June, a widow, lived in a beautiful five bedroom detached property in Dundrum that she had purchase with her husband in 1966. June’s husband Richard passed away in 2000 leaving June alone in the large property. June survived on a state pension and a widow’s pension, June had spent her life as a homemaker and Richard did not have a private pension having spent most of his life self-employed.June found that most months she only had enough for the basics and could not afford the little luxuries she once could when Richard was alive, June was not concerned with spoiling herself but wanted to give a little something to her grandchildren.

Mother of Four

June was a mother of four, Mary, Patricia, Ann, and Martin. Martin was a successful doctor and didn’t accept any gifts made to him by his mother. Patricia and Ann were both nurses and did their best to support their elderly mother often bringing her out for lunch and afternoon tea on special occasions. Mary was divorced and had a poor relationship with her ex-husband. Mary had 3 children. June and the rest of the family did their best to help Mary in any way they could financially. June felt especially concerned about Mary when her eldest daughter was doing her leaving certificate and applied to go to college in Galway. June knew that Mary would not be able to afford to rent student accommodation for her daughter to live in in Galway.

Like a Mortgage

June often when to bingo with her long-time friend Rose. June was lucky at bingo. June confided in Rose about how worried she was for Mary and her financial troubles. Rose told June about an equity release scheme she had heard about. She told June that it was like a mortgage, but it wouldn’t be repaid until after she died. June was intrigued. Rose referred June to the broker she knew had helped her friend. The broker told June all about the loan an encouraged her to take it. June was never good at paperwork and quickly signed up to the offer. June’s solicitor begged her to reconsider taking out this loan because of the incredibly high compound interest rate attaching to the loan. June told her solicitor she knew all about it and she felt the money would be much more useful now than when she passed away.June took a loan of €90,000. She gave Mary €55,000 to pay for accommodation and the children’s education. June was delighted to have €35,000 to spend after living on a budget for many years. June and Rose when on a cruise around the meditation for her 80^th Birthday and she purchased a second-hand micra.

June never told Mary, Patricia, or Martin about the loan as she felt they wouldn’t want her giving all that money to Mary. When Patricia asked how she paid for the cruise with Rose June lied and said that she and Rose had done very well one night at bingo and decided to treat themselves to a cruise.

The Fallout

June passed away in May 2021, 15 years after taking out her lifetime loan. June left her estate equally between her four children. The only significant asset in June’s estate was her house and €10,000 in cash she had saved from her loan.Upon investigating the title to June’s property our office discovered that there was a charge registered against the property.  We wrote to the lender to obtain redemption figures for the loan and were surprised to learn the sum owing was €280,000. At the time of her death June’s house had been valued at €400,000. A condition of the loan was that it must be repaid withing one year of June’s death or a higher interest rate would apply.

Patricia, Ann and Martin were shocked to learn that such a loan existed and could not think of what their mother could have needed such a large sum of money for. Mary, at the months mind, told her siblings that her mother had given her €55,000 15 years ago and she was aware it had come from a loan against the property but had never dreamed that the interest would be so costly.

Patricia and Ann were horrified and enraged, both having expected to inherit approximately €100,000 each from their mother’s estate and would now only receive €30,000. They accused Mary of tricking their mother into giving her this money and squandering their inheritance. Martin attempted to take the role of mediator in the group. Patricia and Ann told Martin he should not butt in as he did not have any money worries and did not need an inheritance.

The Unintended Consequence

The loan was eventually repaid after the sale of the property. The lifetime loan not only significantly de-valued the estate but also came at the cost of the relationship between these siblings.If this story affected you or you have a similar concern please contact us.

Please note for privacy and GDPR reasons names and circumstances have been changed to protect the identity of the individuals involved.