How would this work? Gift of money which will eventually be for DC, to put into bigger family home now...

(6 Posts)
bronya Tue 03-Jun-14 09:23:54

My DF has offered us some money so we can buy a larger house (DC would have a room each, near better schools/nicer part of town). It's the money he'd put aside for the DC's inheritance from him, so he wants it ring-fenced for them whenever the house is then sold. I'm sure this is possible, but am just wondering how it'd work. Especially as I'd rather not have to sell once they hit 21 or thereabouts (but would like to be able to give them this money so they had a deposit for a house), so would save to buy them out. I was happy to look at it as an interest-free loan and pay him back, but apparently that has tax implications or something and he'd rather not do it that way.

Has anyone done anything like this?

HolidayCriminal Tue 03-Jun-14 19:03:26

Maybe a way for a trust to own a % of the house, due to pay out to a single beneficiary (your son) at the age of 21.

ThePerfectNegroni Tue 03-Jun-14 19:11:49

If you listen to money box on radio 4, they discussed this last week. I can't remember if it was the phone in version or the other one, but if you listen to both on I player you'll get a very comprehensive answer.

bronya Tue 03-Jun-14 21:08:51

Thanks, I've listened to the Money Box programme, and ideally the money would have been just an interest free loan. However, my DF lives abroad, and he says he cannot have the money paid back to him, it would have to go into a trust for the DC (I'm pg at the moment). He has this theory that it goes into the house and it's like a charge on the house, so when it's sold, x% goes to the DC. I will book a session with a solicitor to get more of an idea how it could work exactly, but am just interested in rough ideas of how it would work before I do so!

MillyMollyMama Tue 03-Jun-14 21:23:43

If you stay in the house though, how will they get their inheritance if you are impoverished and cannot buy them out? When will your DCs want a deposit for a house? Will the money appreciate in your house? If not, are you actually lessening their inheritance? Should you spend money earmarked for your children on something which, if it has to be sold, will grossly disrupt family life? Who will say when it has to be sold? Lots of questions I think mean this is a very difficult decision.

Iseenyou Tue 03-Jun-14 21:33:01

Did moneybox talk about capital gains tax - not sure if there would be implications but somrthing to be considered as well.
Difficulties that mmm refers to might arise if you can't afford to buy them out and one dc wants the house to be sold while another (and you!) doesn't.
Why can't the money be paid back to df? (not that that is necessarily the best solution anyway)?
Sorry, only questions, no helpful advice!

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