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Family member living for free in inherited property - what we need to watch /should do?

(6 Posts)
ReceptionMum Thu 05-Jan-17 14:12:32

Hi, wood appreciate your thoughts on the below described (complicated and long) situation...

My DH has been a Guardian for his mother for a number of years (dementia; she was in a care home). 3 years ago he sold her house (in NE) and bought a flat (on DMIL behalf and in her name) in the S. where we are.

This was a win/win decision because:
a) the DMIL's house stayed unoccupied for a few years, not easily rentable (a very low rental market in the area + needed a relatively significant upgrade to be able to rent out), so needed to sell anyway;
b) to keep money in the bank with no interest did not look like a wise decision
c) My DM (who for I rented a flat near us) could live in this new flat (in DMIL name) until such time when/if it was needed to be sold (to fund care home expenses for DMIL) [this is a totally different story about my DM - in short, she is my dependant and her living is 100% funded by myself].

So, to summarise the above win/win - we were saving a significant amount on rental for DM; and for DMIL, the money were not depreciating in the bank but were given a high (almost certain) chance to increase through increase in property value.

DMIL passed away last year, no will left. DH is a single child, so inherits 100% (DFIL died a few years earlier). The value is below the inheritance tax threshold, so no tax. The flat is still in DMIL’s name, DH is planning to deal with the transfer process early this year.

My DM still lives in this flat, rent free. No rental contract. All bills (council tax, utilities) are in DM’s name.

We are not planning to sell this flat in the near future – DM will be living there until she is able to live independently.

MNters’ combined wisdom is much welcomed – what we need to watch for/should have done/need to do now?

Many thanks

cozietoesie Thu 05-Jan-17 22:37:31

How is her health - and is the notion of her living 'independently' a realistic one?

Does she really have no personal income at all?

WriterNeedsHelp2017 Thu 05-Jan-17 22:43:06

Do you have siblings?

ReceptionMum Fri 06-Jan-17 13:51:26

Hi, thanks for the responses.

No, I don't have siblings.

And No, DM doesn't have any income. It is quite complicated. She is here on a settlement visa and I was/is her sponsor. Visa issued with a clear statement "no access to public funds"...

Anyway, I probably wasn't very clear in my post but my questions were about the flat. Our house is jointly owned (mortgaged). This flat will be in DH's name. Do we have to let hmrs know if there is no rental income from this 2nd property. Any taxes (immediate or in future) we need to watch? Anything else I'm completely missing ? I suppose, we will go to finance advisor at some point. I don't want to push DH on this sensitive subject and just let him deal with it. On the other hand, I'm a bit concerned that time passes and just thought I would ask for some thoughts here in case there is something urgent that we better do sooner rather than later. He checked somewhere and tells me he has got 1 year to deal with the inheritance process.

Many thanks again

cozietoesie Fri 06-Jan-17 15:50:35

It is quite complicated, isn't it?

I reckon you need, first, to have a serious talk with DH about your intentions in the long term. For example - and particularly if she's elderly - what provision have you made or thought of if her health fails badly? Or if you, or both of you, predecease her? Have you even made wills? Are there other relatives or children who might have an interest?

I'm not clear on the current financial implications (someone else may be able to help there) although I'm edgy that it's all so informal with nothing in writing such as a rental agreement. Such arrangements are not uncommon but they can go wrong - so I'd be wanting to ensure that you were all on the same page with regard to the future before you did anything further.

RRic3pud2017 Fri 06-Jan-17 19:13:51

I would suggest posting this question in the Legal section

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