ILs “gifting” home

Don't go anywhere near this sort of arrangement. My FIL gifted a plot of land to my DH for us to build a house. 3 years later and after a series of all sorts of events we haven't been able to complete the house and have wasted 10s of thousands of pounds on it. We're stuck renting and watching our son grow up and desperately trying to buy a place. We're selling the site after assurances from FIL that it's ours (we offered it back to him) and to sell it if it suits us. We got an offer, accepted it and now FIL isn't speaking to me or DH.
These types of set ups are a form of financial control and ILs even mentioning they have control over what happens if you divorce is a massive red flag! Steer clear!

I think it really depends on the in-laws.

mine? Certainly not. They got possessive over the pram they bought my baby. Insisted they had to push it because it was technically theirs 😂 I can only imagine the drama if they had bought us a house!

I'd like to know the practicalities first. Who pays for maintenance and improvements. What is the paperwork like? Will they be allowed to treat it as their home or is it the I laws home that they are living in? Are they allowed to move out without a hige fall out? Can they pick the house?

Assuming it is the in laws house in name only and they do all the landlord-y improvements. Then I'd be tempted to live there for some time while saving like crazy. Or I would buy a buy to let or holiday property that was in my name. It genuinely would depend on what type of people the in laws are and what the paperwork is like (basically how fuck I'd be in case of death or divorce)

The fact that the ILs want the house in their name in case of divorce would make me not want to touch this with a barge pole.

So if they divorce, the DH has the home entirely to himself and they have to split all other assets - this leaves your sister badly off.
If they have children when they divorce, those children will naturally stay in the family home with DH while your sister has to move out.

i wonder how the DH feels about the arrangement? I wouldn’t want to be in a relationship with this family! If DH thought this was a good offer I’d question my relationship.

Controlling on so many levels!

Your sister should just buy her own property with her DH. And the in laws should gift money to their DS to buy an investment property, in his sole name and they should get legal advice as to how to make it an outside marriage asset (not always possible, but if it is kept separately more likely to be separate).

It’s a bit insulting, that the ILs are insuring against marriage breakup

Yes it is, but of course we don't know the sister and there's just a possibility that they see something we can't

Alternatively it could be a cultural issue, where the folk who feel they have the power don't trust "those others"

The good news however is that the sister's clearly already unsure or OP wouldn't be asking this on her behalf, so overall it may well be another case of going with her gut

This is entirely anecdotal, but I have a friend who went through exactly this. Her MIL then decided that as it was "her house" she could pop around whenever she wanted (letting herself in whenever), critique/control the decor and furniture choices, complain about the tidiness of the home (my friend is a very clean person!) she would just pick everything apart though.

My friend is no longer with her partner due to a number of reasons, but this/his relationship with his mum, was a big strain on them.

Do the ILs have any single sons?

More seriously, this is a very reasonable arrangement. It's fair for the ILs to protect their investment from the possibility of a divorce. although they could allocate funds to an investment property - this is not always tax efficient and it's fair for the DS to want to have full control over the home that she lives in. Who knows if the ILs suddenly decide they need the equity from the home in the future? She also relinquishes her agency when dealing with DH and his family.

That said, if they refuse this offer then that could mean no other financial offers in the future - which will cause friction. For the sake of her DC's financial future your sister should take the offer - but make it clear that to her DH that she won't tolerate having it thrown in her face for the next 30 years.

My rich BIL has done this, and it’s brought nothing but unhappiness for at least two of his children. He’s super controlling, wants to make sure their spouses get nothing in the event of divorce etc. They’re not even allowed to choose the house, but I guess it’s difficult to refuse when being offered a multi-million £ pad.

One other issue for your sister to think about (and I’ve not RTFT) is what happens if her husband dies - will she be evicted? This happened to someone I know, who had a baby at the time. Thankfully her in-laws were good people and gifted the house to her.

It is a minefield.

Normally I'd be of the same view as your sister - however with mortgage rates the way they are I wouldn't be looking a gift horse in the mouth provided her and her husband also invest in a buy to let property that she is the sole owner of / or alt. Has a greater share of

Agree - if the houses are owned by PiL (unless in a trust) would be subject to IHT when they die, so each tenant would lose their home as they’ve have to sell up to pay it off. Also, how would dividing the assets works when they die - what if one house is worth twice as much as another siblings but the will states ‘equal shares’.

PiL would be better ‘gifting’ the money to their children now in the hope they don’t pop their clogs in the next 7 years, and asking them to ring fence the money if invested into any marital properties (which may or may not stand up in court during a divorce). It sounds deeply controlling and works on the premise that the marital spouses are not to be trusted.

Also, in order to build a capital sum/equity in a property of her own, sister has to buy a second property - higher stamp duty obligations, 300% council tax charge in some areas, landlord obligations and stresses if they rent it out, maintenance obligations on top of those for their residential property and complex annual tax returns. If sis does divorce one day, and hasn’t invested separately, but lived as a tenant in PiL’s home, she leaves with nothing. Nothing. No joint share in the marital home she and DH have owned, so would have nothing to start over with. Madness.

I’m with the sister - I’d not touch this with a bargepole.

It seems very controlling and leaves you with very little protection. With ILs like that it’s not just about what they’re offering it’s about what you owe them. They’re buying your obedience.

It would be better put in a trust with the husband as a trustee and beneficiary and the trust worded that the property could be sold and another purchased if agreed etc to give flexibility.

this would take the property outside if the IL's control but protect it in case of a divorce, as legally it would belong to neither the husband or your sister.

The risk of it staying with the IL's as named owners is that, in the future it could be counted as an asset for care cost calculations of count for IHT.

Presuming they have no conditions now that mean they can reasonably require care then the transfer to a trust for the son is unlikely to be viewed as deprivation of assets in the long term.

100% no. If the inlaws were trying to be generous they'd gift help for a deposit. They are being controlling and putting your sister in a terrible position for the future. There's no security here at all which is the benefit to owning a property. Any money she puts into it to repair or improve it will be gone and the moment there's any sort of financial or emotional issue with her marriage or her inlaws' finances she'll be out of a home. This isn't a 'gift' at all.

My inlaws (and my father) gifted us some money to help buy our first home (and actually our second when we had another child and wanted more space). Enough to get us a few years ahead of where we'd be otherwise but not enough to make it awkward or feel like the house isn't 'ours'. They gifted an equal amount to my brother and my sister in law so it's all fair.

It sounds very messy to me. What if there is a family fall out etc?

Agree with your sister that she would effectively be a lodger. What if she wanted to move? What if she wanted to add a conservatory or a garden room? Why should she add value to something that isn’t hers?

Also, it’s a bit insulting, that the ILs are insuring against marriage breakup. It’s weird.

Who pays for the council tax on this 2nd home
It’s not as if it is a rental property.

Depending where it is I have paid mortgages that are less per month than some places that have a grossly inflated council tax on 2nd homes.

It depends on the terms of the contract of course, but if it’s a matter of them living rent free in a property in her DH’s name then as long as they don’t get divorced it sounds fine. They’ll have all the benefits of home ownership without having to afford it, leaving them free to save for their own property.

Only the OP knows whether her DH is likely to turn into a controlling arse and use it against her. But then the problem would be in their marriage, not because of the ILs.

I think it’s less about the control and more the feeling that her ILs don’t have faith in the marriage going the distance. I agree that’s not a nice feeling. But the ILs may see more about their dynamic than the OP’s sister is letting on.

If they're so keen to buy their son a house, let them buy one for him to rent out for income. And she and her husband can buy their own family home

This is the sort of thing I meant about there beingg any number of other ways they could handle a "gift", but as you rightly say they wouldn't offer the same control so probably wouldn't appeal

I also agree with the PP who said why should the DH "save like mad" in a situation where everything would be on his and his family's terms ... and never mind what it could do to the sister if everything goes wrong

Nice try though

What if the marriage does break down, he's OK, she could be fucked and looking at a property purchase, with kids in tow

Edited to add who says the kids would necessarily be "in tow" if it came to a diivorce?
If the DH's family have so much and the sister nothing they could easily make a case to take the kids too

There is no such thing as a free lunch and this is not freedom. They will be in charge and if I were her I would not touch this arrangement with a barge pole.

Yes that's another issue too.

This really isn't going to work. I'd want my DH to be loyal to me first, not the money.

I say this as someone with a DH who has been gifted over 7figures by my IL's and no contract in sight.

So you think the ILs should spend the money, then if there is a divorce, the house belongs to them 50/50? No. I would not agree to that. I would do what they are suggesting - use the money saved to invest in a rental property. Or a home abroad if that is preferable. Why the hell not? Or at least consider tenants in common with a relevant percentage for your sister.

If they are really that well off they would gift the house to you and your partner. Say no but thanks no.

The problem is that in divorce it is very hard to ringfence anything. He would not own the roof over his head so could well end up claiming half the investment property.

So when the IL's eventually die, who is paying the IHT on the property?

It is also massively stupid of your sister not to have her own footing in the property market. What if the marriage does break down, he's OK, she could be fucked and looking at a property purchase, with kids in tow (or financially worse, not kids for the DH to pay towards), that she will be paying until she's 70 (insert other disaster scenario).

What if they marry and divorce after 25 years, is she a gold digger then.

This is all kinds of wrong and I'd not be buying into the idea myself in that format.

My suggestion is that they buy as tenants in common, the DH family owning xx%, and your sister paying for her part with a mortgage. I would question my DH commitment to the marriage however, but at least a joint purchase that she owns a lot of, means she has some protection.

I can understand how she feels

However (NRTWT so apologies if someone else has already picked up on this)

You said your dsis has been saving for a house deposit for years and the in-laws reply was to buy an investment property WITH THEIR DS

Something very off going on. Not only do they want her to live in their house which on a divorce will go back to them/their ds but they also want him to have a share in her savings and investments.
I would be drawing up a contract to say any savings, investments or property she has bought during the marriage are ringfenced, if they divorce and her dh will have to sign it.