Using child’s inheritance to get on property ladder

[Wanttobeontheladder]

We are in our late 30’s with 3 children and have been renting all our adult lives

We are desperate to get on the property ladder but I am SAHP and DH is sole earner.

After the loss of a parent recently there is a considerable inheritance that was left directly between our children rather than coming to us.

Using this money would mean we could finally get on the property ladder (just)

Seeing as the children benefit too we feel that we should use it.

Would we be unreasonable to consider this?

Good luck finding a lender who will accept this as funds of deposit. It’s not your money.

TheBrockmans the money is safe though.

Ridiculous to state it should pay for their hom cause banks lend money.

All that needs to happen is ops dh cant work anymore or they get divorced and cant keep up the payments....and no return in investment.

It's not their money too risk.

What if your eldest DC demands their inheritance on their 18th birthday? Will you insist they wait until youngest is 18? Is that fair?
What if (God forbid) someone within the family has a serious accident or illness making it impossible to sell the house (because they need to live there with family carers)?
I sympathise it's your predicament. It must be frustrating to not be able to use the £ to secure a home.
But what was your plan before the inheritance?

This isn't unusual, sadly. I have a friend who's a lawyer and says that if you want to leave money to a child under eighteen in your will, you must be careful to make sure their parents can't get their hands on it. Do not fall for the myths our society peddles about a parent's love for their child - so many people love money above all else. Look at all the child stars whose parents have dipped into their earnings.

If it were legal for me to do so, I would use this £25k for a house deposit for all the reasons the OP has given. In 14-17 yrs time, if interest rates don't improve, that money is not going to be life-changing for a young adult. If I'd known my parents could have bought a larger house an didn't, and made me share with 2 siblings, I'd be quite cross with them.
(As it is, my parents scrimped massively on stuff like clothes for us, because they worried unnecessarily about the future)

You children are too young to even know that money exists and it would be a good learning thing for them to find out as older teenagers, when the money has been repaid and you can tell them why you made the decision you did. They won't remember the people who died and left them the money so it will only ever be an unexpected windfall. I would even go so far as to suggest that you tell them the money was left "for their benefit" and that you interpreted that as having a permanent roof over their heads.

I am probably a hard bitch but please do what you can for your kids now. No one knows what's round the corner - my dad saved massively for an exciting retirement and was dead within a year (unexpected stroke) - be happy

I would do it. You are still going to have to invest it safely for them, so it might as well be in property. You shouldn't see it as your money though, and you're going to have to think how you can give it back to them, plus any appreciation in value, when the time comes. But you would be saving £300 a month which you could put towards your own deposit, and the family would have better living conditions in the meantime. I'd definitely take legal advice but I'm sure it's doable with a trust.

Noof course you shouldn’t use it. Disgraceful idea.
Are the children old enough for you to go back to work and save for a deposit?

If you'll be saving 300 a month then you can obviously afford to pay the mortgage on DH's wage. Have you actually applied for a mortgage and been rejected or spoken to a broker?

If not then do that first. Another option (as you know you can afford it on DHs wage alone) would be for you to get a job in the short term. Once you have the number of wage slips required (usually 3 months or 6) then your income can also be counted on the application.

I'd try all these options before touching the inheritance. Negative equity, inability to pay the mortgage, divorce etc could all be costly to your DC if you were to use this money

You children are too young to even know that money exists and it would be a good learning thing for them to find out as older teenagers, when the money has been repaid and you can tell them why you made the decision you did.

There's no guarantee that the parents will be able to repay the money. They may save, but there's a good chance there will always be something more pressing to spend those savings on.

They won't remember the people who died and left them the money so it will only ever be an unexpected windfall. I would even go so far as to suggest that you tell them the money was left "for their benefit" and that you interpreted that as having a permanent roof over their heads.

But that's not true. The money was left directly to the children, not left "for their benefit"!

I am in the reverse position, my parents their used inheritance to buy my house outright but we had a Declaration of Trust written up and attached to the deeds which stated I was going to pay back X amount a month into a specific account and that if I decide to sell up any remaining loan has to be paid back using the house money. So you could have something like that drawn up and of course you should include interest that the money could be earning else where.

In 14-17 yrs time, if interest rates don't improve, that money is not going to be life-changing for a young adult.

It's not life changing now.

A fact that makes no difference. The money is not OP's to use. The money belongs to the children. Whether it's a life changing amount or not is irrelevant.

I am in the reverse position, my parents their used inheritance to buy my house outright but we had a Declaration of Trust written up and attached to the deeds which stated I was going to pay back X amount a month into a specific account and that if I decide to sell up any remaining loan has to be paid back using the house money. So you could have something like that drawn up and of course you should include interest that the money could be earning else where.

This is not the reverse position at all. You are your parents are adults and can legally sign the paperwork involved.

The OP is talking about taking her children's money. No consent. No arrangement. No signatures.

would even go so far as to suggest that you tell them the money was left "for their benefit" and that you interpreted that as having a permanent roof over their heads.

That's just blatant lying. Although I would expect that from the kind of person who thinks this is ok.

The money has not been left 'for their benefit' as the parents see fit. It has been left to the children.

Legally you can't keep it from them.

Correct, you can’t keep it from them once they are 18yo but you can try and mitigate it up front. My kids grandparents are leaving the inheritance to them. All good. However initially it was just left to them so they would be able to obtain it on reaching 18. I had a fit and said how irresponsible so now it is written that it is held in trust until they reach 25yo. Much more sensible!

I would even go so far as to suggest that you tell them the money was left "for their benefit" and that you interpreted that as having a permanent roof over their heads.

Until a family member mentions the money. Or one of the DC when they are older go look for the will.

Realise their parents ripped them off and then lied to them.

The potential for a damaged relationship between the kids and parents is real. As is the parents getting used, if it got nasty.

Essentially you are suggesting permanently depriving them of their money. Which is theft.

Amazed how many people think stealing off your own kids is ok.

My friend’s parents took £15 k from her about 15 years ago .. she was 17.. to build an extension onto their house ...
She had been left the money by her grandmother...
She has never been paid back and probably never will ..
she was pressured into handing it over ..

I think they were wrong to do they as they all had their own bedrooms ... extension was a luxury not an essential ...

In OPs case if it is going to improve the standard of living for her DC then I think it is ok as long as it is definitely paid back ....

The fact that so many people on here are condoning this - theft - shows to me what a money-obsessed, materialistic nation we have turned into. There was a time when people saved and worked hard for things they couldnt afford; now they just take out credit ... or steal their kids’ money.

Why do people say it's fine 'if its definitely paid back'

How can anyone guarantee it's going to be paid back, when op cant tell the future. None of us can.

My friend was left 3k by her granny when she was 12, when her dad took off with another woman he emptied that account. Awful.

The amount of moral outrage on here is unbelievable. It’s very standard for trustees of an inheritance like this to invest the money where it’ll actually gain interest. Sitting it in a post office account for 14 years is, frankly, irresponsible.

There are various options for investment, would everyone be so outraged if OP was suggesting to put it in a tracker fund? That also has risks of going down as well as up, but over 14 years would still certainly be worth a lot more than if it sits in an account.

If the OP does everything legally and above board it isn’t really any different than investing it in a tracker fund. Yep there are risks, but there is also the certain benefit of an improved living situation for the children. If I was a trustee I would agree to this, as long as the children benefited from any rise in house value for their original stake, AND there was a clear payment plan to return the amount to the trust with the interest it would have gained if it sat there.

I guess I would normally say yes if there was a legal agreement that you had to pay it back on their 18th birthday - however you honestly don't give em confidence that you wouldn't end up being reposted and lose all their inheritance so I think you should leave well alone

If I was a trustee I would agree to this, as long as the children benefited from any rise in house value for their original stake, AND there was a clear payment plan to return the amount to the trust with the interest it would have gained if it sat there.

And if the OP cant or doesnt keep up the repayments?

Besides which, she has stated herself that the kids are unlikely to know about the money unless she tells them.

So does that sound above board?

I am surprised you can do this though it shouldn't be legal

It’s very standard for trustees of an inheritance like this to invest the money where it’ll actually gain interest.

Is it also standard to invest the money for their own gain?

Re-reading the op it sounds as though the proposal is to just use the money and justify doing so by saying it will benefit the children. Definitely not on. The money is and always will be her children's inheritance.

However, if they could legally borrow it on a short term basis to buy a property, then it might be a good idea. The children would ultimately benefit twice, once from their grandparents then a second time from their own parents. The key word here is BORROW.