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?

FFS anything could happen in the next 10-15 years whatever OP does with the money. If she puts it in stocks and shares, the stock market could collapse and the whole lot disappear. If she puts it in a savings account, the bank she chooses might go under and, again, they lose the lot.
If she and her H get proper legal advice and the terms of the trust allow this to be done, with proper protection for the money, it's no more or less risky than any other option - and has the advantage of improving the DCs' lives straight away (a more secure home; perhaps they can get a dog or have a garden, etc.)

Oh, and the PP who said birthday money should be invested rather than spent on days out - it depends on your circumstances. If you're on a low income and a bit of birthday money means the DC can actually have a longed-for day at a theme park, I'd say doing that is a good use of the money, because it makes them happy and (same as with that shit advice about stopping the takeaway coffees in order to save a deposit) if you are really broke, £50 spent on pleasure is better than £50 in a savings account that you are never going to be able to add any more to than about £50 a year.

@LiverpoolVictoria

If that money is in trust for your children, OP, I'm confused how you can even gain access to it?

The trust will be set up in accordance with the provisions of the will, and so will set out how and when the funds can be used. It is up to the person who makes the will to decide how specific to make the trust, which will determine how the funds can be used.

An example might be that ' all costs associated with the DCs education can be covered by the trust' or just 'for the benefit of the beneficiaries' or 'for the benefit if the beneficiaries in equal measures' if one gets something the others must too.

@mrsm43s

The children's money should be invested in the best way to benefit (financially) the children. The trustees will have a legal obligation to do that.

The trustees legal obligation will be to carry out the provisions of the trust. It may be to financially benefit the children but there are other possibilities, the trustees have to abide by the trust.

@longearedbat

is the trustee, is obliged to do. I somehow doubt that the trust specifies that you can effectively close the trust, withdraw the money and spend it on a house. If the money is not in a trust,; why isn't it protected in this way?

There would be no question of closing the trust. The funds in the trust are expected to be somehow invested, according to the provisions of the will as set out in the trust. There are however restrictions on the investments that a trust can make. For example they cannot hold ISAs. Lots of banks do not permit funds to be held in on line accounts by trusts. The taxation of any increase in capital or interest of the fund is a highly complex matter quite unlike the personal and corporate taxation that many of us have come across.

If the trustees agreed, the trust could make a loan to the parents, on specified terms. Mortgage providers will be very familiar with a deposit or part thereof coming from a trust fund. The terms would include how and when the load would need to be repaid. For example, in the tragic case of the death of one of other of the parents the loan would not be regarded as part of their estate so that it would be repaid before any inheritance tax were calculated.

The load could earn interest like an ordinary loan but the annual tax returns for such small amounts of money would be onerous. Alternatively the interest could be due in ten or better seven year intervals.

It would be up to the trustees to ensure that the appropriate payments were made.

A very sensible and very flexible approach to passing money down the generations

A very sensible and very flexible approach to passing money down the generations

I think this is important. The money isn't being passed down the generations. The OP was quite deliberately left out and the money left to her children. If it was intended for OP it would have gone to OP. I think you have to ask why, knowing OP hasn't got their deposit together to buy a house, that they have been 'skipped'.

the bank she chooses might go under and, again, they lose the lot.

8k would be covered if the bank went under.

It's fairly clear the OP and her dh dont have cash to spare

This isnt their cash. I very much doubt the OP and her dh can do all they say and save up to oay the kids back.

They need to save a minimum of £150 per month to have it back in 14 years.

She said they will be £300 a month better off. So £150 to savings and £150 for upkeep of the house, family days out, repairs, buildings insurance and all the other stuff.

Doesnt really equate to them being so much better off.

That's the problem. If they could borrow it, legally, ensuring the kids when they are older were fully aware and know the could definitely pay it back, there woildnt be such a huge issue.

But the fact is, is that money is tight anyway and a small thing could make it so the cant afford it. Her dh having his hours reduced for example.

And what are the consquences if they dont pay the money back. What if one child really needs the 8k and wants them to sell. Another one doesnt want their parents kicking out of their home. It's got potential to really cause a family to break up over.

Plus the fact that it's their money, no one should be risking someone else's money.

It would be up to the trustees to ensure that the appropriate payments were made.

And if they cant afford to keep the repayments? What happens? Do the trustees force the sale of the house?

What if the OP genuinely can keep up with the repayments. That's not going to end in a situation that is good for the kids.

I think you have to ask why, knowing OP hasn't got their deposit together to buy a house, that they have been 'skipped'.

We can have no idea what the intent was in this example.

It is however routinely used in estate planning, where in the ideal situation, each generation ends up owning capital just within the nil rate of inheritance tax, which for a married couple is around £1M and everything else in the family is in a trust.

There is always a balance to be struck between making the trust restrictive enough that it is recognised by HMRC as a bona vide trust, so a legal way to avoid tax rather than an illegal way to evade tax.

By passing g down the generations I meant in practice entirely skipping a generation.

For example, If it is done early enough in life it can avoid the situation where care fee homes use up all the capital. There are lots of complexity. the most obvious of which is creating the trust only when care home fees and/or inheritance tax is looming. If the will is executed 20years earlier then there is less of a case to consider it deliberate disposal of assets, hence skipping a generation still being passed down through the generations.

I was sort of on the OPs side but I may have missed the reasons why the money they have in savings isn't enough of a deposit and why the person /persons didn't leave the money to the parents to secure a deposit for a house.
Apologies if the answer has already been given - slow reader.

Our children's inheritance would actually be held in trust until they are 21, as if we both died it would be a considerable amount and we worry about putting that on the shoulders of an 18yo
This cant be done. At 18 they reach the age of majority and are entitled to any money in their name. Unless you actually hide the fact they have an account in their name, but still if they ask banks about any lost accounts they can find it.

I can’t see how they can find out about it otherwise though
Wills are a matter of public record. Right now it costs a tenner to get a copy, I imagine in future it will be even easier.

For those going on about it being the kids money how do we know they will use it wisely and not go out at the age of 16 and blow it on a holiday, a bundle of concert tickets and a a few video games.

So what? Would you be happy for someone to steal from you, because for all they know you wouldn't have spent the money wisely anyway?

Flipping heck, there are some incredibly intellectually challenged folk about today. As the DC are minors and far too young to capably manage their own funds it falls to the parents to do so. At the present time, it is in the DC's best interests, financially and socially, to purchase a home with a percentage legally held in trust for them.

Honestly, I truly despair of eejits giving "legal" advice on here.

You can buy the house but the property has to be entirely in the children’s names
Minors cannot own property.
This is a terrible idea, I hope it never happens. Those children will lose a large inheritance for no good reason.

Valanice1989 it seems so.

I cant imagine many people would be happy to have jewellery stolen from their home or their bank account emptied on the basis the thief would use it better.

Imagine if a Mil did this 'aibu, dh and I have been left some money by his grandparents. But mil took it and is using it. She says this is because we planned to use it for a holiday and that's a waste. So she used it to finish paying her mortgage off and says that, that house will probably be DHS one day anyway. Aibu to be pissed off?'

Oh the irony ...

At the present time, it is in the DC's best interests, financially and socially, to purchase a home with a percentage legally held in trust for them.

Says who?

OP is planning for them to not even know.

If it's legal then I don't see why not. The children won't ever know that the money existed.

I've left some money to my grandchildren because I want it to be for them alone, whether it to be buy their first car, pay for driving lessons, enable them to go to university etc. It's in trust until they are 25.

It's not for their parents to spend on buying a house or anything else they fancy spending it on otherwise I'd have left it to them. They have their own share.

It really concerns me that something like this could happen and I'm now reconsidering who the trustees should be and being more specific in my will.

The children won't ever know that the money existed.

This is not ok. Why do you think this is ok?

By they way they are currently young enough that they would never know either. It doesn't make it right.

HavelockVetinari

Are you a lawyer? Then please tell us the legal position instead of throwing out insults.

teaches
How does not telling your dc you have stolen their money make it any better?
If it is possible to do it legally then dc would need to be informed at the correct time.

If it's legal then I don't see why not. The children won't ever know that the money existed.

How is taking your kids money legal?

How does the fact that they wont know it existed, make it ok?

And what happens when they do find out? The family that OP says might be jealous (I think she actually mean disgusted) may tell them. Wills are public record.

Bet the kids will love that their parents stole from them.

No I don’t think you should do this.
If you worked at a nursery would you not get heavily subsidised rates for your own children?

I think arguably it benefits the DCs to have (1) a permanent stable home; and (2) DP having higher disposable income as not paying so much rent. Property is obviously an acceptable investment.

The house should be held on trust for the DC, so ownership is clear, and with watertight agreements that DP will move out if DC wish to sell.

I think it makes sense.

We don't know if would be illegal or legal, because none of us have seen the will. Therefore the knee-jerk reaction of it being theft is unhelpful, over-dramatic, and may well be incorrect.

OP needs to have her solicitor look into it.