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?

Antonin theres a lot of assumptions in that post

The assumption the children will be happy to wait 20 years.

The assumption there will be equity. The assumption the parents will be able to remortgage or sell and downsize.

Then the kids want their money. Do they force their parents to sell their home? Force them into rented.

And what if there is no home?

a) if it's legal it's not stealing, and b) depending on what the will says the OP may very legitimately be able to use the money to buy a property.

Its theft if you intend to permanently, deprive someone of what is theirs.

So given the OP can not guarantee that she can repay it, and its likely she cant. The kids could claim, when they are adults, that they should have reasonably known they were depriving them. Or that since they knew they woildnt be able to remortgage, they are intentionally deprived them.

A spare £300 per month isnt that much.

Given the op will have to save half of that to give any chance of paying it back and theres the up keep of the house, there isnt going to all this spare money she thinks there is.

It comes down to the fact that this money is the kids money and need to be available for them at a certain age. The parents may be able to do this legally. But if they cant not save the money (due to reason they cant predict) this has potential to ruin family relationships or end up in court.

And on top of all that, op has seriously thought about not telling the kids at all. That's definitely intention to permentaly deprive them.

As others have said, it is wrong as it’s their money. Investing in property as part of a diversified portfolio is very different to what you are proposing. Don’t kid yourself it’s an investment for them because of:

1. once stamp duty etc is accounted for they are at a loss during early years.

2. you are not going to be paying them rent on their share so the only ‘investment’ is an assumption that property prices rise over time. They might not.

3)all of the above is irrelevant as seemingly you have no interest in giving them their money at 18 which they are entitled to. Ergo your decision is more akin to theft than an investment on behalf of a minor. If I was the executor, I wouldn’t release the money to you.

I assume as the OP hasn't come back they aren't keen on being told by a large number of
posters that the are indeed being unreasonable and intend to ignore that and crack in anyway!

Because if you're getting their inheritance, they've died.

So yes, it means 'obviously'.

My mistake.

'Parents' the thread throughout has referred to the parents using the money of the children.

I suspect the comment 'of my parents did this to me I would never speak to them again' was about the parents using the money, not the parents leaving them out.

I would do this - it would directly benefit your children if you can secure a roof over their heads.

Actually I am not totally against this if you were seeing the money as an investment for the children because property tends to go up their inheritance will increase - and I presume you can tie the money up in a trust found linked to the house for them......but you said you are desperate to get on the property ladder - if you use your children's money you won't be getting on the property ladder at all - it will be your children getting on the property ladder as it will be their house you are effectively renting from them. Huge issue when they are adults and pulling their money out means leaving you homeless.
You should read your OP back to yourself...you are not saying our rental house is not suitable so the children will benefit....you are saying we (your husband and you) want to get on the property ladder. This is not your money to get on the property ladder with.

I would do this - it would directly benefit your children if you can secure a roof over their heads.

The money has been left for the parents to use for the children's benefit.

It's been left for the children.

It's not the parents choice to risk it or tie it up with the possibility of never actually seeing the money itself.

I don't think this is unreasonable as long as you have a plan or means to pay it back. If you are saving money in rent each month then you could save this to pay them back. It's not a huge amount of mo rub that is impossible to save. I imagine they wouldn't inherit it until their mid twenties anyway.
It would enable you to have a stable home for your children. I rent and live in fear that the landlord will give notice and no properties to rent near us!!
Do what you feel is best for your family.

Also there is a lot of ropey advice on here from well-meaning but potentially wrong posters. It is very difficult (and expensive) now for a child to not inherit at the age of 18 thanks to changes Gordon brown made. The wording of the will will determine whether the parents have the power to manage money for the child on their behalf. For example, my children will inherit and there is a clause that permits the executors to release the money to the parents (me) for educational benefit. The executors have to be satisfied that I will manage the money appropriately before distributing it. The money will be invested in a bare trust on their behalf.

if ur husband is a low earners and you don’t work and ur late 30s, chances are you won’t be able to afford to save £300 a month to pay the kids back.

Not sure the ops husband is a low earner.

Even with this money the mortgage would be over 200k. Based on his wage, it's not a low earner wage.

pretty sure OP said earlier even with 45k deposit DH doesn’t earn enough to buy?

But since they havent managed to save anything to date, just got their deposit from another inheritance, I agree the £300 womt go into savings at all.

pretty sure OP said earlier even with 45k deposit DH doesn’t earn enough to buy?

Yes but with this 25k, that's 70k deposit. The houses are around 280k, according to OP.

So to get a 200k mortgage, isnt really a low earner.

Not sure the ops husband is a low earner

my DH’s earnings are not enough with a £45k deposit to buy a house

Maybe not low, but not adequate for what they want.

Right, the legal position (from what I gather which is that you are trustees and you childrennthe beneficiaries-is this correct?) is as follows:

If you take the money and use it to buy the house for yourselves this is a misappropriation of trystfubds and you will be in breach of your fiduciary duty. Your children will then be entitled to take a share of the house proportional to the money you took from them and spent on the house (e.g. if the money pays for 5% of the house, they are entitled to 5% of the house) or to claim the money back from you personally.

If you want to do it legitimately you will need to place an equitable charge over the property to that effect during the conveyance. This may cause issues getting a mortgage but it’s not unheard of and worth checking with your mortgage provider.

If you choose not to use the money on your house then please be sure to invest it properly rather than leave it languishing into nothing in a savings account.

“If my parents did this to me I'd never speak to them again.l

Sorry, I had to laugh at this response to an inheritance having been left

OP, I honestly think that as long as there is some way to legally protect the children’s money, maintained at it’s present value and with interest, then using the money in this way would benefit your family and in the end the children too. It is their ultimate interest that money goes into property that they will inherit, rather than rent, and it will give them better quality of life in a bigger house.

Make sure the money or stake in house is legally protected and ring fenced for them.
Make sure you have a plan to make it accessible to them at 18.
Make sure you know how you will manage at that point.

“If my parents did this to me I'd never speak to them again*

Somebody just sees their parents as money trees
My dc would be glad I'd invested it wisely. Just think of all the extra to be gained from investing in property.
I'm sure the equity gained in the property will be in line with inflation and interest rates. More than a savings account, and no risk at all.

TheRedBarrows I think this is the main issue.

There is no way to guarantee they will be able to get it back.

So many things could go wrong. Out of the ops control.

In a place where property is already expensive, 14 years could result in very little increase. No one knows because of the instability at the moment.

As I said. It's not ops money to risk.

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.

Maybe not relevant but it certainly can be done in our country (not UK). Money must be held in trust and an age of access can be specified. Hopefully that will never change as thinking that the average (#not all) 18yo will be sensible with it is a stretch.

RomanyQueen Can you really see no risk to investing the money of a minor in the property of a parent? To say there is no risk is naive. It’s a pretty rubbish investment vehicle for lots of reasons.

I can't believe all these people screaming that you are 'stealing their money !! It's not like you are planning on popping down the bookies and putting it all on 'wonkey donkey' to come home first .! You are planning to provide them with a stable home where you are not at the pray of a landlord deciding he wants his house back. Not to mention that instead of paying the landlords mortgage you will be investing for your family.

The amount being relatively low in relation to property prices in your area also makes this easier. Because as you know, property values can plummet so as long as that is ring fenced then go for it. It will give you more income, and the children a better life and home. It's a no brainier.

As for all those shouting that this is illegal. You are talking bollocks. It depends how restrictive the trust is. Who administers it and if the trustees believe this is an appropriate investment.

My best mate has just done EXACTLY this. Only her children are early teens and their trust was £250k . Mums was £50k . They all now have a lovely home which will be sold when kids trust nature's at 25.

@smallereveryday and what if there is a property crash? What if they lose their jobs and can no longer make payments so lose the house?

This is incredibly risky. Especially in the current climate.

And once again why was Op skipped? Was it because she's shit with money and so the deceased wanted it to go to people who it could benefit.

user

Are you for real, where's the risk? Getting any interest from a bank can't be guaranteed, not adding to the investment won't account for inflation.
I've never heard of a property losing money long term. Whereas we know you can get less than you paid into most savings account with the higher interest, then it's not as high as the increased value of the property will, long term.
Completely risk free, ime.

Get a job and don't even think about stealing from your kids.