How to approach an inheritance conversation

[Ifilikedthewayilook]

This sounds very dispassionate, so I’ll say first neither of my parents are in good health and my sister and I love each other very much and get on brilliantly.

My sister and I will inherit our parents property. It’s 3 bedrooms but small, needs significant upgrading but is in a good area with great schools, a few yards from the beach and has a big garden with off road space. It’s probably worth £120k as is. My sisters kids who are 12 and 6 years older than mine are either well on the property ladder or ready to move abroad. When my parents pass I would like to buy my sister out and sell the house to my son. I’ll hopefully be able to help with the deposit though he’s saving hard too. I couldn’t both buy her out and gift it and neither would I want to - he’ll pay his way. With upgrade that we could do with the help of professional builders and family skills he could increase the value significantly. The semi next door has sold for £200k with upgrade but half garden and no off road space.

Is it fair of me to try to buy my sister out at the current market price knowing the upgrades will increase the value? She’ll know this too. The family skills will come from my partner and my son’s dad rather than my sister. She can always refuse of course and I’d make sure she takes advice.

I think she’d probably love the idea of our childhood home remaining in the family for a while longer, knowing her kids weren’t potential buyers. But I want be fair and need objective views. Cheers

I think if you pay a fairish price then you are doing everyone a favour. Just have an honest discussion. You might be a bit off with your valuation if next door sold for significantly more. Good luck - sounds a fab house!

But the current market value is just that - the current market value. The fact that your son would eventually finance upgrades that would increase it's value is a separate matter entirely.
CMV is perfectly fair.

When the time comes, get Independant and realistic valuation, give her half of it.

Absolutely no need to over complicate this whatsoever.

Thanks all. What you’ve said is what I thought but there are often unintended consequences to things so I just wanted to be sure.

My parents have no central heating or plumbed washing machine, have downstairs bathroom with no shower. My sister and I have offered repeatedly to rectify these things but they just wouldn’t hear of it. We’re
not sure why, but it’s them.

However being clinical again, all can be overcome in terms of ability to upgrade as next door have done.

Thanks again

I would get 3 independent estate agents out to value property and discuss with sister what offer she would be happy with. You might get £128, £140 and £120. She might agree £128 or £130 would be fair. I would just go with what she thought was fair within prices given by estate agents. I would make sure she got first pick of contents to sort of balance it up. Your sister may be happy to let your son have it for the lower amount as he is family. You would.need to ask her.

Whoever buys it will presumably do the work and increase its value - the potential to do that will be reflected in the market price. So if someone is making a profit on it it might as well be your son rather than a stranger.

Would it make more sense for your son to buy it directly from both of you (assuming he can get a mortgage for that much)? That would save on a set of conveyancing fees.

the other thing that comes to mind is, if your sister sells with the plan of keeping it in the family, would she be upset down the line when your son has added the value and sells it on?

I think you should explicitly point out to her that he will profit before the deal is done and get it understood neither she nor you will have any claim on that profit. I’m aware of a situation where all fell out when there was a plea at the end of work being done to share and split the uplift.

It might go to pay for care home fees for your parents. Your son might not want it by the time your parents die. The niece/nephew planning to move abroad may not go or may be back by the time your parents die. You may not be with your current partner by the time your parents die.

Hold your horses.

More great advice. I doubt my sister would mind the eventual sale but it is a point to discuss.

The point @Foxhasbigsocks makes is exactly the sort of pitfall I’m hoping to identify and avoid, so thank you for raising that. My sis is a very rational person and we are open with each other, she loves my son deeply. I’ll make sure everything is discussed and worked through.

@HeddaGarbled your scenarios 2 to 4 may happen. The first is unlikely. The house is dad’s. Dads will states mum can remain in it for life. Dad has months to live.

I'm with @HeddaGarbled hold your horses, they aren't dead yet! They could decide to size down next year in a whim. It could be sold and money used for care. There's a multitude of things that could happen between now and their deaths OP.

@dobidobidooo

There would be no care home liability. I was shocked when dad became ill and we sorted out wills and POA that in nearly 60 years of marriage the home isn’t jointly owned. My Nan was dying when they were newly married and dad signed the papers solely. They never rectified that. Dad has months to live. The parent who would need care is mum but beyond some savings she has no assets. No deliberate deprivation. She was born in the house opposite to her home. As pp pointed out, other relevant circumstances could change and that’s fine. It’s just one plan. My sister and I could decide not to sell right away but renovate, then sell or renovate and rent. My son will benefit from all of that with a bigger deposit gifted than if he bought the house himself.

You need proper legal advice for this. There are various tax implications involved.

Thanks @VeniVidiWeeWee. I’ll take that advice

It does sound very dispassionate. Feel quite sorry for your mum. 60 years of marriage and she's being left with no real assets or claim to her home.

Mum is no worse off than if she had owned the house. It’s her home on her terms and will be till she passes. If she was younger and on mumsnet today she’d be warned against being a sahm and the house not being equally hers. Thankfully my dad is an honourable, moral man. Their only joint assets are small savings. Like many people their age, they take great pains to make sure their funerals are covered, which they would be by my sister and me anyway. Mum has lived the life she wanted

Bloody hell OP you’re a peach aren’t you

Whoever would have imagined that the Queen Mother would be attending Princess Diana’s funeral.

Sorry @PurpleRainDancer I don’t understand your comment.

I’m not a racist snob who’d conspire with a close friend to sacrifice a relatives happiness 🤷🏼‍♀️

If your dad died wouldnt his wife be next of kin?
If this ever happens, tax wise I think you would be better off applying for a variation to the will and passing your inheritance directly to your son then assisting him with buying his aunt out. You inheriting and then once it’s yours giving it to your son might have tax consequences. (I assume you only have one child!)

Thanks @timeisnotaline. Yes mum is next of kin but the house passes to my sister and me. The options for them when drafting my parents wills were to leave things as are or do a transfer of equity to mum. The solicitor advised that in view of dad’s diagnosis (stage 4 let my cancer) it was better to leave as is and dad give mum right to remain for life.

@Ifilikedthewayilook

Sorry *@PurpleRainDancer* I don’t understand your comment.

I’m not a racist snob who’d conspire with a close friend to sacrifice a relatives happiness 🤷🏼‍♀️

No but your making presumptions about relatives passing away. The QM was 97 at 36 year old Diana’s funeral. Counting chickens is a dangerous game.

Erm

My family are very factual. Chat about old age, death, wills etc. DH finds it uncomfortable and bizarre.

And even I'm taken aback. They're not dead :/

You can discuss it with your sister when the time comes.

Blimey.

Presumptions?

Dad has stage 4 lung cancer. He’s had immunotherapy and chemotherapy. We’re all out of options now. His death is killing me. Mum has COPD.

I’ve had my question sensibly answered tonight, but I accept these threads attract projected views.

@NiceGerbilwhich is why I’m discussing it on an anonymous public forum. Not with those involved. That’s the point of platforms like mumsnet.