Lifetime trust. Has anyone seen it work well?

[Wraptight]

It's often given as the perfect solution where someone shares a house with a partner or spouse, wants partner to be able to live it it after their death, but for it ultimately to go to their children.

I've only seen it happen IRL twice and both times was a bit of a disaster and made everyone miserable.

One example, the children really begrudged the (in this case) step dad staying and delaying their inheritance, and made every effort to "persuade" him that it was in everyone's best interests for him to sell up, realease his share of capital and rent, which made him more determined to stay. It ended up with the people the deceased loved most hating each other, and making each other's lives miserable, when she'd tried to leave things good for everyone, albeit that the relationship had always been rocky.

In the other the step mother had spent decades running the deceased's home. He owned it 100% but she'd made it a home. It was her home too and he left provision so she could stay there for life. She'd also been very good to the DC, very much part of their immediate family, they'd have all said they loved each other.

However, once money was involved the children started wanting control of e.g. the maintenance of the house. She felt they were trying to prove she wasn't maintaining it adequately, so she'd have to leave (I don't know if that does happen?). They were definitely hoping she wouldn't live too long! Again. it made everyone miserable. The children, lost their father in their 30s but had to wait until they were almost retired themselves for their inheritance, by which time a very elderly lady was still "insisting" on living in "their" house which was becoming increasingly unsuitable for her.

So any success stories or ways to make it work better, especially where there's a disparity in age or health (life expectancy)?

I am in this situation currently. So far it is working out OK although a slightly rocky start where we had to work out the legalities (and SM went to rehab!). SM still has decades to go yet. We have a clause that if the house is sold we must join together in buying another house for SM until her death, but she has moved to another country so none of us really want to do that. I think ultimately either just my DB or DB and I will buy SM out, or she will sell the house and we will agree to split the proceeds. We were told that she/we can agree to no longer be in the trust and I can’t see any of us really wanting the faff of being tied to each other across different countries as SM gets older. We get on fairly well but it would’ve been a nightmare if we didn’t get on or SM was elderly

This is why DH and I have told the DC that we are leaving everything to each other and to expect nothing unless they are very fucking nice to us afterwards.

The thought of living in the house with our step-children eyeing it up greedily sounds incredibly stressful!!!

I have only seen it work well once and it was a situation where everybody was already more than fine financially, so there was nobody who actually needed or even wanted the money quickly. I think in most situations adult children seem to be reliant on that money and want it ASAP for things like house deposits etc or to help DC buy houses and that creates this horrible situation where pressure is involved, in that situation (which is most) I have never seen it work.

It sounds like you've seen it happen often? What would you do instead?

I have a house and a DP I'd like to live with but don't, because I can't see a solution to this.

How much money is involved @Wraptight ? Is there some other assets your children can have instead in the short term.

I have in both my personal and work life sadly. It’s a choice you have to make and a risk you have to either take or not.

There isn’t a perfect solution. The best, if everyone agreed (which they often don’t), is to either combine and accept that when someone dies the house is sold and split however many ways (kids & DP) or the house is passed to DP to do whatever they want with, stay or sell, split the proceeds or not. There isn’t an ideal outcome really.

House is probably £500k.

As it stand there is about the same amount in cash and investments, although I hope to live long enough to spend some of it, and may give them something for house deposits while I'm alive.

DC will do very well, but it's (the house) a lot of money to have in limbo. Also a lot to hand over to DP, which isn't really my intention, but I wouldn't want him to have to leave his home (assuming we've lived together for a long period of time) and I also wouldn't want to cause friction between him and DC.

I think it tends to work best where the deceased and surviving partner were in a long-term, well-established relationship, may have raised children together etc, and so it seems absolutely natural to everyone that the partner should continue to live in their home. Resentment arises more when the partner is fairly new on the scene.

Have you discussed the options with your DP and DC?

Could you leave your DP enough money to buy the children out?

Its an ongoing nightmare for us
I own my Mums home which is still full of her stuff 3 years after her death and I am not sure of its condition etc
In the meantime her partner is living in a house completely unsuitable for his needs that he is struggling to afford but his daughter (who has POA) won't do anything as she does not want him to spend any of her inheritance
I don't like him and for the last 12 months of her life my Mum didn't really either, she also said that he probably wouldn't be able to cope on his own there but she wsn't too worried as I would have POA for him if she died. After my Mums death his daughter somehow changed it, God knows how as I doubt he had capacity.
My advice would be to put a time limit on it

Happening and working in my family and even slightly more complicated in that the person who has the flat in lifetime trust only moved in on the death of the person who owned it.

Additionally one of the people due to inherit when flat does finally sell would benefit in a way that would be life changing so they should be motivated to sell the flat ASAP. It’s not a vast amount of money that would be available but it would be life changing for this person and enable them to get a mortgage and have housing security for the first time in almost 30 years.

However we are all motivated and supportive of the person living there, for as long as they may need to. It’s perfect for them.

getting the flat properly into trust was an expensive business though (around £5,000). Person doesn’t pay any rent - just the bills and the factoring which is quite expensive.

Person living there will probably pay for one home improvement that’s needed but has the funds to do so and I think should given they do not have to find somewhere in the region of £800-£1,000 in rent each month!

We’re saving the welfare state a fortune as this money would come from some sort of housing benefit (person in mid 80s)

A friend is in a mess because his DF moved into a partner's house, partner has now died and left it to her DCs, he has it in lifetime trust but he has dementia and needs money for care home fees, I don't know if he has other assets and don't know the exact ins and outs but friend is tearing her hair out trying to sort it and deal with step siblings she doesn't really know.

I am relatively early in a relationship (1 year) and currently we have no b plans to move b in together precisely because of muddying the inheritance issue as we both have adult DC.
A very difficult issue.

Imagine being in a relationship for 30 years and then the step parent gets kicked out of their home due to inheritance.

if the step parent is married then make sure the will is in place or the kids get nothing!!

I only know of two real life examples, both mixed fortunes! Firstly a friend's grandfather left the house to his son, with his second wife having a life time interest. Second wife outlived the grandfather by nearly 20 years. She couldn't afford the cost of repairs and general maintenance, so friend's dad was obliged to organise and pay for all that, or face the house falling into disrepair. As the second marriage took place later in life and the second wife was never a mother figure to him, it caused much resentment to be financially supporting two households.

Secondly, my aunt's neighbour was widowed whilst her three children were young. Two years later she married late husband's best friend and he moved in with the family. Everyone very happy for them. She died recently leaving a lifetime trust allowing second husband to live in the house. One of the children, now in her 40s, has decided she has no realistic prospect of ever affording to buy her own home and has moved in as well. Very awkward all round.

DH grandfather remarried in his 80’s. He died first, his new wife had two years (agreed beforehand and in the will etc) in which to find somewhere else to live and then the house to be sold and the proceeds passed to his adult DC. This was done with no problems, her family assisted.
She subsequently was diagnosed with Alzheimer’s and spent many years thereafter in a care home so the value of the house was preserved and passed on to the DC in good time.

MIL has this with her partner. It’s her house, paid off long before he appeared when they were both in their 60s. Literally she picked him up on his release from prison (you can’t make this stuff up 🤣). I expect it may save a lot of drama of us having to hoist him out onto the street, though he is a hoarder and house is packed to the rafters with crap so that wouldn’t be easy to do. Dh and I haven’t been allowed in the door in a decade.

Thankfully, partner’s health is poor (MIL still very well), so we are all, MIL included, counting his days and hoping he dies soon, so that MIL can have her lovely home back.