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AIBU?

Share your dilemmas and get honest opinions from other Mumsnetters.

Original poster

to ask how you plan to protect your children's inheritance

242 replies

OrangeMabel · 25/04/2013 14:19

DD only aged 10 but my main goal is to make sure she has a home for life; with us whilst she's young then a house for herself when she's an adult. So I eventually want to make provision to buy her a house that can't be touched to pay our care home fees, should we need them.

Anyone else got similar goals for their kids and, if so, how to you plan to achieve them?

OP posts:
PuggyMum · 26/04/2013 06:37

Ghosts, I'm the youngest of four and there was no inheritance from my dad and there won't be from my mum.

But what they did I still were values and a work ethic (need to haul bum out of bed!) that many don't.

This thread boils down to should you help your kids financially if you can so if driving lessons are within your means and helps them up the ladder a bit then thats your decision.

Mine couldn't afford that but what they did give me were skills to help me get ahead.

I'll be doing what I can for my kids in the future.

Original poster
OrangeMabel · 26/04/2013 07:16

Iteotwawki - thanks, that's the type of thing I'm interested in as I wanted to guard against someone else getting the benefit should DD divorce or become a crack addict!

And to those suggesting I'm trying to control my DD's adult life; things such as putting assets into trust are what the rich have done for centuries - you do know that the wealthy don't pay inheritance, don't you - that's for us plebs.

And of course I value education and am teaching her the ethics and morals I believe will make her a happy adult who contributes to society. I just want to use some of my money to buy her the security and safety net of a house.

OP posts:
firesidechat · 26/04/2013 07:16

i thought it was an interesting thread that is why i opened it and because i am nosey and wanted to know what other people would answer , weird how some are being all pc on here saying its wrong to put your house in your kids name or sell it and give them money etc , i dont see a problem with giving my kids my house that i paid for with my money that i earned and payed tax on ,i think its wrong that the tax we pay all our life is wasted , hidden,given abroad ,if it wasnt wasted there would be enough to pay for everyone who needs care in there old age

I don't know if this has been mentioned on this thread before, although I assume it has, but this could be a really bad idea.

What happens if you gift your house to your children, continue to live in it yourselves and one of them gets divorced? Your house could form put of the marital assets and the house may need to be sold. What happens if your child dies before you do? Also there have been cases where this has been done and the children have forced the parents out of the house. Also the government may still consider that you own the house and not your children and wouldn't pay for your care needs ( Deprivation of Assets). Far too much to go wrong just to protect a few bricks and mortar.

Also everyone talks about the tax that they have paid, as if this is some kind of justification, but who do you think will be paying for your care fees? Well party it's me and all the other tax payers on hereor your own children, just so they can have an inheritance. Tax isn't a savings account that you're paying into. it's paying for the care needs of the current generation of elderly.

DIYapprentice · 26/04/2013 07:19

Well if I can, I would like to purchase a small London flat for my DSs. If they chose a London profession the starting salary/training can be really low and as a result there are many careers only those well off can really afford to take a gamble on. A small London flat (probably in a family trust arrangement as described above) would give them the ability to live in London, have lower commute costs, and have their income support them in food and bills. If I manage to save up a deposit for it over the next five years the rent will hopefully pay enough of it off for them.

I have no intention of that being at the cost of having my own house though, and by the sounds of it neither does the op.

Care homes have a certain amount of self funded places and state funded places. The payment for state funded places is very low, and the self funded places very often subsidise them. As a result if you are self funding in a care home and your ability to self fund stops, the state will take over your care but that does NOT mean you get to stay in that care home just because they have some state funded places. If they are at their maximum number of state funded places (and the nice ones have long waiting lists for those places so are likely to be) you will be moved elsewhere.

So think and plan carefully people!

imour · 26/04/2013 07:27

thanks for the info Iteotwawki will be looking into that :)

Glittertwins · 26/04/2013 07:37

CloudsandTrees, we have a similar arrangement and it was set up when we wrote our wills, its not overly complicated.
I don't see anything wrong with giving our children the best possible advantage in life that we can give them. We don't spoil them, we are careful with our money and plan things financially. We will give them a good education in financial planning so that they can make their own decisions but if we don't have to saddle them with debt and still live comfortably then we will.

DontmindifIdo · 26/04/2013 07:43

Orange - the point I was making earlier is highlighted through that, the rich have held property and assets in trust for generations, and therefore have been limited in their options for generations - stuck with houses that don't meet their needs etc.

It's one thing if you can afford a full house for her, but if you are only going to buy what you think she should want/need, not what she does want/need, being a trustee so you get to decide if she sells it and buys something else, if she borrows against the value to invest in a business or many other changes she might want to make - you will be giving a gift with strings. Personally, I'd treat it as something to rent out to subsidise my income, refuse to live in it and get my own house, just because I wouldn't want my parents to have any say in my finances. I also think it would put a strain on any marriage if your PIL have more say in your finances than you do. Worrying about gold diggers is understandable, but it also means that you are setting up a very strained relationship with your future son/daughter-in-law and potentially putting problems in their marriage.

(ignore if your home is actually something like a family farm that's been in the family generations)

CloudsAndTrees · 26/04/2013 07:48

Iteotwawki and Glitter, thank you. I really need to start getting my head around these things, it's good to know it's not too complicated!

Original poster
OrangeMabel · 26/04/2013 08:06

Erm, firesidechat, have you read the thread?

OP posts:
firesidechat · 26/04/2013 08:14

I was replying to one particular post and not trying to address the whole subject. There have been lots of opinions and I was giving mine. Is that ok?

auntpetunia · 26/04/2013 08:15

We've set up our Deeds so that the kids are Tenants in Common so the house is owened by all 4 of us, and as long as nothing happens to us in next 6 years (the rules are 7, but we've had it a year ) then they can't be forced to sell it, if DH goes before me I get his share and vice versa and then when we go its split between the kids, but it's protected against care home fees as it's like having a surviving spouse.

LadyInDisguise · 26/04/2013 08:26

Orange

Hope you are still reading.

Just go to see a good estate planner, NOT a will writer of some sort.
They will be able to guide you re how to protect that specific asset. they will also be able to guide your guardian etc... which is something you need to plan for too (eg if you die before she is 18yo, no one can sell the house 'for her' etc...).

imo too few people do take care of their estate, even if it's just the house they live in.

Doubtitsomehow · 26/04/2013 08:47

Lady in disguise - what is an estate planner? Hw do you find one?
Is it a solicitor, or something else?
Probably need to go down a similar route, grateful to the op for starting the discussion and others for providing info.

SuedeEffectPochette · 26/04/2013 10:12

Iteotwawki - if the beneficiary of a trust needs a care home, whether or not the trustees approve it, the local authority would not pay the fees if there was money available (but withheld) so i am not sure that works.

SuedeEffectPochette · 26/04/2013 10:14

aunt petunia
To some extent the house of tenants in common is protected against SALE but not against the local authority taking a charge on the share of the person who needs care and getting the money when the property is eventually sold.

Glittertwins · 26/04/2013 10:41

It depends on how the trust is set up. Speak to a solicitor.

Iteotwawki · 26/04/2013 10:49

Suede - the point is, the trust owns all the assets. So if I needed a care home but to finance it would involve selling the family home and making my children homeless, that's not in the majority best interests. So the trust wouldn't fund it.

In terms of LA finance, we don't live in the UK so it may well be different here.

SuedeEffectPochette · 26/04/2013 10:55

Yes I guess it depends on the jurisdiction. There are lots of companies in the UK purporting to protect assets that fail to advise on the other consequences (usually tax!). A proper solicitor or accountant is best. Don't use these "asset protection" advisers or firms IMO they are just out to make some money out of people now and won't be around to sue when it becomes clear that what was promised doesn't work. A solicitor's office will always be better because they have to maintain an insurance policy. Probably accountants do too.

SuedeEffectPochette · 26/04/2013 11:30

I could put my house in a trust but then kids would pay CGT on it. As it is, living in it, I get the main residence exemption. So many tax considerations to consider with trusts. Proper advice is needed.

kyz1981 · 26/04/2013 11:43

Iteotwawki - Thank you- I had been very worried about what to do -My DS has complex and Special needs - at the moment we are spending the money we would be saving for education and stuff trying to help him reach his potential- I am very unsure for his future and would worry with leaving him nothing or just a trust fund that my DD could possibly end up as a full time carer- (she may not mind this but I would want to protect her). The family trust sounds ideal as it could be for both DCs and flexible for DS if he needs more care.

Saying that I am also retraining in a to a career that I should be able to work in easily and anywhere in the country as I know I will have to support my DS for most if not all of my life.

OhHullitsOnlyMeYoni · 26/04/2013 11:51

I am doing this OP. I rent my late mother's house currently and am in the process of building us a home. Idea being that I will sign one into her name (and not tell her - I want her to have it but don't want her to think her future is completely set!) and it will be a nice surprise when I pop my clogs. Having somewhere rent free to live takes massive pressure off life, and if she would rather sell it and live on a boat travelling or living like a hobo then that is fine with me too :)

OhHullitsOnlyMeYoni · 26/04/2013 11:57

rent OUT my late mother's house, I meant Blush

ssd · 26/04/2013 12:04

interesting thread

Kendodd · 02/05/2013 14:29

Any of you knowledgeable people like to comment on my plan?

I hoped to sell our house when the children leave home, buy a smaller house more fitting to the needs of a couple. Then lend (will proper legal agreements drawn up) the DCs the purchase price of a house (or let them use the money for other purposes such as setting up a business) for each of them. They make monthly 'mortgage' payments back to us. We don't charge them interest so they just pay back the amount they borrowed. Win-win they get to buy a house cheaply without interest, we get an income. The fatal hole in my plan is that the sale of our house will not produce enough money to then buy four smaller properties, we do have three BTL properties so we could always sell them though. Oh, and the DCs might not want to/be ready to buy a house when it suits us.

I do plan to be ruthless though, if they don't make the payments, I will confiscate their assets. I don't believe it's in their best interests to just give them things, that's why I want them to stand on their own two feet. I do want to help them though, hence the free loan.

MN experts, would this work?

PuggyMum · 02/05/2013 15:46

Nothing wrong with that in theory. Its basically lending your kids money.

How you would enforce if they do not repay is the snag here. If they bought a house, you would need to take a charge over the property to have any legal power. Then if they don't repay you can enforce the charge but if you did that you're relationship would no doubt suffer!

You would need proper legal advice for this one. FIL lent us quite a sum and we repaid as planned. He lent BIL a small amount and is struggling to get the cash back. FIL doesn't want to look like a tight wad as BIL has a young family.... Its tricky.

I've seen families ripped apart by money.

Personally, if you can't afford to gift the money outright, I wouldn't do it.

Anything that gives you security will cost money in terms of legal fees an legal charges etc.... With the potential to cost a lot more in heartache.