Is my dad or my dh? And am I for even asking?

[inabitofadilemma]

I'm in a bit of a dilemma.

Me and DH have been together for 14 years, two kids and one on the the way. We jointly own our house. Originally, we both put in savings of about 30,000 pounds as a down payment. We did well from selling and buying at the right time and renovating a run down house and took advantage of low interest rates and paid down the mortgage. My Dad gave us 40,000 pounds a few years ago to help with mortgage and renovations. Currently our house is worth about 400,000 and we have equity of 200,000.

My Dad is now wrapping up and selling his business so he can retire properly. He's done very very well out of the super high prime London prices because his business had some real estate there. As a result, he's offered to help us pay off the mortgage and upgrade our house because it'll be tight with the third child. Altogether he's offered to give us 350,000 pounds. This is, of course, a huge amount of money and will allow us to buy a bigger house mortgage free. I'm fully aware that this is very generous and we're incredibly lucky to be in this position.

However, he's stipulated a condition. Only my name on the house. He's willing to sign an agreement that DH can have 'his' share plus whatever it's appreciated in the event that we divorce (and if I die that it's in the name of the children as a trust) BUT the house MUST be in my name.

My Dad says that this is to protect me. He does actually really like DH, it's not like they've ever had any issues. They get on really well. But he says that things can change. His biggest fear is that we divorce (or I die), DH gets remarried and half of the money he gave to me ends up with another woman and her children.

DH is incredibly insulted by this especially because he always got on with my Dad. He says he will feel uncomfortable living in a home that's not his and he's very upset. We've never thought on these terms, always had a joint account and apart from the money my Dad gave us a few years ago, it's always been kind of even. DH works less than me and earns less but he's with the kids more so neither of us think of our money other than as joint money. We had a joint account before we even got married.

DH is kind of angry with me for not fighting his corner more. But I feel bad fighting with my Dad when he's about to help us out so much, I feel ungrateful doing so like some kind of spoilt brat. I totally get where DH is coming from but I also understand my Dad's reasoning. It's just how he is (he's lived with his partner for 20 years and in his will, he's very very clear about what she's entitled to and what she's not - and it's not much - in fact, I had to tell him to change it to leave her more!). My Dad is also helping my brother out in a similar way with a similar condition but they don't seem bothered by it.

So who is being unreasonable here? My Dad who is insisting that only my name is on the house? Or DH who feels hurt and insulted and thinks i should be fighting his corner more?

We could, of course, turn down my Dad's offer. We're also happy as we are, can make mortgage repayments and pay our bills just fine and carry on in our house, we'd just be a bit cramped. So it's not like we NEED this to just survive. But then i think that might be unfair to the DC because this is really THEIR money at the end of the day. And it's very hard to turn down the tempatation of a bigger house and being mortgage free.

Given that there are other ways of protecting your dad's investment your dad is BU.

To leave your DH's name off the deeds to the new house negates the financial input he has made thus far in your current house. He has paid towards that, the asset and equity isn't currently just yours.

As that asset and equity will also be needed for the new house a far more sensible option would be to have a legal agreement drawn up stating that your dad's contribution is protected for you and the kids only. In the event of a split that would still put you in a better situation than DH for rehousing costs.

In your DH's shoes I would not sign over my share in something is worked hard to contribute to. Also if you get hit by a bus tomorrow how will he house the kids?

I think it's for the ones who are not married that it's crucial they get their names on the deeds. I think MN is even-handed - people would say the same to men or women who were not married.

This is all kind of hypothetical anyway as the OP is married. They need to do two things imo. Firstly, get legal advice on what are the implications of not being on the deeds or of being a tenant in common with a certain share. There may be no implications whatsoever as the marriage would render the split 50:50 anyway. Secondly, work out how much of a deal breaker the principle of it is with her DH.

It should be the DF going to the solicitor. Otherwise, there's a chance of the OP being given advice that runs contrary to the interests of her DH.

Been thinking some more about this. I'll put a disclaimer now that all the below is to the best of my knowledge!

The only way that that you an agreement that DH can have 'his' share plus whatever it's appreciated in the event that we divorce (and if I die that it's in the name of the children as a trust) is to hold the house as tennants in common. This means your deeds will state what % each party owns -but both names will be one the deeds. There is no other legal document you can sign to demonstrate this.

If you were to divorce then, as all assets acquired after marriage are joint, the property will be considered joint also, regardless of what it on the deeds. I would think your father knows this and I'm not sure this is his concern.

I suspect what your father is concerned about is you dying and then his hard earned money potentially going (partly) towards a future family to which he has no biological links. Lets presume the deeds state 75% yours and 25% DH. For the purposes of the scenario lets presume you die within a year (sorry...)Your 75% would pass to your children and because only a spouse does not pay inheritance tax, they would be required to pay 40% on anything over £325K (each). As they are children with no means of paying this (presumably...) your DH as their parent would potentially have to sell the house in order for your children to be able to meet the tax requirements placed on them.

If the thresholds meant this wasn't an issue, then once they came of age the house would have to be sold in order for them to actually have any cash. I'm not sure if your DH could refuse to sell??

It could be a great big mess couldn't it....I would suggest you need legal advice. I understand where your father is coming from but as a married couple you come as a unit. Lets say the worst did happen, you died and your DH meets another parter (which I would hope mine would - I wouldn't want him single for potentially 50 years). Lets presume that partner is not a ridiculous fairytale wicked stepmother. Lets presume she raises your children as a second mum, not replacing you but being there for them. Maybe her own career and earning potential suffer as a result. The sacrifices that would entail are immense. I would expect my DH (and my parents would feel the same) to have the common sense to protect the best wishes of all involved 10, 20 or 30 years down the line, when at the moment we can only guess what may or may not happen.

I would agree with a previous poster that if your father desperately wants the money to stay in his biological family, he has to give the money (whether in the form of cash or property) to your children (bypassing you), with strict instructions to blow it all before they themselves get married and the cycle starts again....

Absolutely you should get legal advice, and ask your DF to do the same.

I'd also ask for DF how he'd advise you if it was your DH who had been made that offer by someone in his family (ie the house on DH's name, not yours) - would your DF advise you to agree?

It doesn't all begin again if it gets put in trust now! Any sizeable gift should be done this way. It protects the money from the children's future spouses too. The trust owns the money so it never be OP's so her DH can't take half if they split. Why also would he attempt to break a trust that is also for the benefit of his children.

sorry but inheritance tax is on the estate regardless of who the beneficiaries are there is only one lot of inheritance tax and who pays it is immaterial people doing this normally plan for the inheritance tax too

though the first partner in a marriage allowance can be added to second partner so the total allowance is 650

so lets say there is a new house worth 600k of which OP owns 400k and DH 200k, if OP dies 325k is tax exempt so 75k needs tax paying on it, ie 30K but if any of this is in trust that would lower bill also there would almostly certainly be cash/ invrestments in such a large estate to settle tax bill this would be part of the planning and advice OP and her Dh need to plan for tax trusts gifts etc and where gifts are with benefits

But the DH has put a sizeable stake into the current property so it can only be put in part trust. How does he house their children if the OP dies??

There are at least 3 scenarios here:

1. They live happily together til a ripe old age and their children don't insist the remaining spouse moves from the house in order for them to get their majority share.
2. They divorce - in which case I completely agree that the father wants to protect his money for his biological family
3. One of them dies when their children are still dependents. I wonder if the DH will write in his will that his share is to pass direct to the children, potentially forcing her to sell up ?

You would want something different in each situation I would think?

Ah yes, of course inheritance tax is on the estate.

You deffo need legal advice. I'd even go as far to say that your DH should probably get separate advice from you as your interests are not the same in this situation.

I have a horror of dying young and leaving all my property to DH. He remarries a few years after my death and has more children with his second wife. He then dies leaving all his money to his DW. On her death she leaves all her money to her children and not to my children. Nothing wrong in any of this but it would mean my children would not inherit from me or their dad. It sounds like your Dad is trying to provide for a similar no fault scenario.

If that's the case, then to achieve this he should consider something other than having indirect control of ownership of the family home of his daughter and his son-in-law.

My view is that his intentions in themselves might not be unreasonable but his proposed way of enforcing them is.

OP, I have been in a similar position as your husband. FWIW, my husband point blank refused the money practically without telling me. I was not happy with the arrangement at all, so I greatly appreciated what he did for me. He stood by my side. To my in-laws credit, they changed their mind but the damage was done and we won't accept their money again whatever the circumstances (this is not my PIL btw, but other relatives of my husband). Maybe we would change our minds if we really, really needed the money but we don't so our choice was easy. It doesn't seem like you desperately need the money either, so I'd urge you to think carefully about your decision, just in case it puts a strain on your relationship later. I also agree that your husband should take independent legal advice.

For those worried about their husbands remarrying and their kids not inheriting, is it not possible to leave in trust for your children? I'm not a lawyer so can't advise here.

I understand both of them, your dad is being careful and ensuring the best future for his child. Your eh is seeing that as a lack of trust and upset by it. I would say that your dad is partly right, you never know how life and people change.

The.other option is your dad's name on mortgage too and a contract to stipulate where his part goes. Or that you and du only on the mortgage but a contract to.

You all need to take legal advice here - there are massive potential IHT issues for you if your DF dies during the seven years from date of gift. If you see a good solicitor together they will be able to work out something that satisfies you all - it won't be cheap but then good legal advice never is!

We had a similar situation in our family - I don't want to say too much as a nasty divorce is ongoing at the moment. Essentially, my Dad lent 200k to my sister towards a house. He is a lawyer and everything was documented correctly (I will inherit more when he eventually dies). She married and has a very successful career, her DH who was (I thought) lovely, turns out to be a layabout, alcoholic, compusive spender with a penchant for other women.

So they are divorcing after 12 years of marriage. My Dad may have looked a little bit odd at the time insisting on these documents, however, the trust can now demand the money back. The fact is that in all probability my sister will end up being able to use that money towards her next home, and as such, it is being considered by the mediator...the assets of the marriage will be split roughly 50/50 (no fault divorce) with the aim of providing a home for both of them.

Given the amount of money at stake here, go and see a lawyer and find a more palatable way of dealing with the issue. I see where your dad is coming from , but it was a bit of a crude way of attempting to deal with things.

I don't get what happens on your death. (I've read the thread but may have missed it.)

Is he also stating that you have to leave "his" share to your children? Because in which case the risk of them losing their home in their childhood (having lost their mother) goes zooming up - firstly inheritance tax liability as discussed and secondly what happens when the eldest reaches 18 and decides she wants to go to medical school and wants her money to pay her fees? Or 22, is getting married and wants to buy a house with her husband. How old will the others be then?

And if you are planning on leaving everything to him then he can still then leave every single penny to the wicked stepmother, the Cat's home or his cousin Susie!

FWIW after some discussion my parents suggested and we agreed that if I pre-decease them then my share (my parents are pretty comfortable) will be in trust with my dh and my db as trustees. Obviously this leaves a serious amount of capacity for dh to use the money inappropriately (and if I die after my parents then all the money will come to me and is then willed to him so even more capacity.)

However I am trusting him with something far more important than money - if I die I am trusting him to raise our children. I am trusting him to tell dd about periods and explain to ds why he must always wear a condom. I am trusting him to choose their schools and convince them not to get a motorbike at 17. If he does all that right but donates all the money from my parents to the Tory party (my parents are staunch labour supporters) then the world will not stop turning.

On the other hand if he neglects them or abuses them then I'm not sure that £500k will fix it.

I've been thinking about this all day and still think this is bonkers. And, if this was posted as the DH suggesting to take the DW off the deeds of the house, all Hell would break loose. And rightly so.

I think that you just need to hold the house as tenants in common with the split specified don't you? I think that will more than protect your dad's money. You can specify that dh has a life interest in the property if you predecease him so that he doesn't have to move out. A solicitor can draw up that agreement.

then your dh can stay on the deeds.

Mind you, I'd have my name off the deeds if my inlaws gave me £350k - it wouldn't affect the legal position as to what my share is (as we're married too) - I think the tenants in common route protects your dad's money more tbh.

Not sure about the IHT implications though - your dad and you may want to take legal advice about that.

Get your own legal advice. It all sounds very standard though - presumably your dh is a life tenant? If not he should be I think :notalawyer:

Well it sounds standard without hearing the details. But your own legal advice - I expect your fathers suggestion has come from a lawyer - as it's not unusual for donors to want to protect large sums of money from potential future relationship breakdowns.

I don't think your dad is BU.

My happily-married-for-40_years DPs have had papers drawn up that mean that whoever dies first, we ( the dcs) receive that parents share of house/inheritance. This reflects a situation with my DGF who remarried (a year before he died) and died without a will.

Also I have plenty of (albeit unmarried) friends who put in different deposits to their partners and have their money 'ring fenced' plus friends who have 'their' money ring fenced for their DCs from earlier marriage.

Life is complex these days and solicitors can advise on best ways of protecting yourself/your assets/your DCs.

I could well be completely wrong, but I don't think being tenants in common alters the position if you divorce. A judge has a broad margin of discretion and can juggle property rights to achieve a fair outcome, so why would a tenancy in common alter that? It could be that you can shield your property equity from the other in a divorce this way, but it would be surprising, as it would be so easy to manipulate by the financially stronger party.

Obviously it affects a will - if you're joint tenants, and one dies, then the house never forms part of the estate at all. It automatically belongs to the surviving party, and no will provisions count because it's never part of what the deceased can leave to anyone; the joint tenant owns it in full from the moment of death. Tenants in common, though, own specified shares, which form part of their estate and can be willed away from the other (subject to the law on providing for dependants via will). I just don't think the advice that a tenants in common arrangement would shield the money from a divorce settlement is right - death, yes but not divorce. But again, I could be totally wrong.

I suppose it all comes down to the fact that the OP needs good legal advice.

"there are massive potential IHT issues for you if your DF dies during the seven years from date of gift. ."

Agreed.

I also thought that there were limits on the amount of money you could "give away"

I think there are limits on what you can be given, without paying tax. The OP may have to pay tax on this income.