AIBU to think there should not be equal split

[Thinker03]

Ok so DH dad passed away 2 years ago. He owned a flat which he purchased with my DH and his sister, DH never lived there but was quite young when he was put on the mortgage purely to help his dad out. The sister always has and still does live in the house. When the dad was alive he paid his mortgage ALONE. No help from the sister on the mortgage or one of the other now adult siblings who occupies a room rent free.

For background info there's 5 Adult siblings including my DH.

When his dad died as house was joint tenancy it passed straight to DH and his sister. Despite the fact that there is 5 Adult siblings all together because they all have their own lives and "are so broke" DH and his sister have been going half on the mortgage. The plan is to sell when market improves asap.

So as not to drip feed info. DH and I have 2 kids we want to have more but canr yet as we are too stretched for money and too stressed. We have struggled to pay our bills our mortgage plus half of mortgage on Dads old house which is now technically DH and his sister house. DH has never lived in house. Also for added info we won't be going on holiday this year as we can no longer afford it. DH has been doing overtime at work.

By the way the dad always spoke about wanting his kids to split the house if anything happened to him but no he didn't have a will and couldn't of really stipulated such anyway due to the way the house was set up a long time ago. (Joint tenancy)

Other than the sister DH is going halves on mortgage with there is also an adult brother living in the house unemployed and rent free. As he is "Just trying to get on feet"

There are also 2 other siblings who have kids of their own and like I said "So broke" and have never offered to help pay the mortgage in light of our situation.

Recently they have been talks of the house being sold and the fairest way to split the house. There's been mention of an equal spilt between them all. AIBU to suggest that an equal spilt is no longer applicable since only DH and his sister have been paying the mortgage?

your FIL expressed a clear desire for his estate to be divided equally between all five of his children.

HIS estate was a third of the house . . .

. . . and as co-owners, OPs husband and sister legally own it all now. between them.

ReflectentMonatomism I'm pretty sure OP said there definitely isn't a will, and that "making his wishes known" was a casual, verbal thing ... ?

What deposit did FIL pay when purchasing the property? That is part of his estate ( he could have had that written as a charge on the estate). However, I doubt he was that organised. As it stands legally it appears to belong to OPs DH and SIL. Solicitors need to act on behalf of their clients ( this is usually financial behalf as that is easier to demonstrate should anyone question their advice). Getting lawyered up will very likely lead to the solicitors working on encouraging their client (DH or SIL) to claim their full amount of the flat leading to family rifts. That is FIL's true legacy .

I don't think there is a will. What about inheritance tax on the estate? It sounds as if the sale of the house will bring in more than the threshold.
If there wasn't a will, who is acting as executor? I think there has to be a probate process even if there is no will if the estate is more than a certain value? FiL's name will have to be taken off the Land Registry records. Usually, the executor's name is added instead until the house is sold and money divided. I think fil's share of the proceeds counts as his estate, and the rules of intestacy would apply to how it is divided.

Op this situation is far too complicated. You do need legal advice with such a valuable property - and the rest of fil's estate. It's not just up to your dp and his sister, and she can't block the whole process for sentimental reasons.

Apart from anything else, you will need probate to access savings and bank accounts. Assets don't just automatically pass to descendants. There has to be a legal process.

What has the family been doing for the last 2 years? Is there more that you haven't told us regarding fil's estate?

The moral of this story is - MAKE A WILL!

A secondary moral would be - Don't try to be so clever pulling the wool over the eyes of the mortgages lenders that you end up shafting your family.

OP - I feel heartily sorry for you and your DH - this property is a poisoned chalice.

I'm sure there must be a way to force your SIL to sell whether she likes it or not. It's been 2 years since your FIL died - she has has time to come to terms with her grief and get her ducks in a row. Does she know how difficult it is for your DH to meet the payments each month?

If you haven't got the money to continue paying the mortgage, you haven't got the money - full stop! I really think would be worth your while to consult a solicitor about this - it's a real fiduciary mess. Whatever happens, there is going to be a lot of family discord - people will think they have been "robbed" even if you give them a full 1/5th of the sales price, because they will all want to keep it until the market improves (which might not be for 20 years).

Even if it is a really difficult to find the cash - go to a solicitor. Find out what you are legally able/ constrained to do. When you know that, you can decide for yourselves whether you feel morally bound to do more.

- You'll need them - this is going to be massively stressful and upsetting, and as I say, your husband is going to "lose" relatives because of bad feeling over this horrible situation.

Ok - based on your updates....

The estate is sizable and you can expect that all the siblings will be "counting" on their share.

As such unless it's an equal divide you need to anticipate that any other outcome will be challenged and understand what success any such challenge is likely to have.

Equally you should probably resign yourself to the fact that a solution where everyone is happy is highly unlikely (I say this because if you want to be hard hearted about it there is an argument that you might as well be hung for a sheep as a lamb).

The value of the property has fallen since your DH started paying half the mortgage.

Given the state of the economy wrt Brexit I think the notion that you are going to see a significant rise in value in less than 5 years is unlikely.

In the present situation all the siblings have something to gain with the exception of your DP.

Put simply, right now he's subsidising his sister and brother to live in a property they could not otherwise afford at the expense of his own family's lifestyle. That subsidy is unlikely to have any upside financially to the OP's family for the foreseeable future.

As for the other siblings, they have nothing to lose in playing a waiting game on house prices rising.

As per my first post your DH needs to see a solicitor ASAP.

He needs to understand a) if he can force a sale without his sisters consent b) if the house is sold, would the other siblings have a claim on the equity?

Having this information he needs to sit down with his sister and agree a plan.

He might want to agree to a 5 way split but if she doesn't are posters expecting the DH lets her have 50% and he spilts his share 4 ways?

This is a mess because there's no one in the driving seat here.

The OP and her DH need to focus on what's best for their family and that has to mean bring this issue to a resolution by selling the property and agreeing with the sister how to split the money - what split may be possible is hard to predict without any insight into his sisters mindset.

Yes, who has been dealing with everything over the last 2 years? Probate doesn't happen by magic, the bank accounts should be frozen etc. even if you keep the property there is inheritance tax to pay.

There may not be inheritance tax to pay as we are talking 1/3 of a potentially £800000 property.

Lets hope so, but you have an executor?

The only ones with anything ( substantial) to lose are the remaining siblings ( not OPs DH or SIL) as legally the property is theirs. Though there is also the risk of a default in mortgage payments affecting credit scores. The FIL may have paid quite a lot of equity into the flat in the first place ( along with 17years mortgage). That has all been moved to the OPs DH's and SIL's name.

Your dh will be liable for capital gains tax on 50% of the original purchase and sale price as he has not lived in the house. His sister will not be liable. There is some annual allowance that you can carry forward. You need specialist advice. Money saving expert house sale board will give you basic advice

Soortvif his dad owned a third he will be liable for capital gains tax on a third.

So if it is split 5 ways he may end up owing money.

What was the purchase price and what is it worth now?

There will not be inheritance tax to pay in respect of DF's 1/3 share of the property.

This is because it was owned as joint tenants.

There are two ways property can be jointly owned: as joint tenants or as tenants in common.

This is how I always explain it:
Joint tenancy:
think of the house as one big circle with (in this case) the 3 legal owners drawn inside it as stick men. One dies. Cross him out. Then there are 2 left. They automatically now own the property between them. Dead owner's share passes automatically to them, not under his Will or under Intestacy laws.

Tenancy in common:
Again, think of the property as a big circle. But this time, draw lines through it so that each stick man owner is standing in the part of it that is theirs. This doesn't have to be equal, but is assumed to be unless there is an agreement to the contrary. Stick man 1 dies. Cross him out. The part he was standing in does not go to stick men 2 and 3. It passes under his Will/Intestacy laws.

OP has told us this property was owned as joint tenants. So the point is that it has nothing to do with his Will or Intestacy laws. His 1/3 share simply passed automatically to DH and DS, the other two stick men standing in the circle.

So no inheritance tax, because it isn't an inheritance.

Whose account does the mortgage payment come out of, your DH's or his sister's?

Excellent points Hairy

OP - your DH really needs to get proper advice on this and sooner rather than later.

I get the impression that he (and yourself) really don't understand what you've signed up for and what your liabilities are.

Not sure if DH is liable for CGT on 50% of the gain. I agree he4's liable for CGT on his share, but is that 1/3 or 1/2? If he steps into DF's shoes, it was DF's principal private residence so DF's share is not liable to CGT.
But DH certainly needs advice on how to minimise his CGT liability.

Is your SIL even on the joint tenancy ( your original post was unclear as you said it was set up a while ago- but she only took on mortgage repayments 2 years ago). Capital Gains is an issue as PP have said for your DH. I fear potentially deep down ( due to the title of this thread and info about your SIL that this will not end well for the remaining siblings and relationships will be destroyed).

If her dh is on the deeds and mortgage but has never lived there then he is liable for capital gains.

£2200 a month is a hefty mortgage after 19 years , are you sure it isn’t interest only?

It all goes to the two who own it surely? As a joint tenancy it was nothing to do with the general inheritance

That mortgage amount could be about £350k.

It sounds like interest only to me! There might be a big shock coming when the "inheritance" here is a lot lot less than expected.

Could end with DH actually owing money for his CGT and receiving nothing if any proceeds are split 5 ways. And SIL refusing to share her half as she will be homeless on the sale of the house.

Could end in the other 3 getting nothing. FIL hasn't actually left any inheritance here

What was the original purchase price OP?

This seems unnecessarily complicated. Your DH and his DS are the legal owners. Nobody else is entitled to anything. Irrespective of who has paid what, they own it jointly and that’s how it should be split. Their best plan would be to sell up, pay off the mortgage and any liabilities, and split the proceeds 50/50.

I wouldn’t be promising any shares to the other siblings till all of this was settled and I knew exactly what was left. And I wouldn’t expect any gratitude. No matter how much he decides to give them, it won’t be enough.

If they want to share and honour their Father's wishes (although they don't actually have to do this) then the simplest way would be to sell the property, pay back the mortgage and deduct all selling costs which leaves the equity. Both your DH and contributing Sister then get re-imbursed the amount of money they have paid in mortgage payments plus interest to compensate them as the ones who stepped up when necessary. When those amounts have been deducted the balance should then be split equally between the 5 siblings which means that your DH & contributing Sister get their share of the monies left as well.

They don't actually have to split it as legally it is theirs and they did take the risk of non-payment but if they want to do so for the sake of family harmony then the above way is the fairest to everyone.

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