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 AIBU to suggest that an equal spilt is no longer applicable since only DH and his sister have been paying the mortgage?

If it's a mortgage of 200k and your dh is paying 1100 a month is he paying all the mortgage? Or has there been equity release / remortgage? 2200 a month sounds excessive for a 200k mortgage

There is no inheritance here.
If the Property is sold:
The two legal owners are considered to have had half the proceeds each, regardless of where the money actually goes.
Each will be liable for CGT on that amount
If they choose to split the gross (actual) sales proceeds in five before CGT, they will lose out massively as they will still have to pay CGT on the whole amount, which may come to more than their fifth share.
If /when they make gifts to the siblings from the net (after tax) sales proceeds, the siblings will each in turn have to pay CGT on the amount they are gifted.

1100 a month for half of a 200000 mortgage? I don't understand. Your DH is paying way more than double what he needs to. Why?

£1100 per month?
Your dh is a mug and a doormat to boot!

Serve the non-paying siblings with eviction notices - or they can find a way to pay rent which will pay the mortgage.

If sold then yes, it should be split between all the siblings as that is what his dad - who paid the mortgage all this time - wanted.
Your dh has no moral right to more just because he couldn't be arsed taking his name off it all this time.

He needs to tell the siblings he's selling whether they like it or not and take it to court to force a sale/eviction of freeloaders if his sister doesn't agree.

Each will be liable for CGT on that amount

The sister won't as it's her home.

I guess there's always a chance the DP could claim the brother who was living there was a dependent and get some relief on the CGT too that way, of course that's a risky route.

There is no CGT on gifts - there is a potential risk of inheritance tax later if the giver dies.

I'm sorry but something really doesn't add up here. That's a rate of 14% interest. Do you actually have the mortgage statements?

On a more average rate of 4% over the past 17 years there would now be around 85000 left (as you thought earlier) and the payment would indeed be just short of 1100 a month.

He is paying the whole mortgage!

He is paying the whole mortgage!

So stop, and let the place be repossessed. There's plenty of equity in it, even allowing for costs of sale.

OP could you say more about why he mortgage was taken out in this way?

I know of a situation which turned v messy where a young family member was added to the mortgage to help a fifty-something get a mortgage he could afford, but the bank would give him due to his age. She was added on, did nothing other than sign the paperwork, and was due to be removed once the equity got to a certain level except the homeowner had a stroke, the house went into negative equity and he literally left the country and moved to Spain and left her to deal with everything. Up to that point she hadn't paid a penny and more or less forgot about it.

I'm assuming that it was a similar situation - dad wants to buy a new home, maybe the result of divorce, is able to afford it but too old to get the mortgage term so adds two of the kids - possibly the two who are old enough- but doesn't expect them to pay anything and is in fact able to cover all the bills, mortgage etc. Two of the children live with him at various points, in the way parents sometimes let their adult children, and the paper ownership is forgotten about by everyone until he dies and it becomes clear nobody thought that through.

If they'd taken decent legal advice at the start then the CGT implications etc would have been thought through. The one advantage for your DH is he has the right to speak to the bank, see all the paperwork, etc etc. The figures do sound a bit off.

Morally though, if the father did to all intents and purposes own the house, and paid for it, then his wish that the proceeds of it be split equally should be honoured. But that should mean equally, the DH here shouldn't be worse off because if a CGT bill, and nor should the sister inadvertently profit even more just because she was allowed live there. The dad clearly meant it to be viewed - and used - as a family asset but the strain it's putting on your DH is unrealistic and it sounds like they all need the facts explained to them.

The sister is profiting as it looks like she's still living there rent and mortgage free which is why she doesn't want to sell. Sounds like DH has just taken over his late fathers direct debit!

Original post says sis & dH go halves

It does. But has op any proof of that because at the amounts she has since given either DH is paying it all or they are just about the only people in the last 17 years to pay 14% interest on a mortgage.

OP the only thing that becomes clearer as this thread progresses is how vital it is that you and your DH get specialist advice.

Firstly to protect yourselves but also, I'd argue if there is to be a way through this mess with some degree of family accord, it's by having all the facts and figures laid out by an expert.

Being able to show the rest of the family what your DH is entitled to, plus what he's invested, liabilities such as moving/selling fees, stamp duty and CGT etc, the value of rent "owed" by non paying sibling etc

Get it all laid down in black and white by a professional.

In everyone's head they will think they are due a fifth of an £850k property and do a simple division.

You need someone qualified to point out all the things they will have forgotten about.

I understand paying for this above everything else might stick in your craw - but it's a wise investment.

Get that information then speak to the sister who co-owns the property.

If he gets flak about it being about money, then the answer is yes. No apologies - it is about money and your DH subsidising everyone else's expectations to his and your deficit.

Again - there's no point thinking about what an appropriate split is until you've spoken to her. If she doesn't want to share then I can't see how or why your DH should split his share with everyone else when he stands to gain less in real terms than her (and hasn't had the benefit of living in the property).

Once you've had that specialist advice, frankly any qualms your DH may have had to force a sale will likely vanish when the reality is laid out.

Good luck OP - it's a really shitty situation

Your dh needs to get hold of all mortgage and conveyancing paperwork and get legal and financial advice to see where he stands, and then play hardball with his sister. There is going to be falling out over this regardless, best to get it over and done with

THIS ^

I think too, that your DH needs to check where you and your DC's would stand if anything happened to him (heaven forbid) before all of this is sorted out.

Would everything go to the remaining SIL whose name is on the deeds (and therefore you and your DCs would not get a penny back of the mortgage money your DH has already paid), or does your DH's will reflect that is portion goes to you?

I'm sorry - I'm not trying to trow even more into the mix, but this gets more and more complex the more we look at it - makes Jarndyce vs Jarndyce look simple.

Everyone who currently lives there moves out or pays market rate rent. Hopefully rent pays the mortgage. When you decide to sell it gets shared equally minus the mortgage payments currently paid by your DH and his sister plus say 2% interest. If it’s not in a good enough state to rent then sell now, get it over with and stop freeloaders who are paying no rent but expecting a big payment. It’s not eorth your DH’s health to keep going as you are now.

Not quite understanding why your DH and his sister were put on the deeds to 'help your dad out'? Was it done as a technicality with him always expecting the house to be split 5 ways?

Am I the only one thinking the sister isn't paying her half? Can not make the figures add up at all and mortgages are pretty simple really

I agree with posters suggesting split his father’s third between the others. Legal him and his sister own 50:50 of the house but given the father legally owned a third before his death it makes sense to split this between the other siblings (technically that third should also be shared by your dh and his sister so it’s actually fairly generous).

Morally/ethically if fil has paid of a large chunk before his death and your dh and sil have only contributed a few thousand to the mortgage I would say recoup what’s been put in and then split the remaining amount between the siblings.

Wow, so the debt is only £85k on a £800k property?

How many yrs did FIL pay mortgage alone, & who paid the deposit?

I'd sell asap and split it between all 5 siblings. Money isn't worth a huge family fall out imo. Or even whoever has been paying the mortgage takes that out then splits it 5 ways.

I'd keep out of it if I were you though! Nit your circus and all that!

I don't know why people get so greedy in these situations! It's money they never had so how can they feel they've missed out?! I work in care and the amount of relatives I never see until the funeral never ceases to amaze me! It's honestly like they're waiting for them to die so they can have their money. One gentleman, so sweet, was a millionaire. Private pool, tennis courts, the lot. Family could never be bothered to visit but all showed up after he died. Little did they know he left it all to a Parkinson's charity and I loved him for that!

The answer to this is easy, house gets divided between husband and sister, half each. However morally it should be split between the five, minus the funds on the mortgage and any other costs.

Haven't RTFT but will try to clarify.

They are joint tenants. That means that, regardless of what DF may have intended and what the family want, the property passes automatically to DH and Sister. Whether he had a Will does not matter - the joint tenancy trumps a Will.

Only DH and Sister are liable for the mortgage. The other three have no liability as they are not owners. They have not inherited any share and are due nothing.

If the house is sold, the mortgage is paid and the money split equally between DH and Sister. If they want to give some money to the others they can, but they are not obliged to. The house belongs to DH and Sister.

When DF died, his estate would have been assessed for Inheritance Tax and tax would have been paid. If it was 2 years ago, his allowance was £325,000.00 basic. The fact that it is joint tenants does not affect whether there is Inheritance Tax payable - the tax man gets his money and that would only matter if it was co-owned with a spouse. He had a 1/3 that would be counted for IHT, even though it passed to DH and Sister.

If there was not enough in the estate to pay the tax, then there could be tax due on the sale (best to check with the solicitor who dealt with the probate). However, after this time it was probably sorted.

If DH wants the brother out, kick him out or make him pay some rent. He has no right to be there.

If DH wants to sell, he needs Sister to agree to it. Tell her to pay some rent on his half that she is living in and that may prompt her. If not, you can go to Court to ask for an order for sale, but best to try and be amicable.

Sister will be okay as it is her residence, but as it is a second home for DH, he will be liable for Capital Gains Tax when he sells. It is best to speak to an accountant over how much tax there will be.

It may be an idea for them to convert to tenants in common so DH can deal with his half as he wants.

If DH wants the brother out, kick him out or make him pay some rent. He has no right to be there

That depends a lot on the sister, who also owns the property, the DH certainly can't simply "kick him out" in any case. There would need to be reasonable notice, and given that they've been living there for many, many years without difficulty, what is reasonable is not going to be that short, it's still likely going to need a court order so hardly quick!

Oh and the house was not part of the fathers estate, they were joint tenants - just like it is not part of DP's estate if he dies tomorrow.

Agree that all solutions start with the property being sold.
It's ok for the sister to be paying £1k a month towards the mortgage - she lives there. But not for your dh.
Plus waiting for it to increase in value pushes up his cgt bill, while she won't have one.
The current situation is deeply unfair to your dh and untenable.

He needs to persuade his sister on this and if she won't budge, seek advice about forcing a sale. Hell, stopping paying and it being repossessed would work out better for him. (She and the other sibling would be evicted, the lender would force a sale and your dh and sis would get the net proceeds!)

Once sold and your dh's cgt bill (which could be about 50k , depends on his income, any other cut and whether he has ever lived there?) settled, he can gift what he feels to be a suitable amount to his siblings.

So say net proceeds less cgt bill less mortgage payments is c£230k. His sister gets say £300k net proceeds. Then a 5 way split means each sibling gets £106k so he gives He could gift the other 3 siblings £40k each and his sister gifts them £64k each (if she chooses to). And he could adjust the sibling who has been living there foc if he wants to.