Rented house and inheritance (Is GF BU?)

[OatAndRaisinCookie]

This is about my grandfather. And he’s been asking if we think this is fair. GF is 85 if it helps.

GF owns his own home, mortgage free. Worth around £180k (3 beds with garage, decent sized garden and options to extend). Currently it’s rented out to a family and the money after money to the management company is used to pay for my GFs sheltered accommodation. He’s compus mentis, but has mobility issues so likes the security of the SA.

Technically on his death the house will be sold with proceeds split between his daughters. His worry is the family living in his house. They’ve been living there around 5 years now and have 2 children both under 10. The couple are good tenants, pay the rent and keep the house in order. Their children attend the local primary school. They have often stated to the management company that this is their home and they want to stay in it long term.

GF wants to put a clause in his will so that the family can stay living there until the youngest child leaves home with the proceeds of the rent being put into a savings account to be given to his great grandchild when the house sells. He knows they will never be able to buy.

But he doesn’t know whether this is fair? And also whether the family might be a bit offended that he made provisions for him in his will when he’s never met them. He knows having seen all of his children struggling with rented places when their children were young that having a secure home for your children is very important.

Is HIBU? Or not?

I would say that the property will need to be maintained so with that comes cost, as with all rentals you have to factor for the unexpected and sometimes it can be costly.

Would they want some of the grief that comes with having a rental?
Maybe give the tenants a chance to buy the property off you at a slightly reduced rate.

What pp have said and you don't seem to be taking on board is that your 'grandfather' is saddling his daughters with a house that they will need to manage and maintain for potentially the rest of their lives and it's their great-grandchild(ren) that will benefit. You say that currently there is only one great-grandchild, so that means that one daughter's family wouldn't even benefit at this point (unless more children are born).

I don't understand why your grandfather is prioritising the 'needs' of a family he's never met and going off the word of the management company that 'the family now feel this is their forever home'. You seem to be focused on the fact that there are 'no other homes to rent in the area' and the concerns about if the tenants children go to school locally or not, but you don't seem at all concerned about the implications this will all have on your own family.

It sounds as if there is something more going on here.

Your GF's daughter's have to wait for 10+ years potentially to get their inheritance.

Sounds sweet until you realise he's disinherited all but one of his family.

How about an expression of wishes that offers the property to them first at an agreed discount £10k off market value, for instance. If they turn this down or have issues with a mortgage then it is sold to someone else. There could be a time limit applied for them to get organised.
That way he is offering a good deal but not at the cost of his family.
He could discuss this with them so they are aware and can start saving if they want it. However, it would need to be on a sold as seen basis and not subject to major overhaul prior to sale (the windows, doors, kitchen, bathroom need to be done, then we will buy etc.)

Is this great-grandchild your child, OP?

Oh bless him No tenant on the planet would expect to stay after the Landlord's death. Perhaps the tenants will be in a position to buy when he dies?

You're the tenant aren't you??

He's not done it yet and hadn't even thought about the practicalities that's why I asked on here. I am taking everything on board and will be suggesting it to him. I don't necessarily think it's a good idea.

I don't know who'd manage it, he'd need to decide or discuss with my mum and her sisters and decide between them. As I said he's just generally talking at the moment, he obviously hasn't thought of everything such as care home fees or if the daughters needed the money.

I will suggest he speaks to his solicitors about this as well.

Absolutely bonkers for the many many reasons already stated.

You're the tenant aren't you??

No definitely not

Do his daughters know? This really should be discussed with them. I feel pretty sorry for them, reading this. While it's a nice thought providing for the family that he's never met, it's likely to take a lot of setting up and managing.

Let me check that I’ve gotten this straight.

Current provisions stipulate that property will be sold and divided between his daughters. So by doing this, your GF is prepared to disinherit his own children for strangers he hasn’t met. And then leave money to one child (effectively completely disinheriting the sister who didn’t have a child?)

Wow.

I’m missing something here. Has your GF fallen out with his daughters?

Are you the grandchild set to inherit?

GF wants to put a clause in his will so that the family can stay living there until the youngest child leaves home
I think it would be safer to specify an age (i.e 16/18) so it's crystal clear to all parties.
Plus it gives the tenant a definite deadline to work with.

Might also be worth him specifying how the pot will eventually be shared among dc/gdc in X amount of years.
Also, who will manage the tenancy and maintenance?
Will they get a fee for doing this?

Don't you think it's a bonkers idea OP?

Actually having reread this it looks like the daughters will have to be both landlords and trustees - bloody nightmare (also depending on the jobs could cause them extra hassle there). Just tell him to forget it it’s really not fair on HIS family.

I would hate to be given the job of landlord for what potentially 20 years if they have another child? on a property I couldn't sell. His daughters are 50/60 now so couldn't 80 and in poor health and still be an unwilling landlord. I think if he wants to do this it would be kinder to leave the house to the family in his will as this would be less unkind to his daughters. Providing it hadn't been used on care fees obviously. Sorry but can"t help wondering if you are encouraging this as your son is set to benefit with the odd rental situation but you without you having any of the responsibility
of house maintenance. He may be super kind but it is a truly terrible idea. Asking his heirs if they would try and prioritise the family is entirely reasonable and completely different imho

There are 3 daughters. All 3 have children. Only one of the daughters have grandchildren.

Plan was on his death house would be sold and split 3 ways.

He wants to still do that but allow the people living in the house to stay there until the youngest child leaves home.

Yes daughters are aware as are all the grandchildren. He's not disinheriting anyone, just asking them to wait a few years,

But like I said he hadn't thought of all the practicalities so this thread has been useful to help him decide if he will do it or not.

Whilst it is in romantic terms a lovely idea, I think it's a silly one and your grandfather is being unreasonable to foist being a landlord on the people who are set to inherit the property.

What happens if he needs to go into a care home and the property has to be sold to pay the fees? The family would be given notice and have to leave.

They have often stated to the management company that this is their home and they want to stay in it long term.
Well it is and isn't their home and yes, they may want to stay in it long term but things happen and they may have to move out. It is their home but it belongs to someone else and they are renting. They could be given notice to leave at any time irrespective of how often they tell the management company that its their home. That's a fact of life when renting.

I think the whole thing is too risky. He shouldn't put the clause in his will. He sounds like a very nice man and very concerned for them BUT he has no obligation to provide for them to make sure they can go on living there. What about his own family? One of the daughters is going to be burdened with being a landlord whether she likes it or not.
The property should be left to the daughters equally and when he dies they can decide whether they want to continue renting out the house and split the rental income or sell the property and split the proceeds.

Wouldn't a Trust need to be set up to administer the let property after his death?
If so the Trustee would have to be appointed before death, and said Trustee would be entitled to charge for their services.

Sounds like it could be messy and potentially expensive. It is a very kind thought by your GF, but it has the potential to be really messy for his beneficiaries.

As far as I know none of his daughters desperately need money but of course their financial situations could change. They're all in their late 50s - early 60s.

So basically even if the "cut off" is the youngest being 18, they'll be in their seventies looking after a house they'll never see a penny from? Even if there is a management company that's still a lot of work and headspace, and that's before you even think about who's responsibility it would be to pay for any major works. If one of the sisters died who would inherit their obligations re. the house? I'm sorry, but I'd be telling the executor to do one, especially if I was the sister who had no children/grandchildren who would benefit.

Also what's to stop charming young family from just stopping paying the rent? If they think they can't be booted out until DC is 18 they might decide to take the hand. Unless any agreement is watertight and conditional on them continuing to pay you might get into difficulties.

It's a very kind thought, but I think he's got caught up in imagining himself as a generous benefactor in a Dickens novel rather than being practical. He might have to sell the house to pay for care home fees anyway, so I wouldn't raise people's hopes and let them think they have a secure tenancy for the next 10 or whatever years.

Agree with others it’s a bit bonkers for a few reasons and I personally wouldn’t encourage it as it may block home ownership for your own family Members as the funds aren’t available.

But one other thing to consider alongside when is the youngest actually going to leave, repair bills exceeding the rent “profit” etc is yoy rent level increases.
The rent can’t remain static for a decade plus is it being protected or can it move with the market. What if this prices the family out?

Why is he putting strangers above his own family?

He is basically making you and your family responsible for this family after his death.

So many costs will be incurred around this - lawyers, etc. - that you lot will have to come up with.

Too many pitfalls to the scenario he has envisaged. Laws change all the time too. Too many unknowns in the future.