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?

wheneverythinggoestitsup

You're the tenant aren't you??

😮 Like an M Night Shyamalan plot twist.

Your grand father is just lovely and gets it more then the government do!!
It sounds incredibly messy and unadvisable but something that he’s clearly worried about.
It would be lovely if there was a work around idea.

His children are potentially approaching the age where they might need to go into a care home, or claim some sort of benefit. Is it possible that there could be an issue with them owning an asset of enough value that they would be turned down for benefits/care home funding but they also wouldn't be able to sell it to pay for their own care nor would they get any of the rent?

It all seems quite convoluted and potentially awkward.

He could consider adding a letter of wishes to be kept alongside his will. This is not legally binding, but would put a moral duty on his children to follow his wishes. In it he could state that he would like them to continue to rent the house to the current tenants until their youngest child is 18.

Anything more than that gets complicated and I think it would require a solicitor to draw up some sort of trust. Especially if the rent does not go to the owners of the house.

@OatAndRaisinCookie
You're the tenant aren't you??

No definitely not

Who is then? As you say in your OP that currently it's rented out to a family member... ??

Also this- 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
Why hasn't he met this great grandchild that he wants to inherit everything??

It's a lovely idea but as most people have said not practical. I'm a LL and renting/managing property is a headache.

My BIL and SIL had a similar situation. They owned two adjoining properties, lived in one and rented the other out to a single man on a very low wage. They came to see themselves as his patrons and delayed selling long after it was practical for them to live there. When it came to it he easily found a nice little flat he could afford and there was no drama.

wheneverythinggoestitsup I thought OP said it was rented to a family (not family member).

I'm not the tenant, it's currently rented to a family he's never met as the management company put the tenants in.

He's definitely met his great grandchild

I personally think while it's a lovely though, he shouldn't do it.

A right of first refusal to purchase the home upon his death, sure. that would be reasonable.

BUt to make his daughters wait for their inheritance when that could delay it for YEARS if the youngest doesn't 'move out' until his mid-20s. they're already in their 50s/early 60s ... they could die themselves before that happened!

I think if he wants to help the family he should, at best, stipulate that they can stay in the house up until the end of the school year their children are in if necessary so that don't have to consider changing schools mid-year unnecessarily or 90 days notice, whichever is longer for them to find a new place to live (if they can't afford to buy the house).

This is a really stupid idea, I understand your GF wanting to do the right thing but I can't understand why he is putting the needs of a family he's never met over the potential needs of his own blood!

Yes the family may see the house as 'their home' but in reality it isn't, and they can do what the rest of renters do when a situation like this arises and move out. This just sounds like its going to be decades and decades of involvement from his daughters who didn't ask for it. It sounds a little selfish to me, your GF need to be a 'shining white knight; to a bunch of strangers whilst actually getting his daughters to pick up the slack for him. Very strange.

So the three daughters are late 50's early 60's? They could easily be dead before they see a penny of any inheritance. That is why some posters are saying he is disinheriting his family for strangers.

The last thing pensioners will need is the hassle of dealing with this strange family and 'their' house for the next 20+ years, for probably no recompense.

Who would pay the lawyers bills, funeral bills etc (& inheritance tax if any is liable)? This could end up costing the daughters a lot of money, if the GF does not have a lot of cash savings or insurance to cover all these costs.

Given the thread title and references to "my mother" I'd guess the OP is the mother of the great-grandchild who'd benefit from the rent under this scenario.

To be fair she's also said that any future great grandchildren would be included in that scenario.

OP - another consideration. Your GF's children may not need the money now, but what if they do in 5/8 years? Poor health/an unexpected catastrophe?

Your GF is placing a bet on continuity of current circumstances if he proceeds on this basis and it's one where there will never be a winner apart from a family he's never met.

What happens if of 3 (?) of the sisters only 2 have grandchildren born before the tenants child is of age? Let's imagine one is born 2 weeks later? They are legally entitled to none of the rental.

Can you imagine the fallout as a family?

I can imagine so many different scenarios where this suggestion can cause conflict.

Will's need to be clear and fair unless you want to risk your descendants inheriting chaos, resentment and disharmony.

This plan has disaster written all over it, whatever the intention/motivation.

GF gets to look like a benefactor whilst disinheriting his dds.
DDs get a load of tedious shit to sort out plus the complications of owning a property you can’t do anything with (what if they need care home fees?)
Sole dggs inherits lump sum. Nice for him but sucks for the dds, the dgcs and any unborn dggcs.

Ahhhh ok- in that case- I don't even remotely get where he's coming from and would be very pissed off as one of his children.

If the legal practicalities can be overcome (property held in trust until youngest tenant child turns 18 with 3 daughters equally sharing net revenue stream from rental?) I don't think it's at all unfair. It is simply deferring their inheritance whilst giving them a bonus income stream between his death and then.

Get a solicitor in to talk to him.

It's a disaster. As lovely as this family might be once they feel they are.. Entitled... To something and they have no emotional connection to blood family.. It could end up being life long battle ti get it from them.

The best thing is to leave it to his dc and simply leave them some cash.

What I suggest is that he now (or his estate after his death) sell the house to a buy-to-let landlord with an appropriate tenancy agreement already in place. (So the new landlord also gets the tenants.)

The custom tenancy would give the tenants the rights he wants.

Bloody hell sone mean spirited replies. GF sounds like an actual morally aware landlord.

I'm surprised his kids don't want to respect his wishes. People become really nasty about inheritance. He could live for another 20 years for all they know so they shouldn't be relying on his inheritance to fund their lifestyles.

Sounds like a nightmare in waiting. He should leave the house to his own family and give the tenants a cash sum in his will if he wants.

He obviously has a lovely spirit.

But
What if his care needs increase and he has to spend years in a nursing home - typically about £1k a week. He could easily live another 10 or 12 years with high care costs.
What if some misfortune strikes one of his Dds and they desperately need the money that is tied up in the house being rented to another family for 18 years?
The contract would have to be ridiculously complicated, allowing for things like the couple in the house splitting up and a new partner moving in, (with their children??), management of the house, stewardship, trustees or his Dds needing to be landlords - or paying for a trust to be landlord - a lot of ££ in lawyering.
Does he have other assets that would take his estate over the Inheritance Tax Threshold?

Lovely idea but unless his Dds are extremely wealthy and self sufficient, very hard on them.

"What I suggest is that he now (or his estate after his death) sell the house to a buy-to-let landlord with an appropriate tenancy agreement already in place. (So the new landlord also gets the tenants.)"

This is a good idea - except he shouldn't sell now because the yield is paying for his care, and if he sells now he will simply diminish his capital - at an increasing rate if his care needs increase.

But his estate / descendants selling to a buy to let landlord with tenants in place - good idea.

I agree with what most posters have said. The tenants are surely nice people, and it is generous of the Grandfather to want to help them. But they are, ultimately, just tenants, and GF has a family.
He would be wise to insert in his will a provision to allow his tenants a much longer (but time-limited) tenancy than the law allows, following his death. Eighteen months or something?Anything more complicated may lead to unintended consequences.
He should tell them that "up front", and expect the embarrassing but unavoidable question "How long do you expect to Live?"
Good luck to him and his tenants.

In order to do this your grandfather would need to set up a trust under his will to act as owner of the property, even if the day to day administration was left in the hands of the agency and this would mean more fees to pay. Probably cheaper to give the tenants a years free rental so they have a deposit for a house of their own. Or would he consider refunding some rental s a deposit and selling them the property. The estate would get the market price of the house less the deposit from the mortgagee.
Or there could be provision in his will leaving the house in equal shares to his daughters with the wish that his daughters continue to rent the property to the current tenants on such terms as the daughters shall agree. That way GF ( if he believes his daughters agree with his wishes) get to decide if and when the tenancy will end and depending on the renters’ circumstances.

I agree with walking dead , the tenants could be given a year’s notice when he dies. That way they are not forced out in a panic but have plenty of time to find a new home for themselves that suits their needs.