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?

Absolutely bonkers with huge potential to go wrong. I suspect his solicitor would STRONGLY advise him not to do this if he goes to make his will.

It may help his tenants (or they may simply move anyway) but it has the potential to really mess things up for his own family.

I am not sure you can dictate what happens to your worldly goods from the grave. You can leave it to people who inherit when you die but beyond that I do not think you can dictate what they do with the benefits after your death unless put into a trust.

Well, he could leave them an 'interest' in his will, but that is usually a lifetime interest but could presumably be limited some other way (he can just say to what year - if the child is 8 now, then 2029, doesn't matter when he dies) and the legal ownership still goes to the daughters.

Or, as you say, it could be put in a trust but that would actually be worse and costly.

Some basic stuff about it here:

wards.uk.com/online-services/legal-guides/life-interests-rights-occupation/

"Right of Occupation – a right to live in a property for a specified time, or for the beneficiary’s lifetime, but usually subject to conditions."

He definitely needs legal advice though, the last thing he would want is for the family living there to have some claim on the house later.

It is so kind of him... but the best thing would be to leave a bit to the family really.And that will help them onward. I would do something like that if I could. He just sounds a very very good person.

I'm a romantic, so I think this is a wonderful idea. NO one in the family is entitled to the property and it's lovely you DGF is being so philanthropic.
As you said, he's compos mentis and is fully aware of his choice. Let it be.

He wants a family to have a home, this day in age it's difficult for anyone to get on the property ladder.

Nothing like death and the hint of inheritance/property to bring the greed out in some people. People that are not entitled to it too.

That's kind but he would need to put an age limit on it. Also I think it's silly, they could want to move, they wouldn't honk about him in their future living arrangements. They're tenants, not family.
Also his family could just choose to increase the rent until they leave. If he said that they couldn't put the rent up then they may end up out of pocket. I wouldn't want to have landlordhood forced upon me..

What a lovely thought. That's warmed my cockles a bit.

A lovely idea but potentially a disaster waiting to happen.

What if tenants stop paying rent would be my main concern.

Also you aunts and mum won't get much benefit if they have to wait 15+ years or more they had another child.

what if you or one of his daughter needed money suddenly so owud have sold the house to fund it.now what?

Lovely idea but what if the tennants stopped paying rent? Or the couple split up? Or one if the children was trashing the house.

So much potential to go horrible wrong. He would be better just saying they get 3 months rent free to save a deposit.

This is a terrible, terrible, terrible idea OP.

Honestly, there's so much that can and will go wrong with this. It's a highly unusual thing to try and secure legally as part of a will/inheritance, and even if it could be done in a better way than the OP has proposed (e.g. as PP say, stipulate a proper time limit, make it a lifetime interest or something)... there's a LOT that will go wrong with this.

What if his daughters need to sell because they're in hardship themselves?

What if the tenants become problematic e.g. just have more children to extend the occupancy?

What if the house needs significant repairs (e.g. tree goes over and roof is destroyed) which can't be covered by the rental pot that's been built up?

What if his daughters don't want to become landlords, and the obligations it entails (e.g. around timeliness of repairs, safety checks and certificates, managing rents, declaring income for tax reasons)?

Those are just the ones off the top of my head - there are SO many things wrong with this proposal, it's a nightmare waiting to happen.

Your GF can offer an unusual level of care towards his tenants which won't put his estate in a state of flux once he dies - such as giving them extra time limits on notice of eviction as part of the estate (so if he dies, they have 6 months notice or something)... do NOT do what is proposed in the OP though!

I think it is a lovely kind idea. And if his children don't desperately need the money and are OK with it and the legal terms can be sorted properly, then why not do this. The world would be a much better place if more people were so thoughtful. If I were a an adult child of his and already well set up and not needing the money (and it would partly depend on how much the share would be relative to my current situation) I would be amenable to it.

I think the key here though is the length of time that the sale would be delayed. 3-5 years wait is one thing, 10 -12 is quite another. Things like health can change so quickly so I'd want to know my own children had enough security including for if their own health takes a turn for the worse, or redundancy or divorce etc.

It can be done if all parties are willing but, perhaps a simpler solution would be to arrange a 3 year tenancy so the tenants can plan and feel at home while the kids are little but will know that the sale may happen sometime after that.

There can be a balance between being ruthless and being foolishly kind.

It really is a lovely idea, its nice to see that he is thinking about the further implications of his death outside his immediate family.

I haven't the slightest idea how it is possible but I know it is. My Aunt and Uncle's landlord died and his willed dictated that the house is inherited by his daughter and my Aunt and Uncle can stay for as long as they wish.

GF sounds like an actual morally aware landlord

However nice this would be for the tenants, I'd suggest that potentially throwing his own family under the bus is hardly "morally aware" of the GF

On every single MN thread where problems arise between LL and tenant, and no matter how reasonable the LL has been, the popular advice is that "the LLs are running a business - if they can't hack it, sod 'em"

Should this GF's idea go wrong these tenants will probably be told the same, and with the rent ringfenced for the GGD the LLs would be up the proverbial creek without a paddle

Maybe not such a "morally aware" idea after all?

I'd also add that although the current tenants want this to be their long term home, should their situation change they'd be off with minimum notice. It is thoughtful but seems fraught with issues.

Exactly puzzled
And the fact that the family have often stated to the management company that this is there home shows that they wouldn’t be in any hurry to move out

Awful idea for all the reasons stated. As someone who has a lifetime interest in a trust of which certain beneficiaries will likely be very old or dead by the time they inherit i can attest this is a mean thing to do and will cause falling out and create a situation ripe to be tapped into by lawyers and letting agents alike.

You are assuming the rent will cover costs and pay fees for whoever manages the property. If the roof needs replacing or other structural work then this will need to come from somewhere. Is your GF planning on setting up a trust to manage and maintain this property all for the benefit of people he doesn't know.

Sounds like he has contempt for his own family. Good way to ensure he is looked back on as a complete pain in the arse.

i think its a terrible idea - a kind one, but an absolutely awful one - he would be making his DC become reluctant landlords, and what if one of them had an emergency and they needed the cash and it was there, but they couldnt get it

Dont tie your childrens hands like this, let them decide what they want to do - either leave them the house or not

the tennants will know that they may have to leave as the landlord is elderly, and even if they dont, they know that nothing is permanent in the world of renting

Also, would his (poorly thought out) plan in the OP render his daughters liable for capital gains tax when they eventually were able to sell it? Presumably yes!

And what about other gov schemes like help to buy- it would presumably render them ineligible for some schemes because they technically already own a fifth of a property (it's just in a useless form to them where the tenants have more rights than they do as owners).

And what about additional stamp duties and land tax if they buy their own property, since they already own a 5th of the GF's house?

More costly and stressful implications the more I think about it....

But JiminyJim it isn't the kind to his daughters. Someone made a good point about care home fees. If they need care or lose a job they may not be entitled to a safety net as they own an asset they can't sell. Of course no-one has the right to expect an inheritance. But this is worse then leaving disinheriting them. He could actively make their lives miserable unless he is very careful.

the gf wants to the house to stay in his family.

His family are ultimately entitled to it. At the moment in his mind unless he actually bequeath this house to the tenants.

His kind gesture could actually mean his own family never get it.

It's one thing if op had said... Is this fair.. He wants to leave it to this unknown family.. But quite another in this circumstance.

Absolutely not. No way. Nightmare for everyone, and utterly unfair to his relatives. They are tenants, not family.

The problem is the end game and law of unforseen consequences.

His intentions are for family to receive blah and stay until youngest child blah.

But anything could happen to invalidate this or some rare precedent somewhere that the family could use to challenge this.

This is the problem.

There are huge stamp duty implications on this. It would rule out the first time buyer exemption for any of the ultimate beneficiaries and also the extra 3% charge could potentially come into play.

I’m it sure why so many people want to sell the house as soon as the GF dies. It certainly doesn’t have to be AS LONG AS all the beneficiaries are ok with it.

So my first question is very much, what do his children and grand children think about that organisation? Is one of them quite desperate for some money or could really with some for whatever project?

And yes he needs some legal advice too.

It wouldn't just be a few years, it would be quite a lot. Then his daughters will be quite a bit older and might need the money. The house would have aged a lot by then and would need money spending on it. Would cost a lot to keep for all the years and the rent might not cover big jobs. Nice idea but wouldn't work.