To think that that this will not end well

[subtlesue]

A is a 60 year old widow with 2 adult children. She owns approx £300 equity in her house. All children moved out, all renting and struggling for deposits. She works part time at minimum wage. If relevant, £150k of that equity came from life insurance pay out when her late husband (father of the children) died 15 years ago.

B is a 60 year old divorced man with 4 adult children all moved out and renting. He has about £200 equity in his house and earns about £50-60k/year.

A and B have been dating for 10 years and now all the children have moved out they want to move in together, no intention to marry. All children support the relationship and are happy for them that they can now live together properly.

Here is where it gets a bit complex.

A and B are planning to put equity together and buy for approx £400k keeping some as savings in the bank.

A and B both, in the event of their untimely death, want the equity that they have put into the house to be available to their children relatively quickly, and not for them to have to wait for their 'step parent' to die which could be another 20 years.

Is there any way legally that this can be done, or must we rely on the good will of the living partner that they would organise for the release of equity (most likely downsize I suppose)?

No one is suggesting that a bereaved partner should be evicted suddenly. Honestly- no one in the two families is horrible. But surely something formal
needs deciding and something 'put in place' in advance so that everything is clear and all are prepared should something happen to one of the partners. It seems immoral to me that if A were to die, then B could be living in a house with £150k worth of A's children's fathers life insurance money. But also seems immoral that he would be expected to move out of his home to release the equity when he's just lost his partner. And there would be other difficult situations if B were to die and A to live.

So, to my AIBU- A and B keep saying they will 'make sure' that things are set up so that their equity would be released, AIBU to say that this won't be possible and there would be an awful complex situation?

Is the £300 equity a typo?

How much are both houses worth?

What I see here is 2 people that have worked hard their whole lives and moving in together, and all their children/grandchildren shitting themselves that they won’t get their cut of what they think they’re owed, this is awful I can’t believe so many people think they’re entitled to their parents money. What if the couple decided to both sell up, rent and spend all their money on expensive cruises and enjoy the rest of their lives living off all they’ve earned their lives? Would you all kick off and tell them how out of order they are 😂

Earn your own money and if you’re lucky enough to be left money then good for you but bloody hell they are 60 years old and doing what’s good for them, no one else’s business.

No advice but this is so glum. I get its wise to think about the future but this just seems so grabby of the dc. I have firmly told my parent to spend my inherentence they have planned on themselves, enjoying their remaining years. Blow it on cake gor all I care its their hard earned money. I'm just glad I get to enjoy time with them now.
In my opinion a and b should move in together enjoy the love and life they have and stuff the dc. They obviously care about each other after 10 years so they should look after each other the dc can sort themselves out.

There's something in particularly bad taste about the 'struggling for deposits', the minimum wage job reference and then highlighting the insurance payment for being widowed young.

Buying in a way that keeps individual ownership and not marrying is protecting the inheritance for the children. They'll likely just have to wait until they get it. Be that right after their parent's death or after the death of their parent's partner.

This happened in my family.

A & B were dating and lived separately for years. A owned 100% of a house, B owned 100% of a flat, no mortgages. When A & B moved in together, B sold their flat and purchased 45% of the equity in A's house. A wanted to retain majority equity and kept 55%. They elected to be tenants in common, and had the solicitors draw that up with the sale documents and their wills.

A died a few years later. A's will specified that their 55% of equity went to A's children alone, and that they were to offer B first refusal if selling. A's children offered to allow B to buy their share of equity at the appraised market value, and B did so, which released the money immediately. The total time from A's passing to a bank deposit was around 8 weeks, made possible by the easy wills in place and the cooperation between A's survivors and B.

If B had opted not to purchase the remaining equity A's heirs had a few choices:

• retain the equity until B opted to sell on B's terms
• apply to the court for an order for sale and force the sale on A's heirs' terms (yes, you can force someone to sell as tenants in common)
• buy B out of the property

Your A & B need to discuss their options with a solicitor because it IS possible to do what they're trying to do and protect their heirs, but it takes understanding of the options, along with proper wills and tenants in common.

Are they both mortgage-free? If so live in one, rent out the other. It’s surely a no-brainer?

@Merryoldgoat

Are they both mortgage-free? If so live in one, rent out the other. It’s surely a no-brainer?

They'd need to take proper advice on that as well.

The house that was rented out would be subject to Capital Gains Tax if sold without becoming a home again.

Plus being a Landlord is a big responsibility and can be expensive - especially at the moment when evicting a non-paying tenant can take many, many months because of the court backlog.

what will happen if they need to sell the property to pay for care as they get older? That could potentially swallow up deceased fathers inheritance for step dads care if they are not careful with how the ownership is legally worded.

I would vote for rent one property out and live in the other

If either let their house and move in with partner won't capital gains tax apply?

How about renting out both family homes, and renting a place together using the proceeds? Then the ownership stays within each ‘family’ and each house could be sold independently as the owner dies, to benefit their own children.

This seems a very simple solution, so I wonder if there is something I’m not seeing about it!

DP is the stepchild in this situation. His DM sold her property and kept the cash (well invested I suppose) when she died her entire estate bar a cash sum went to her new husband (DP's DF died many years ago) On new husbands death his estate to be split between his 2 children and DP. None of this was discussed in advance just 'you'll be alright'- the cash sum probably seemed very generous when the will was written but did not rise with inflation. So now DP's inheritance from both of his parents depends on it not being spent on care home etc, or the step father not writing a new will.
Which all sounds very grabby, but we faced a lot of issues from his DM when he inherited from her brother (unfairly she felt0
so my advice is be very open and upfront about it.

New house owned jointly rather than as tenants in common. The percentage owned by each to reflect the capital contribution

It is Tenants In Common that ensures that each can own a specific portion of the property and Will it to who they wish.

So: a careful discussion with a solicitor when they buy, and a detailed discussion with a lawyer to make a will.

If they buy as Joint Tenants the property reverts to the surviving partner in the death of the first.

@MsAgnesDiPesto

How about renting out both family homes, and renting a place together using the proceeds? Then the ownership stays within each ‘family’ and each house could be sold independently as the owner dies, to benefit their own children.

This seems a very simple solution, so I wonder if there is something I’m not seeing about it!

That seems like a good option. I guess the big worries would be - the cost of being a Landlord (in monetary and stress terms as they age), both properties would be subject to Capital Gains Tax when sold, the families would have to deal with tenants at the difficult time of the death of their parent, and they'd have to rent somewhere they could individually afford as once the first partner dies the other wouldn't be able to kick out their tenants quickly to move back into their mortgage free house.

@PerfectlyUnsuitable this is EXACTLY what I was going to suggest. Much more certainty all round.

Thanks for comments, I will reply to several at once as tagging is not straight forward on a phone

Both A&B have explicitly said that in the event of their death they want their children to get the inheritance relatively quickly when they die. This is their preference. So whilst as a beneficiary of this I am pro this plan, it is not something I am pushing or have instigated. I've started this thread to understand if there are options and pitfalls so that I can support them in any way I can to coming to a decision that they are happy with.

My personal view is that I'd rather come across as a bit distasteful but everyone be in an informed and planned position than be found in the difficult situations examples by many PP below.

Being prepared for the worst is pretty normal in life, I'm not wishing them dead by discussing potential outcomes- is that what you would say to those who take out life insurance?

Easy stuff for a solicitor to draft, would suggest the bereaved partner is given a year to move out.

I don't think they will be keen to become landlords, nor would they want to rent together. (Fair enough). But thank you for all helpful suggestions, definitely give us ideas to think on.

Re £300 equity, I missed off the 'k', it's £300,000

Why don't they sell both houses, downsize and give everyone a chunk of 'inheritance' now?

It's not the father's life insurance money. It's the mother's money. Presumably it paid of the mortgage to allow her (and the children?) to stay in the house. She could just have easily have spent paying the mortgage or on other living costs or a world cruise.

Both parties should see a solicitor, but if they've been together for 10 years and are married for a further x years, I'd think the spouse should inherit at least the right to live in the house.

I thought that was just called being tenants in common? So your half remains your own and you can leave it to whoever you want.

Joint tenants is where you own the whole thing together, and whoever survives keeps the whole

But there are some very good imaginative solutions here!

@PerfectlyUnsuitable

FWIW another possibility is for let’s say A to keep her house and rent it whilst she lives in B house. If A dies, inheritance goes to her dcs. If B dies, A can move back into her own home and inheritance goes to B’s dcs….

So a couple who could live in a lovely big property or in a nicer area together should sacrifice that for the convenience of their grabby entitled children? Why?

@MsAgnesDiPesto

How about renting out both family homes, and renting a place together using the proceeds? Then the ownership stays within each ‘family’ and each house could be sold independently as the owner dies, to benefit their own children.

This seems a very simple solution, so I wonder if there is something I’m not seeing about it!

Well if the couple are setting up home together they might prefer to own it so they can decorate it how they please, renovate it, put up pictures and not worry if they spill a bit of paint on a carpet. Oh and not worry the landlord will decide they want the property back in six months forcing them to move. What an attractive idea - just to convenience their horrid children.

@girlmom21

Why don't they sell both houses, downsize and give everyone a chunk of 'inheritance' now?

Because they are not a charitable institution and still need to fund the rest of their own lives?

This thread astonishes me.

@AndMatt

It's not the father's life insurance money. It's the mother's money. Presumably it paid of the mortgage to allow her (and the children?) to stay in the house. She could just have easily have spent paying the mortgage or on other living costs or a world cruise.

Both parties should see a solicitor, but if they've been together for 10 years and are married for a further x years, I'd think the spouse should inherit at least the right to live in the house.

Hear hear! Well said……