In-laws want their deposit back

[ArnosLeach]

I married 5 years ago and I have a three and a half year old and a nearly nine year old from a short lived relationship.

Full background as I am anticipating the questions I would want answering.

The nine year old sees their father once a month for a weekend. I assume that my ‘ex’ owns his house. He had a vasectomy before our child was born. We do not communicate on any level other than if arrangements need to change. He pays a set amount every month but every month will buy shoes/clothes etc.

We moved into the house my husband had bought fifteen years before. It has doubled in value. Following a miscarriage last year we are trying to conceive again and we are looking to move house. We mentioned this to the in-laws a fortnight ago. I did not know that they had provided DH with deposit.
They have now asked for twice the deposit back comprising the original sum and the proportion of what that deposit has added to the value.

They feel that my elder child will benefit from their largesse. We are both completely gutted by this. A bolt out of the blue.

Where did you read that?

I would give them the 80k and never speak to them again. What nasty people.

And as several posters have pointed out, the terms on which the money was provided as the deposit would have been specified to the mortgage lender, so easy to check presumably. If it’s recorded as a gift, PiL are stuffed legally.

You are not being unreasonable. Your in laws are nasty, they should be treating your son the same as their other grandchildren. Petty and nasty

I think the in laws don’t understand the legalities of marriage and divorce in the UK and probably think that their son will get to keep the marital home as it is in his sole name if they divorce

FGS nobody tell them!

Like almost everyone else I agree it's petty minded and quite frankly nasty of your ILs to ask for double their deposit back. They should be embracing your daughter as part of their family. Personally I would give them nothing and not be welcoming them into my family again until a heartfelt apology is given.

We are being asked because they do not wish my eldest to benefit from their money.

I think their reasoning is ridiculous!

I read it as him offering to repay the £80k once the house was sold - as per their request - but not the extra £80k in ‘interest’.

Yes I agree with Penguinbiscuits. DH parents helped him to purchase a property. DH didn’t tell the OP when they married that there was an arrangement with his parents. At that stage with alteration in the arrangements when he married he should have returned what was probably the deposit for the mortgage.
He was hoping they’d forget.
This is likely to be a common situation with many parents helping their offspring to buy their first property. The parents may now need the money for their own care.

Not sure if anyone has mentioned inheritance tax.

Your inlaws seem to have a lot of spare money and so could be liable to inheritance tax when the second one dies - currently 40% for anything above £1,000,000 per couple including a house. If so, they should be inheritance tax planning and thinking about giving away more of their assets and then living 7 years, not gathering in £160000 from one they gave away 15 years ago.

If they get the £1600000 back (and I don't believe they should as it was a gift with no strings) and just add it to their pile, 40% inheritance tax on that is £64,000. Not a lot different from the £80000 they're quibbling about. Surely they'd want that money to go their son's family not the government coffers.

No they are still together and trying for another baby.

I do believe that it was a gift freely given to all their children but things like marriages with step children just didn’t cross their mind and now are making up the rules around this gift (that they have agreed it was given as a gift) as they go along.

Such a bad idea to start trying to control a gift that was freely given. It risks drawing value back into their estate for IHT purposes.

And it is insane. If I give money to my child I then have no choice but to trust them. They can piss it up the wall, snort it up their nose, or lose it in a terrible divorce. Not. My. Problem.

ILs will have a life full of worry if they don't change their attitude.

You are now married so anything on that house is 50% yours. You can do as you see fit with that 50%, including your son benefiting from it. Your son is your husband's step-son and entitled to have just as good as a life as the other grandchildren.

They sound like awful, money-grabbing vultures and they don't sound like the type of people I would want to keep in my life.

If not paying them back means they cut you all off- Good riddance. No good parent chooses money over their own child.

Everyone saying it's between your husband and his parents- I don't know how your marriage works, but that's a lot like abandonment. This money effects them both.

Agree with above, let them know what you are doing and let them know the consequences (ie tax they owe) or you could just give them back their original gift (£80k) as they are not entitled to any increase in value of DH house. Then go non-contact with IL because whatever you do, having given each of their children £80k, they are taking back the money they gifted to your DH but not his siblings. So he will have nothing, as will his child (plus any future chn you have together). They are treating you and your children very differently to their other children/grandchildren. They really haven’t thought this through. DH needs to have a long talk with them.

They are married. It doesn’t matter whose name is on the deeds. It’s all marital property, whether they move or not.

That's not necessarily true. They've only been married five years, it's been his home a lot longer. It's more complicated than that.

Nasty fuckers. Imagine even thinking like that. They’d get £80k back and be dead to me.

But this wasn’t the stated reason for wanting the money back - it was because the OP has a child of her own and they don’t want them to benefit from the gift. And if the money was stated to the mortgage lender as a gift when it was actually a loan to be paid back with interest, that’s mortgage fraud.

What the actual fk are you on about. You know nothing about their situation. The DH has taken this child on as his own, and has married Op. They have a child together.

You think his family are perfectly entitled to consider her ‘baggage’? And that they are entitled for this reason to take back a gift from a decade ago? And Op should be grateful because she has ‘traded up’?

Married couples are not subject to inheritance tax on transfers between themselves.

She's a 9 year old and clearly your husband considers her part of the family! How can she benefit at their expense? I can't understand this! And wanting the double of the deposit money? Looks like they saw this more like a business investment rather than a gift to a son. He is going to pay back what was initially a gift and with interest! Horrible people

Playing devil’s advocate because I feel like a lot of these comments are missing some points.

OP’s DH got the gift for the house 20 years ago. He paid a mortgage by himself on that house for 15 years before OP met him.
OP has stated that she pays a 1/3 of household bills, she has not said that she pays anything towards the mortgage.

From the ILs point of view, OP has met her DH 5 years, OPs eldest child would have been 4 at the time, some older generations would view this unfavourably, a single mother of a young child meeting a man and within a year and a half having a second child with this man. OP then around this time moved into the house.
The house is now worth £650K and OP has not paid a penny towards that worth. She has benefited from her and her eldest being housed there. Now that OP and her DH are considering selling the house it means that the next house that is purchased OP will be entitled to half of it, and technically so will her eldest child. Although OP has not contributed anything to this £650K ‘pot’.
I’d imagine the ILs have calculated this and are feeling like OP is due to be entitled to a large chunk of a property asset even though she has not provided anything towards that asset. The ILs are probably feeling that OP may be taking advantage of their son’s position and want to safeguard the money they have gifted incase it ends in divorce etc especially considering that OP earns 1/3 of DH’s wages and is benefiting from a £650K house.

The OP said they married 5 years ago, not they met 5 years ago.

As I said the arrangements altered with the marriage and who knows what was agreed at the time.
anyway it was dishonest of the DH not to inform his wife before they married and not to ask his parents if they wanted the deposit returned at that stage

Ok then OP’s eldest child would have been even younger then - which would probably be even more concerning for the ILs especially considering that OP’s DH has a very expensive asset and also earns 2/3s more than her.