ILs “gifting” home

[Zingtang]

So I’m writing this on behalf of my sister. Shes not a mumnsetter but I told her she would get great advice.

Sister’s ILs are well off. They have offered to buy a home for my sister and her husband. BUT they would want the property in their name in case of divorce. They would charge no rent. Sister has been saving for a house deposit for the best part of a decade. ILs suggest she buys an investment property with her husband if she wants to iwn property.

This is the set up for all the ILs kids who are married. They have had contracts drawn up so they are not turfed out if there was a falling out etc.

Sister is dead set against it. I say why the hell not! She wants a home that feels entirely hers ie she would feel a lodger with this set up.

could they just loan cash to you sister and partner instead so they can get on housing ladder and build their own equity.

This. To me it seems that the in laws want to appear generous 'oh we bought DS a house' but to do it on their terms and control the situation.
Giving a deposit would still be helping DS but they would have less control over things. If they reject the offer, the in laws can also go round being sad and saying they wanted to help to their friends and appear to be kind, without people knowing the full details of the situation and think your sister is mean to them.

It is an obligation with likely strings attached imo. Who's best interest IL's have proposing this?

I'd also be really curious about boudaries and control within this family.

I don't think you read my post correctly Another2Cats.

I am saying that in this situation we could save the money that would ordinarily have gone to paying the mortgage.

And I would get half of that money in the event of a divorce.

I wouldn't get half the house but there would be so much money saved that I shouldn't be destitute.

The in laws have said the property will be in their name, not the son's name. So inheritance tax would become due if total estate is worth above the threshold.

Sorry, I haven't rtft and my situation is slightly different, but I'm with your sister on this one.

I've lived for over 10 years in what was my STBXH's childhood home which was gifted to him by my STBXILs. It has never felt like MY home, always felt that I was living in my IL's house. And even if it had been a 'neutral' house gifted, I imagine it would still feel like someone else's rather than being my home - whether we were paying any rent or not.

Sorry, you're right, I did misread your post.

Very unpleasant world view from the in laws that in the event of divorce they want to hang onto their money. They want to give a gift to their son but not his wife. It's sending a very strong message to her that she is not a proper part of the family.

It's really quite a disingenuous and controlling gift if they're not letting him do what he wants with it.

If son was worried about divorce then he could draw up something to protect himself. They shouldn't be doing that for him, it should be his choice.

Being controlled by them like this is just horrible and imagine how it makes your sister feel that her in laws care so much about making sure she gets no money in the event of divorce.

I wouldn't do it.

I would only recommend doing this if she was able to legally protect any savings so that in the case of divorce they are hers alone and not a marital asset. I have no idea if that’s possible but if she can do that but worth looking into. She could save a shed load and then in worst case she could walk away and buy her own place. Also surely if it got to the point it was too uncomfortable for her and didn’t work, her and her husband could use the money they saved from no mortgage or rent to buy a place of their own.

I'd encourage if the relationship allowed for your friend to speak with the other spouses of DH siblings to understand how the set up has worked for them. Understandably I'd be incredibly cautious with an offer like this until I'd seen the contracts and tenancy/licence agreement drawn up. At the very least, there needs to be some defined housing rights in the event it all went Pete tong. Verbal agreements are all good and well until someone is upset and changes their mind. It could offer a good opportunity to save for the "dream home" though. Yes it would be considered part of marital assets but say they bought a house together, this would still be a joint marital asset.
I'd also want to know if/how children may change the set up. Would the house be put into trust for the kids (ergo protecting the "familial" money) or would it only pass down once inlaws passed on.
Tell your friend to get some (quiet) legal advice. Knowledge is power and in circumstances like this, you want to know all possible outcomes before making any decisions.

This!

The inheritance tax on a minimum of 5 properties with no rental income to cover the high rate tax! Ouch!!!

It won't be her own property, though. If the divorce that the PIL are concerned about happens, her husband would be entitled to half of "her" property.

If your relationship went sour, your DH may have a claim on those savings, or any property you had bought.

I wouldnt touch this with a bargepole

I'm not religious but there's a bible quote that seems to ring true about marriage - that you need be able to 'leave and cleave' - that is to say put your old life/loyalties and attachments aside and commit to your new shared life. A couple need to work out how to be a team, make choices together, work for common goals, build a shared life and if it goes wrong deal with the consequences of that/untie their marriage. And interference from outside whether emotional, practical or money/asset related is a problem that can derail the whole exercise- as seen with a million threads on here.

Taking the offer gives the ILs too much control and influence over the couple- where and how they live, house renovation and maintenance, financial, what happens in a split, and its all to your D sis's disadvantage, and all relationships are influenced and colored by this.

After a very messy time extricating myself from complex family financial arrangements entered into (in good faith) in my teens and 20s, my now DH and I have a rule that we are a team and don't consider any financial dealings with family (mine or his). Quite simply, its too complicated to be tied up with other peoples arrangements and priorities, and when situations change you are at a huge disadvantage, lacking flexibility and the ability to put your own shared interests as a married couple (with or without dependents) first. This has made our life possibly harder, and certainly slower to build assets but it has been much less complicated financially and emotionally, and we own both our successes and mistakes.

She is effectively living rent free in someone elses property. I would have no issue with that at all! I probably wouldn't consider it mine but she is renting now anyway. She and her dh will have time to save and buy somewhere to get on the property ladder in their own right and possibly rent that out earning an income. I wouldn't let the set stop me buying somewhere else in my and dh's name for the future so if her marriage does break down they still own a property and she moves from her current rent free arrangement. Or am I missing something?

What are DH thoughts about this?

Doesn’t make great financial sense does it, assuming UK they will be charged higher SDLT as second property, and then the inheritance tax etc, are they going to make a trust? Perhaps that’s what they are thinking.

Surely it would make more sense to make a financial gift to you and your DH to buy your own home, if your finances aren’t 50-50, in the worst case scenario you did spilt (but honestly who would be saying that to their married adult kids but that’s a whole other issue). A contract could be drawn up.

It sounds amazing to be mortgage free however who pays for repairs, new bathrooms, new kitchen if required.

I wouldn’t want to be putting money into a house and not getting any return if things go wrong with their relationship.

hat happens if they want to move home , move areas etc

It wouldn't be for me. Aside from all the legal and financial considerations that people have mentioned, I just wouldn't want to feel indebted to them in any way or to be faced with "oh but we've been so generous to you....". I'd much prefer to stay in a small home that's mine than one owned by family with the potential they hold it over you.

Me I would care and wouldn’t touch it either. No way would I live in a house that isn’t mine that I wouldn’t have authority over and on the event of a divorce would have to leave. meaning my property was a buy to let

there maybe no mortgage but there is no equity build either

She wants a home that feels entirely hers ie she would feel a lodger with this set up

So would I

It's interesting that, with so many other options as to how "support" could be arrranged, the PILs have chosen the one which gives them most control, and while understanding the immediate appeal I wouldn't touch it with a bargeepole

I’m with your sister.

The whole dynamic will actually affect their marriage.

It may not be conscious, but a joint investment that they stand to lose helps put little disagreements into perspective in a marriage. The joint investment in a partnership keeps both sides engaged in protecting it.

If their marriage fails, so what, she’ll be out and her DH sitting pretty in his parents house. What does he have to lose?

She will feel beholden to the parents, instead of her and her DH feeling proud of what they have built together.

Disagreeing about this may have already sown long term seeds of resentment and discontent: if they decline, will her DH feel forever hold it against her that they have a mortgage to pay? Will it fracture the relationship with the ILs?

Suppose the ILs give her DH an amount that matches what she has saved as a deposit?

IF she accepts, in her shoes I would buy the investment property in my own name, with a contract with DH to say so.

It’s her life, her marriage, her money. She shouldn’t feel pressurised by everyone and made to feel she is in the wrong.

I wouldn't want to accept anything this substantial, either. There are always strings - sometimes ropes - attached. I'm extremely independent and dislike being under obligation to anyone, particularly to this degree.

If sister's DH wants to accept a substantial gift from his parents then this is for him to negotiate, but he can't expect to do this on behalf of his wife as well. An investment - perhaps in the form of a second home - can be bestowed upon him alone, without involving his wife.

Were I in your sister's shoes I would not accept this arrangement.

this

Plus what is their relationship with the other couples they are providing homes for - interfering or let them get on with it? even if they are a bit interfering, 2-3 years of saving whatever they'd pay in rent to an external landlord will add up to a sizeable deposit.

I have a similar set up with rich in-laws. I wanted a nice family home for my children, and to be financially comfortable, so went along with it. My mother in law has now passed away and half the home is in DHs name. I do have to bite my tongue with them all sometimes.

I’d take it for the free accommodation and ability to save but it sure as hell wouldn’t be long term