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.

It depends on the terms of the contract of course, but if it’s a matter of them living rent free in a property in her DH’s name then as long as they don’t get divorced it sounds fine. They’ll have all the benefits of home ownership without having to afford it, leaving them free to save for their own property.

Only the OP knows whether her DH is likely to turn into a controlling arse and use it against her. But then the problem would be in their marriage, not because of the ILs.

I think it’s less about the control and more the feeling that her ILs don’t have faith in the marriage going the distance. I agree that’s not a nice feeling. But the ILs may see more about their dynamic than the OP’s sister is letting on.

Who pays for the council tax on this 2nd home
It’s not as if it is a rental property.

Depending where it is I have paid mortgages that are less per month than some places that have a grossly inflated council tax on 2nd homes.

It sounds very messy to me. What if there is a family fall out etc?

Agree with your sister that she would effectively be a lodger. What if she wanted to move? What if she wanted to add a conservatory or a garden room? Why should she add value to something that isn’t hers?

Also, it’s a bit insulting, that the ILs are insuring against marriage breakup. It’s weird.

100% no. If the inlaws were trying to be generous they'd gift help for a deposit. They are being controlling and putting your sister in a terrible position for the future. There's no security here at all which is the benefit to owning a property. Any money she puts into it to repair or improve it will be gone and the moment there's any sort of financial or emotional issue with her marriage or her inlaws' finances she'll be out of a home. This isn't a 'gift' at all.

My inlaws (and my father) gifted us some money to help buy our first home (and actually our second when we had another child and wanted more space). Enough to get us a few years ahead of where we'd be otherwise but not enough to make it awkward or feel like the house isn't 'ours'. They gifted an equal amount to my brother and my sister in law so it's all fair.

It would be better put in a trust with the husband as a trustee and beneficiary and the trust worded that the property could be sold and another purchased if agreed etc to give flexibility.

this would take the property outside if the IL's control but protect it in case of a divorce, as legally it would belong to neither the husband or your sister.

The risk of it staying with the IL's as named owners is that, in the future it could be counted as an asset for care cost calculations of count for IHT.

Presuming they have no conditions now that mean they can reasonably require care then the transfer to a trust for the son is unlikely to be viewed as deprivation of assets in the long term.

It seems very controlling and leaves you with very little protection. With ILs like that it’s not just about what they’re offering it’s about what you owe them. They’re buying your obedience.

Agree - if the houses are owned by PiL (unless in a trust) would be subject to IHT when they die, so each tenant would lose their home as they’ve have to sell up to pay it off. Also, how would dividing the assets works when they die - what if one house is worth twice as much as another siblings but the will states ‘equal shares’.

PiL would be better ‘gifting’ the money to their children now in the hope they don’t pop their clogs in the next 7 years, and asking them to ring fence the money if invested into any marital properties (which may or may not stand up in court during a divorce). It sounds deeply controlling and works on the premise that the marital spouses are not to be trusted.

Also, in order to build a capital sum/equity in a property of her own, sister has to buy a second property - higher stamp duty obligations, 300% council tax charge in some areas, landlord obligations and stresses if they rent it out, maintenance obligations on top of those for their residential property and complex annual tax returns. If sis does divorce one day, and hasn’t invested separately, but lived as a tenant in PiL’s home, she leaves with nothing. Nothing. No joint share in the marital home she and DH have owned, so would have nothing to start over with. Madness.

I’m with the sister - I’d not touch this with a bargepole.

Normally I'd be of the same view as your sister - however with mortgage rates the way they are I wouldn't be looking a gift horse in the mouth provided her and her husband also invest in a buy to let property that she is the sole owner of / or alt. Has a greater share of

My rich BIL has done this, and it’s brought nothing but unhappiness for at least two of his children. He’s super controlling, wants to make sure their spouses get nothing in the event of divorce etc. They’re not even allowed to choose the house, but I guess it’s difficult to refuse when being offered a multi-million £ pad.

One other issue for your sister to think about (and I’ve not RTFT) is what happens if her husband dies - will she be evicted? This happened to someone I know, who had a baby at the time. Thankfully her in-laws were good people and gifted the house to her.

It is a minefield.

Do the ILs have any single sons?

More seriously, this is a very reasonable arrangement. It's fair for the ILs to protect their investment from the possibility of a divorce. although they could allocate funds to an investment property - this is not always tax efficient and it's fair for the DS to want to have full control over the home that she lives in. Who knows if the ILs suddenly decide they need the equity from the home in the future? She also relinquishes her agency when dealing with DH and his family.

That said, if they refuse this offer then that could mean no other financial offers in the future - which will cause friction. For the sake of her DC's financial future your sister should take the offer - but make it clear that to her DH that she won't tolerate having it thrown in her face for the next 30 years.

This is entirely anecdotal, but I have a friend who went through exactly this. Her MIL then decided that as it was "her house" she could pop around whenever she wanted (letting herself in whenever), critique/control the decor and furniture choices, complain about the tidiness of the home (my friend is a very clean person!) she would just pick everything apart though.

My friend is no longer with her partner due to a number of reasons, but this/his relationship with his mum, was a big strain on them.

It’s a bit insulting, that the ILs are insuring against marriage breakup

Yes it is, but of course we don't know the sister and there's just a possibility that they see something we can't

Alternatively it could be a cultural issue, where the folk who feel they have the power don't trust "those others"

The good news however is that the sister's clearly already unsure or OP wouldn't be asking this on her behalf, so overall it may well be another case of going with her gut

Your sister should just buy her own property with her DH. And the in laws should gift money to their DS to buy an investment property, in his sole name and they should get legal advice as to how to make it an outside marriage asset (not always possible, but if it is kept separately more likely to be separate).

The fact that the ILs want the house in their name in case of divorce would make me not want to touch this with a barge pole.

So if they divorce, the DH has the home entirely to himself and they have to split all other assets - this leaves your sister badly off.
If they have children when they divorce, those children will naturally stay in the family home with DH while your sister has to move out.

i wonder how the DH feels about the arrangement? I wouldn’t want to be in a relationship with this family! If DH thought this was a good offer I’d question my relationship.

Controlling on so many levels!

I'd like to know the practicalities first. Who pays for maintenance and improvements. What is the paperwork like? Will they be allowed to treat it as their home or is it the I laws home that they are living in? Are they allowed to move out without a hige fall out? Can they pick the house?

Assuming it is the in laws house in name only and they do all the landlord-y improvements. Then I'd be tempted to live there for some time while saving like crazy. Or I would buy a buy to let or holiday property that was in my name. It genuinely would depend on what type of people the in laws are and what the paperwork is like (basically how fuck I'd be in case of death or divorce)

I think it really depends on the in-laws.

mine? Certainly not. They got possessive over the pram they bought my baby. Insisted they had to push it because it was technically theirs 😂 I can only imagine the drama if they had bought us a house!

Don't go anywhere near this sort of arrangement. My FIL gifted a plot of land to my DH for us to build a house. 3 years later and after a series of all sorts of events we haven't been able to complete the house and have wasted 10s of thousands of pounds on it. We're stuck renting and watching our son grow up and desperately trying to buy a place. We're selling the site after assurances from FIL that it's ours (we offered it back to him) and to sell it if it suits us. We got an offer, accepted it and now FIL isn't speaking to me or DH.
These types of set ups are a form of financial control and ILs even mentioning they have control over what happens if you divorce is a massive red flag! Steer clear!

if they divorce, the DH has the home entirely to himself and they have to split all other assets - this leaves your sister badly off

What other assets?

I don't want to assume he is, but IF the DH is onboard with his parents' plans to keep everything in their family what's to say he isn't keeping other assets in their name too?

This post nails it! I wouldn’t touch this with a barge pole.

Your sister would be in a really risky position should they split. Even if she’d bought another property in her sole name that would count as a marital asset whereas the family home (owned by ILs) would be out of the pot and just for her H

Similar almost happened to me, @BoogalooBoo

My late, ex PILs owned some land they offered to us to build on, only I refused after finding out they'd excluded me from legal discussions about it all and insisted exH attend alone

A wise decision as it turned out; it was shortly afterwards that MIL told me to my face that "we don't want you", so it's only too easy to imagine how things would have turned out had we lived there, only two doors away from them

I would live rent free like that, yes. I would save save save. Although if the husband is an arse he could use this as a way to control the marriage. 'My parents pay for this house' sort of thing. So actually maybe it would become stressful with that hanging over you.

OP, I do hope this thread is giving you food for thought and enabling you to see past those apparent £££ signs.

Your sister is absolutely right to be wary and cautious here. There's just far too much that could go wrong and I am gobsmacked that some people seem so unable to see that.

Personally, I wouldn't touch this with a bargepole for all of the reasons already given. I'd be insisting that the property should belong to ME and DH jointly, not to the in-laws. If they wished to provide money towards a good deposit and ringfence that for themselves and DH then that would be fine, but I would NOT want them buying or owning the property.

I really hope your sister sticks to her guns and doesn't go for this. You should also stop urging her to go for it. It's far too risky and she doesn't need to learn that the hard way.

This is what I'd do UNLESS the in-laws interfere in other ways.

Possibly a massive amount of inheritance tax down the line.

Tax wise the situation sounds mad, as eventually they'd have to pay inheritance tax on the house AND CGT on your sister's investment property. I'd get proper advice because the tax bill could end up being house-sized!