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.

I remember feeling a little jealous of a couple the same age as us who lived a few doors down, with his parents living next to us. It had been the grandmother’s house and when she died, the father inherited and let his son live in it with his girlfriend, on condition they upgraded it themselves. So no mortgage payments at a time when they were skyrocketing and we were barely covering ours and very, very gradually doing our own upgrading.

Not so envious 4 years later when the relationship fell apart and she had no rights ( not married) to the house despite having put in a huge amount of work and money herself. She hadn’t been paying rent but had also had to tolerate continual interference from the parents over everything to do with the house and with the child they had. .

The man in the couple met someone else a few years later and she was much more savvy - moved in briefly but insisted on marriage before children and that they buy their own property asap.

Glad you avoided it! I wish I'd listened to my doubts and not gone along with it. The fact OPs sister is having doubts shows she knows it's a bad idea - trust your instinct!

Isnt that what you do when you rent anyway?

Yes, but she's been saving for a deposit for 10 years so she can buy her own place.

I think she should stay focused on that and not let her inlaws send her offtrack.

These huge 'gifts' are all well and good but they rarely come without strings attached.

It's the strings that bother me.

Any parent who puts serious money into their DC’s home is going to want to know it’s safe. It doesn’t necessarily meant they will want to control the asset, just that it won’t be given away in the event of a split.

I think the principle is fine, ILs are being sensible, they want their gift to benefit their DC and DGC, not a potential ex-wife and a future family to whom they have no connection.

It all comes down to the relationship the OP’s sister has with her ILs, and the dynamic between them all as a family. She might have good reason not to want to get into this arrangement. However, if it’s just about the money, I think she’s BU.

I’d be concerned that in a divorce he would be able to claim on her savings. But she would have no claim on the house.

but then again she would have massive savings due to not having to pay a mortgage.

hmm. On balance if it a contract is drawn up properly with consideration to all parties by a reputable lawyer of the OPs approval and if no other stipulations are put on with regards to location, decoration etc then it would be worth it.

they’ve done it for other siblings so presumably you can see if there are power issues relating to it

They still have to pay a mortgage though or they don’t have a property if things go belly up! Especially if she splits from him. I’d consider taking it IF the house worked well for me but wouldn’t change my financial situation as I’d buy something else.

BUT they would want the property in their name in case of divorce.

This tells you exactly what they think about women.

I’d tell them to fuck off.

They have had contracts drawn up so they are not turfed out if there was a falling out etc.

How do these work, then? I'd want legal advice on how watertight the contract is. PILs understandably want their son to be protected in the event of divorce, but it potentially leaves your sister high and dry - she would also possibly be at a major disadvantage when it comes to child arrangements if she is not able to afford somewhere to house them.

Who chooses the house, what happens if they want to move to the other end of the country and the PILs don't want them to, what if it turns out to be too small but the PILs disapprove of how many children they've had?

I personally wouldn’t as I have previous bitter experience with now ex in-laws who use their money to control those around them. It’s a horrible way to live.

Your sister is right, good on her. The house would never feel like her home. What happens when the IL’s die - will the house just be left to her partner ? What happens if her partner dies before his parents ?

Your sister will end up paying towards repairs, decorating, etc.

setting aside the legal aspects, unless the option was living on the street, I wouldn't have done it and I had a lovely MIL and step FIL. I wouldn't like the feeling of chains no matter how light and golden.

ILs in my wider network do this, but think it's a different structure, maybe a loan that has to be repaid if divorce, but the couple do on paper own the house. These ILs are very controlling and they cause a lot of trouble, even with this slightly more benign structure.

So I’ve spoken to sister. Apparently i have got it wrong - the house would be purchased via a trust or something similar.

The other siblings have had complete control over what house they purchase, location, decor etc.

Maintenance is down to the couple - this would include putting in a new kitchen etc.

Sister is just about to turn 30. She is a professional with a good paying job. Savings are decent by most people’s standards. But the homes she and her partner would be able to buy aren’t great given they are looking at commuter towns to London.

Sister is fine with a small cottage set up. 2/3 bed. BIL less so.

oh and apparently they arent that interfering from what sister has observed. She has spoken to one of the the people who married in and had a house bought for them.

Thats not the issue it’s the fact that her home wouldn’t be her home. Bad juju also. Moreover shes worried she would get screwed if something untoward happened.

Other assets being sisters life savings or investment property

I picked up the fact that parents not only want the marital home in their name but also want their son to get half of an investment property that he has never saved for

Still if your sister and husband split up, your sister is the one who would end up homeless and any joint assets split. It's a win, win for the husband, has a house and half the joint assets from marriage.

How much has your Bil saved to be this picky

Oh BIL has savings for house deposit. Sister has said BIL’s ideal plan for them would be to save like crazy together whilst living in a home bought by his parents. And invest heavily between the two of them. BIL is obsessed with retiring before a certain age so the set up suits him. He knows he will always be looked after

BIL always knew this arrangement would be available but had rejected the idea for years.

changed his tune now

Having seen what happens to the retiring early set I would run in the opposite direction

I would not agree to this. The very set up is to ensure your sister doesn't get any benefit from the house if they split up. How is it fair that she would maintain and invest in an asset that she won't benefit from but her husband would?

Would it help to consider what the courts do for divorcing couples where one brings sizeable assets into the marriage ? I assume (with no experience) that the court would assess length of marriage , what housing needs both people have etc but that protection won't apply to her if the asset isn't his to share.

I can understand why the in laws want to structure it like they do but it would be thanks but no thanks from me.

I would also hate to be a landlord with all the hassle and legal/financial/tax risks involved.

I would go along with it as long as they invested heavily in property of their own and continued to make joint investments throughout their lives

It isn’t just divorce that needs to be considered, but death. If the OP’s sister was widowed, where would she stand? That’s the conversation I would be having.

Although I don’t think I’m principle it’s a bad offer, the OP’s updates suggest that they could afford to buy their own home together and work their own way up the property ladder without this help so I think that might be the better way.

Early retirement is another issue, can they both afford to do this? One partner retiring while the other has to carry on working rarely ends well.

It would be an asset so would rightly have to be sold to cover care fees if no other income was available to cover them. It’s a terrible idea unless for a limited time while the couple save a deposit.

OK so as the Trust would own the house, the beneficiary of said trust would be the DH. Be very careful how the trust is structured as a discretionary trust would require payments every 10 years (relevant property tax rules) and who is going to fund that. If it is a 325k capped discretionary trust with a Bare Trust, then the DH could break the Bare trust if he wished... but would he, as it would suit him.

Sounds to me as if your DSis could end up on the wrong side of this. I would expect the lawyers fees for suitable advice to be paid for as part of this deal, not getting legal advice would make her a fool.