Investing children's inheritance in our family home.

[Youknownorhing]

My Mother left her house split four ways. Myself. 2 siblings and my two children. So 25% for each child and 25% slit equally between GC in trust. They can have when they are 27.

I am a single parent in a house worth £400k. Ex left me with the mortgage and skipped off abroad with OW. He is in Dubai where CM is unenforceable.

My mortgage went from £500 to £1400 in January. I had already put my inheritance into the house to reduce mortgage to £150,000.

The children's share is £167k.
It seems ridiculous that I pay this money for a loan when there is money in a discretionary trust of which I and my best friend are trustees. The money makes bugger all in interest. The sea single thing to do in my eyes is to pay off my mortgage with the children's money . (I would do it via a lawyer so that their percentage of ownership is clearly recognised and recorded at the land registry )

Kids are 11 & 13.

I currently struggle to pay for day to day life for us all now the mortgage has increased . Doing this would free up my salary and allow us to have a few treats and perhaps even a holiday this year - something not on the cards at the moment .

Other trustee is more than happy . Can anyone see any problems doing this ?

Obviously I will have to sell in 15 years or so. But until then it seems a much better way to invest their money which will benefit us all.

Can you change the mortgage to an off set one and use the children's money to off set the interest?

Big problems, I can’t see how a solicitor would allow this tbh

Oh my god no. Absolutely not. I know someone who did a similar thing and it created a complete mess. Can you not sell the house and downsize/move somewhere cheaper?

In this scenario would you sell when the eldest child becomes 27 and therefore have the £83,500 available to give to give to them?

It is a risky move as the housing market could do anything but as long as they get their inheritance when they should I don’t see a problem with it. 🤷‍♀️

How will you ensure the children get their shares of the money when they’re 27? Do you plan to sell your house then to pay them?

No, absolutely not.

No and I can not understand why another trustee and or solicitor would agree with this either tbh.

Speak to a financial advisor. My mum sort of did this (money left “for our education”) and we inherited it all when she died, we were 30 and 34. Glad she got to benefit. We benefitted from having a home.

I'd say no personally. But

I can't see it being agreed to. Doesn't matter who manages the trust.

Maybe this is covered about when you say 'other trustee is happy' but as I don't know what trustee means - is the other sibling happy with only 25% split with you essentially getting 75%? Before you do anything, check they're not contesting that.

Oh 3 siblings. Whoops. Still. Are the other 2 siblings happy that you get 50% and they get 25%?

It would need to be a rectified figure not half each of the initial inheritance, op would have to either sell and give back an equivalent percentage of what the investment was in comparison to the whole mortgage or calculate realistic interest over the whole period.

Does it matter?

Not in the Uk but my siblings and I inherited some money and my parents did use it towards the house but it was in the form of a loan - so they paid us interest.

Could you speak to a financial adviser and see if that is permissible?

Have you spoken to the solicitor?

My understanding from setting up a trust for dd (for my will) was that the money could only be accessed for expenses for dd, for example money to go on a school trip or buy a car and the trustees would all have to agree (two solicitors in my case).

As your DC aren't old enough to own property how would they have a legal interest in your house?

Sure, if there's an injustice that's happened, it's OP's responsibility to make things right for her siblings.

But we don't have the full context to make that judgement.

No. It's a recipe for disaster and could cause serious ill feeling with your children when they're adults.

They will want their money, and will pressurised you to sell, which you will almost certainly resent if you love your home. Also the residue from the sale after you've given them the money, may well not be enough at that point, to buy you a home that you're satisfied with.

No don’t do that, get a mortgage broker to see if you can get a better deal. 159k over 20 years at 6% would give you a £300 per month saving

Interesting response. Why wouldn't a solicitor 'allow' this ? I was told by the solicitor who helped set up the trust that it was my responsibility to ensure the money was 'used in the best interests of the children and I had discretion as to what that was (in agreement with joint trustee)

We are currently so poor that the children's quality of life has diminished since huge mortgage hike. I cannot afford school trips, a holiday or new clothes for them. We have cut 3 extra curricular activities.

This is their home and they do not want to move. They have had a horrible few years with their dad leaving.

Putting their money that literally pays £5k a year interest at the moment - into the house would give us £18,000 a year extra income and also grow with house price increase. Which admittedly isn't much at the moment but we bought it 10 years ago so not at the top of the market. So I would expect some growth over the next 15 years.

Yes I would sell when eldest is 26 and give them their percentage increase in equity plus capital . I can then buy myself something smaller with my share.

Thank you that's helpful.

You've inherited £167k and now you 'struggle to pay for day to day life for us all'. Good grief.

Can the trust loan you the money.
You pay off the mortgage.
You pay interest back to the trust (this would be lower than a mortgage, but your DC will still get interest on their inheritance) rather than to the bank.
Proper contract drawn up r.e. Loan and interest and what happens when the DC need their money back at 27 or earlier for a deposit themselves.

I think you'd need to look to downsize when the youngest is adult/off to uni to make sure the money is repaid when the eldest needs it.

When on earth did you remortgage? How are the repayments on £150k with a LTV of approx 1/3 £1400/month??

Yeah a quick money saving expert google suggests your mortgage company is massively ripping you off. That would be my first port of call.