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.

I can’t understand why people are so against this?

Because she’s wanting to risk money that isn’t hers.

Incorrect. Children cannot take legal title to a property.

They can however be a beneficiary of a trust, so if the trust takes part ownership of the property, it would be effectiveMy the same.

Not a fan of trusts personally, but they do have a function.

Honestly? Bearing in mind a trustee has a statutory obligation to manage the assets of a trust in a manner that is in the best interest of the trust assets and in turn all beneficiaries on an equal basis, objectively you think this responsibility is adequately discharged by purchasing a share of a single residential property subject to a first charge by the lender, when the debtor is a single mother who has been subject to family breakdown?

What if the children need the £ before 27?

What if OP falls out with DC and refuses move ?

What if ex is still on deeds?

What if OP remarries or extends the family?

What if OP loses her earning ability and can't afford utility bills etc?

What if the roof blows off and no one has spare cash to fix it?

What if the house value goes down?

What if the DC's future decisions (eg buying a first home) are impacted because of already being a house owner?

What if, what if ...

Given your updates, I would definitely see what is legally possible.

Pointless asking on here as it would just be people's opinions - some people would say 'don't touch a penny, it's not your inheritance!', yet miss the point that you all suffer in the next 15 years due to lack of cash.

I am sure there will be a legally binding solution that could give you access to the cash now, where everyone benefits and the inheritance for your DC is safe-guarded.

It might mean that you have to sell when eldest is 27 no matter what else is going on in your life or where the market is so as long as you can deal with that, I would definitely seek professional advice

The FCA website listed the company in which I lost my money as authorised when it was not. It's currently going through court but it took the FCA years to notice their website was wrong and a year more to actually do anything about it. They have issues. I regret massively not putting the money in property instead.

Really don't see the issue in the Trust owning part of a property. My SC will own part of my house via a Trust if DH predeceases me.

FFS, the Trustee Act 2000 IS NOT AN OPINION!!!!!!

OP becomes insolvent. Bank enacts their first charge over the property and takes possession. Where does this leave the trust?

I'm sorry you had a bad experience, that is why i suggest a chartered business, possibly even speak to 3 or 4. Property is just so inefficient, CGT, stamp duty, illiquid, its just the pits for an asset of a trust.

Are you actually able to pay it off in one lump sum? A lot of mortgages only let you overpay by 10% until the end of the current term or are you on a variable. Of on a variable I'd be looking at different mortgage rates. Your loan to value would be really good since you've paid off a big chunk.

You need to look at a solicitor for this. If done incorrectly, your kids could end up paying more inheritance tax. My thinking is that once it's been put into the mortgage utility would be seen as your money with you contracted to pay it back. If anything were to happen to you, they could be looking at paying 40% on the house sale.

This is the best idea.

I wouldn't put your house in your kids names. What if you fall out with them (it happens) and they force a sale?

Cant you just downsize so your mortgage is smaller?

Use the assets of a trust in an offset mortgage. Seriously? That fulfils her obligation under the Trustee Act 2000?

It is a huge conflict of interest.

What if the eldest child wants "their" money early at aged 18 or 21 to buy their own property. The trustees can release the money earlier than the will. Will you block that as it is not in your their best interests when it so clearly will be?

You should use your own inheritance to support yourself and your responsibilities to your children.

What’s the risk of your ex going after the house and taking half their money. We’re you married and divorced with a financial order?

could you also invest some of that ‘saving’ on the mortgage into a high interest account that could pay out some of the money in 15 years (or sooner) if the kids need access? That may leave a shortfall you could get a loan for so they don’t lose out.

If it’s doable sounds a good idea??
you and the children get to keep your house and have extra money, when the children are older and your ready to downsize you sell and they get their inheritance??
My dh dm lived in the house he and his db were left by their grandparents (they also lived in it before leaving home) She did no maintenance at all over 15 ish years when the time came to sell the entire house needed renovating and they lost a substantial amount of money. They were annoyed but not a lot they could do they were Just pleased with the money they got.

@Everanewbie yes I understand that... now. And in spades. I was just jolly surprised to end up as a trustee! I had assumed there would have been some consultation before hand especially given the complexity of the one in question.

@Milger gosh really? I think when it comes time to think about passing on my trustee responsibilities I will consult the people I have in mind.

I can see this being a minefield OP-although I understand why you want to do it. You don't know what your personal situation might be in 15 years and it might not just be as easy as that to sell and sort somewhere else, you may then have very peed off kids. I think you need to see if you can get the mortgage back into' on dodgy lender ' rates- or if you genuinely can't afford it - cash out and buy 25% in a shared ownership place outright - and just pay the rent element which will be a lot less than £1400- even if you were somewhere south east and considerably less if you were elsewhere

She could pay them the interest they are receiving at the moment.

It is all for their benefit so that they can enjoy life. What is the point of them having all this money and then not being able to go on holidays etc while they are children?

No. Absolutely don't do it. This is not a business transaction between two separate parties. This is family and emotions. I have seen too many instances where similar agreements, although done with the best intentions at the time, have caused misery.

Too many "what ifs" that can't be covered.

Please find an alternative solution to free up your income.

That is some pretty extravagant mental gymnastics to arrive at that solution being OP fulfilling her responsibilities. Out of the entire investment universe, tying the assets of the trust to a single offset mortgage that just so happens to be in the name of the mother of one of the beneficiaries, oh and also a trustee, is the best solution. What research and due diligence was completed to arrive at that, beyond "I need to reduce my mortgage repayments so i'll use the assets of the trust assets i control" went into it?

I could spend, invest and enjoy my parents money much better than they do, and I'm confident that they'd be happy eventually too, but if I was their POA thats not what I do.

The bottom line is that it won't even be possible, because the mortgage co will not allow it and they have first charge - they have to be consulted over ownership and they will not want a trust owning part of the property. That's the end of it.

The OP clearly needs to look into a better way to finance the current home, or move. Then she needs to sort out a sensible, boring, steady investment vehicle for the trust money for her kids. Index linked tracker, boom!

My ex dss' mother used all his trust money, about £7k to pay her rent and buy him gifts (and get hair extensions etc) and he didn't know until he was older. He's 22 now and he will never forgive her, their relationship is totally broken. In her mind this was "in his best interest" because she apparently couldn't afford the rent. Funnily enough, he doesn't see it that way (his dad paid her rent anyway).

You are of course correct. My fear here is that OP will "distribute" her sons share then just have him pay it to her, then put it into the mortgage. I.E. a big legal fudge where the trust assets are just swallowed up in the property in OPs name with little come back beyond a great feud and legal action.

OP, if you're still here. Don't do this. It's immoral, illegal and in your own interest only.

@Everanewbie

I've told OP to seek legal advice! I've also said that if anything is possible, it should be legally binding and safeguard the inheritance for her DC.

Any decent lawyer, I am sure, will be able to tell her what is and is not possible

Sounds like you have some experience of this kind of thing, which probably makes you more qualified than 95% of the people posting on this thread. I have no experience at all which is why I have signposted her to an expert