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.

Oh, and if the other trustee signs off on this, they're just as culpable,

Thanks. Signposting to an expert is correct. I do have a working understanding of trusts and advise on their creation. This type of scenario is why I always recommend a professional be appointed as a trustee to ensure this kind of impropriety doesn't occur.

Under the anti money laundering rules, the mortgage co will ask where the lump sum came from. And when she tells them, they won't accept the funds, or at least will require a legal disclaimer which she won't be able to get.

What she could do more easily is pay down 10% a year, dripping the money in, they'd be far less likely to ask about that, or to accept that she saved it up from earnings. But she still must not do this, of course!

Shock, horror you cut 3 extra curricular activities!! For goodness sake you are coming across horribly from your posts. You have not right to use your children's money like this.

Yes this method might cover the tracks of somebody at worst defrauding the trust they were trusted with, at best negligently discharging their duties but in their own favour.

Money Saving Expert can give you tips on how to get a "credit rating divorce" from someone like an ex-H whose poor financial decisions had adversely affected your credit. Also, MSE and the credit rating agencies can help you explore your options as a victim of fraud and identity theft. You might be able to get a clean slate with the credit rating agencies, which you can then use to get a more affordable mortgage.

Also, speak to Action Fraud.

adversely affected your credit

Should say "adversely affected your credit score".

Op I was in a similar position a few years ago and whilst some posters on here think what you are doing is wrong / immoral I disagree and the legal advice was that it was possible and happens reasonably regularly. I didn’t need to go ahead but if I ever needed to I would happily reconsider it.

I don’t see why people are so outraged that you want to improve the children’s current circumstances if they are truly as bad as you say.

Property is often used as an investment. Investments can go down.
Lots of people put in their will that a proportion of their property will go into a trust for their children if they die and a spouse survives them, are these people all being reckless?!

Currently with the cost of inflation and adviser fees / platform management charges etc I believe returns are fairly comparable although clearly some people on here disagree.

The caveat was it would need to to be all done legally and above board. Due to my circumstances I was advised to be given a loan from the trust and put the loan as a charge against the property. From what your initial post said I assume you would be paying off the mortgage in full so the loan would be the only charge going forward

Any documents written up would need to stipulate when it would be repaid and how you would repay the “interest”
eg pay “rent/interest” to the trust annually and / or pay the trust a proportion of the equity in the property when it is sold. A separate document detailing your reasoning why you felt this was in the children’s benefit (so if anything happened the children would understand) was recommended.

Definitely get some advice from a trust lawyer and also make sure your ex couldn’t try to make a claim.

To add: I cannot emphasise enough that you must not yourself attempt to anything to your DC's trust that could be construed as fraud. Doing so would seriously undermine your credibility when reporting your ex-H to the police and Action Fraud.

My first thought was shock, horror and why would you, how could you, but actually it makes financial sense. You make them shareholders of the house, so you own your portion and they are shareholders to the percentage of the value they invest. In x years time the house will most likely increase in value, so their investment will grow accordingly. When the first is 27yo you MUST sell up and downscale giving the dc their portions. As long as everything is set in stone legally, and you don't pull guilt trips when you need to sell the house, then win win. They get a better childhood plus a good return on their original investment.

How long have you got left on the mortgage? If you extend the term to 25 years then you'd be paying about £800 a month on a 5 year fix. I'd do that if possible rather than use the kids money.

I cannot afford school trips, a holiday or new clothes for them. We have cut 3 extra curricular activities.

Eh? Of course you can. They have £167k in trust to be used for their benefit, take it out of that if you can't afford these treats from your wages. The DC already have a home, you're all living in it. You can't spend their money to improve your quality of life, only theirs. So no, don't pay off your mortgage with their money.

Surely the children's money should be invested for them into the highest interest account you can find. They could be earning 5 percent a year. You have already had your own share of the money, now you want your children's money. You should not do this. Whoever is the executor of the will has a fiduciary duty to follow the instructions of the will, not just take the money for themselves. Would you be giving your children their initial inheritance amount? If so you would have effectively stolen their interest which would be a crime. You need to seek proper legal advice.

The showstopping problem with your plan is that children cannot own land nor buildings in the UK, so they cannot jointly own the home.

2 percent interest. Inflation is running at 10 percent and savings accounts where you toe money up for over 10 years you would get at least 5 percent.

I'm sorry OP it sounds dodgy to me. Your mortgage payments are ridiculously high. Your relative was very clear about leaving your children money separate from you. You have to respect that.

I totally agree. My kids have money left by a grandparent. I have dipped into it for THEIR benefit. I’ve used money for school trips including a ski trip, for inter-railing for my teen, extra curricular stuff and music lessons. It’s for their benefit and can be used accordingly where necessary.

Absolutely not

You are struggling despite receiving a big inheritance. What happens if downsizing means there isn't enough for you to buy something else? health problems?

Tip 8 of this link tells you how to disassociate your credit record from your ex-H's. https://www.moneysavingexpert.com/loans/credit-rating-credit-score

Read the screenshotted area of https://blog.moneysavingexpert.com/2019/06/martin-lewis--financial-abuse--joint-accounts-and-managing-money/

use money from the trust to pay for treats, don't put it into your house

I do not want to use their money for normal childhood 'treats' . That's my duty to pay for as their mother. Their money shouldn't diminish in anyway . Most kids of their age do not pay for their own holidays or summer sports clubs. That's the parents job.

With no mortgage and just paying interest on their percentage of the equity and the same rate I had it on at Barclays means I then have sufficient income from my salary to raise them on my own without using theirs.

I have an appointment with an IFA to discuss the other options of offsetting or creating a trust that loans the money to me for the next 13 years I have also made an appointment with a solicitor to discuss the trust deed and the terms.and safeguarding their share with land registry .
I retire in 13 years and will have a lump sum from my pension to make up any shortfall should property prices crash to a point where a £400k house drops in value to £167k in the next decade.

My mortgage is also only 13 yrs . So probably a reason why it's so high. To coincide with retirement. They wouldn't give me beyond that.

I have an appointment with an IFA

Whilst you are there, discuss your options to improve your credit report as a survivor of financial abuse and spousal fraud. Even if you do borrow from the kids' trust fund to clear your mortgage, clearing your name with the ratings agencies will make other financial services easier to obtain.

I do not want to use their money for normal childhood 'treats' . That's my duty to pay for as their mother. Their money shouldn't diminish in anyway . Most kids of their age do not pay for their own holidays or summer sports clubs. That's the parents job.

But you want to put the money into the house to free up your income for treats...

That is not what their grandmother wanted.
She put in her will that it has to go into a trust until the6 are 27. What and where gives anyone especially a trustee to ignore the terms of that requirement, in Law,
Access to the childrens money by OP to pay off her mortgage is simply not allowed.
It doesn’t matter if, the same amount of interest will be paid in blah, blah, blah.
The courts don’t care how much nicer life will be. The courts won’t give too hoots if OP is struggling. The childrens money is just not hers to play about with.
There are Laws in place to safeguard childrens rights.