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.

Yes I'm sure it's illegal. !! That's why the lawyer is drawing up the trust paperwork and registration with the LR.

You seem determined that I'm going to run off with the money . So little more to be said. The children are happy, my siblings are happy, my in-laws are happy with the arrangement as is the other trustee who has taken independent legal advice . So thanks but it's sorted .

You need to find out the legal position

I have found out the legal position ! As I have said in my update. A solicitor who specialises in trusts. The other trustee has taken her own legal advice and is happy to proceed.

@Youknownorhing I said quite a bit back in your thread that I would be thinking exactly like you. Really good to see your update. I really hope you resolve all of this to maintain stability for your children

I read your update. I think it’s the best decision you could of made for you and your children. I hope it all goes smoothly for you.

I’m glad its worked out.
So much ill informed spite on MN these days.

You absolutely can! In fact, the Inheritance and Trustees’ Powers Act 2014 widened trustees powers on this considerably!

If you are going to be so definitive about it then please reference the law that stops trustees doing this.

I know , however the naysayers did at least spur me on to speak to the solicitor. I knew I was right as previously the 'trust' owned part of GPs house after they died.. so me reason why it couldn't equally own the house we all live in. Freeing up my income to maintain them appropriately.

hi @Youknownorhing so glad to read your message. I posted earlier on in the thread saying I agreed with you and had been advised something similar to you have now.

Due to some of the other posters being so adamant it wasn’t possible I was starting to worry I had been misadvised so I’m quite glad you posted 😀

My concerns are more that your ex has already shown he's capable and willing to forge your signature, remortgage etc. I'm more worried that your ex will continue doing the same, borrowing against the house, getting credit in your name, so that when it's time to pay back the trust the money is gone.

that is something to look out for - @Youknownorhing have you asked the lawyers / trustee?

Perhaps you need to add a trustee signature requirement to the mortgage documents to protect against any loans to be taken against the mortgage etc?

I’m so pleased OP. I posted earlier that I had been a child in a comparable scenario. The difference in the ease of my mum’s life made such a difference to how my childhood felt. ❤️❤️❤️ I can tell you’re a really thoughtful mum.

ps. But I do agree with protecting against your ex’s fuckery. My mum made sure my dad didn’t know the mortgage was paid off just in case.

Good luck OP. Despite my comments I hope things work out for you. I do not agree with what you are doing and I would like to know what IFA suggested this was in any way permissible let alone advisable. They have really opened themselves up to a complaint from the beneficiaries in the future that could see them liable for hundreds of thousands in redress. My own compliance team would have me thrown out the door by the seat of my pants for going anywhere near facilitating this course of action.

What I really don't understand here is the actual benefit to you. You pay interest on the loan to the trust rather than the bank, either way you're still paying interest, albeit at a potentially lower rate, all you're doing is switching debt to a more sympathetic lender, sympathetic because, well, you're its manager.

I pray that you keep your job and have appropriate life cover and income protection in place, because if you mess this up you will have screwed over your child.

The interest is paid at the time of sale or a % of the appreciation, whichever is highest. That’s the benefit. The op meanwhile has more cash to spend each month to spend enriching her children’s life’s on a day to day basis.

The trust will be protected from job loss etc just as a bank would be.

It really isn’t a risk for the children.

But the trust getting its loan back, both the capital and the interest is dependent on the OPs ability to pay. If she defaults, the trust loses capital and growth (interest payments). The bank is protected as it has first charge and absolutely will use that if they need to. I can't see that happening if OP defaults as if she finds herself in a hole she'd be

Its a big risk to the trust without the level of return that would be required to make that risk efficient.

Apologies, should read like this:

The bank is protected as it has first charge and absolutely will use that if they need to. I can't see that happening if OP defaults as if she finds herself in a hole she'd be obliged to dig herself deeper by enforcing the loan as trustee. I pray this doesn't happen.

I don't see what everyone's issue is? I think this sounds like a great solution. It allows the kids to stay in their family home (I came from a broken home myself and understand how important this could be to them) plus they get to have a nice lifestyle and attend all their school trips and activities etc with a Mum who isn't stressed about money. I genuinely can't see a downside.

Sounds like it's a decent sized family home and will the equity that will build over the next 10-15 years it will leave Mum with plenty of equity to downsize when she no longer needs/wants such a big home.

Go for it Mum. Sounds like a great plan to me and if I was your kid I'd never have had an issue with this!

If mum loses her job and can't repay the loan?

Its nice to see common sense win; sad to see how uncommon it is!

Those with common sense will hopefully read this thread and appoint a more competent, financially secure trustee if they were to make bequests to minors, who will manage any trust assets without reference to their personal circumstances.

Agree this is the best option because of inflation and because of the short term benefit to QOL for your children. Well done, great choice.

I love how some people on this thread, having been proved wrong - ' (we can) you can't do that' , 'it's almost certainly illegal' (it's not) .. etc etc are unrelentingly negative about our solution.

We have now moved on to the what ifs ..
losing my job. ... civil servant for nearly 35 years. So redundancy would be early retirement .. bring it on !! Although that would only happen if there was no appropriate position across the entire civil service... sadly a bit unlikely. However as a CS my final salary pension which only closed last April - is payable in three years and career average when my

Ex-H raising money on the house. Not possible. I used my inheritance towards the mortgage on the condition he came off of it. The mortgage company would not agree until the capital amount was lowered to something they deemed affordable for me alone . However they factored in substantial CM which is not available.

As his head is ruled by his dick , he was only too happy to get out of it for free. So he can start with a 'clean' slate with gf overseas .

Sale or remortgaging requires self and trustee to sign - as trustees and myself as joint owner. Solicitors believe that a 'fraud warning flag' can be activated by LR . I am looking in to how we go about it.

I do find it odd that there are so many people on this thread who believe I would
a) defraud my children.
b) Prefer me to struggle by trying to raise 2 kids on about £300 a month after mortgage /bills//etc. when there is a substantial sum under my control earning £5k a year .. whilst I pay out £18 k. ?
c) Prefer that I use their money to pay for normal activities that are clearly within the remit of a parent. Such as family holidays, extra curricula etc. - To me this is simply immoral. It will whittle down their funds which in my opinion, is my responsibility to grow.

It wasn't an immoral suggestion at all. By that logic you could say its the remit of a parent to ensure they can afford to keep a roof over their children's head without using their own money 🤷‍♀️

@Everanewbie but she has a property worth 400k? The plan isn't even to repay the loan using her earned income it's to sell the property to repay the kids and then use the remaining equity to buy a smaller property for her?

It makes sense for them to stay in the larger family home whilst the kids are young and then when they're older and move out there will be enough equity for mum to downsize to a 2 bed and the kids to get their money back

Couldn't agree more OP.

Reading some of the responses makes me wonder what kind of parents these people had that their first instinct is suspicion that you're somehow trying to defraud your children???

I thought it was abundantly clear from your original post that your priority is the children's welfare both now and in the future. You're looking to ensure they can remain in their family home after a period of significant upheaval whilst also ensuring they don't miss out on things like school trips and extracurricular activities. And on top of this you're able to do it whilst ensuring their money will still be there for them in future.

Ignore all the naysayers, you clearly love your children and are looking to ensure the three of you as a family are in the best position possible both now and in the future ❤️