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.

Absolutely sensible idea, go for it.

Tying up a trust fund assets in a single residential property🙈

You may not agree but you were stating it was illegal, immoral, etc - let it go; if it makes sense in the OP's circumstances and is done at arms length with proper steps then its the right thing to do - not one opinion is right for every circumstance.

That's the problem, everyone these days thinks that opinions of laypeople are equal to that of a qualified experienced professional. My opinion is based on years of study and real life cases that I've advised on a reviewed over a long period.

Based on the Trustee Act 2000 OP would not be discharging her duties correctly. Something that a previous poster noted that I hadn't though of too is that EXH may turn up out of the blue and disclose to the children how OP is tying up their entitlement in her own affairs and pointing out how every little luxury she enjoys is because she's used their money. And then promote action to remove her as trustee and liquidise their entitlement, ergo force the house sale. All possible long before age 27. I know that's not completely fair on OP who thinks she is doing her best but that's the kind of seeds that can, not entirely illegitimately, be sewn.

Yes, as it was originally.

The only real difference I can see is that the children benefit now (through mothers increased disposable income, secure home and minimal upheval) AND financially later when the asset is sold.

Yes, the home was left 4 ways, 2 adult and 2 children in trust. The house was sold so that, pretty ironically, OP and other adult could benefit from their inheritance, unshackled from an illiquid asset linked to others, a situation she seems intent on reversing now that she's released her share.

I really want to give up but I do hate mis-information! For that reason alone I am offering this acurate free advice on MN - someone needs to counter all the rubbish spouted on here!

I don't really want to out myself, but rest assured @Everanewbie that I am extremely well-qualified in a respectable and traditional profession that takes years to acquire post degree (unlike an IFA which I believe is a level 4 qualification, the equivalent of a first year degree)! I have over 40 years of experience in trusts and have acted as a professional trustee for more trusts than I can remember. I was, until I retired, an international leader in my field and reached the top career wise. My credentials are indisputable if anyone wishes to question them.

All your nonsense about the trustee's duties of investment is very mis-informed - this is your position as an IFA, not the trustee's position. You also seem to take a particularly cynical view, but don't appear to appreciate that the stock market also goes up and down regularly. There are risks in all walks of life, and trustee's responsibilites do not go beyond those of any other individual unless they are a professional. Providing the OP takes appropriate advice (from a professional lawyer or accountant) then there is no issue.

I can only assume you are unmarried and live alone. Otherwise, are you aware that most property purchases are subject to a declaration of trust? In fact anyone who owns a property jointly or as tenants in common with someone else has effectively created a trust! Are you saying all property trusts are inappropriate investments?

An added benefit of the trust buying a share of the property is that it is very tax efficient in both the short and the long-term, far more so than your elaborate offshore scheme! I know there is nothing illegal in accumulating funds offshore, but since David Cameron's father was named in the Panama Papers, people are understanably nervous about such things.

Not my position as an IFA, but my interpretation of trustee responsibilities as stated by the trustee act.

I don’t believe you are what you say you are, and calling an offshore bond an elaborate scheme reveals your ignorance. How on earth can a residential property direct holding be tax efficient?

This action is such a betrayal of trust.

OP should really have simply extended her mortgage term to reduce the monthly cost, it was obvious her mortgage was for something like 12 years at 5%.

The trustees should then have invested the inheritance in low cost index trackers, and should probably have also moved £2880 into each childs SIPP each year, and then £4k into each childs LISA each year when they turn 18.

I hope that one of the beneficaries doesn’t have a child, get married and want to buy their own home aged 18. That would mean the house has to be sold then, as trustees have to act in the best interests of the beneficaries; and forcing them to stay living in a part-owned home instead of their own home with their own spouse and child would be a legal breach of trust.

The age of 27 is not when the earliest date they can benefit, it’s the earliest date they don’t need the trustees to agree. They can benefit aged 17 to buy a car for example if the trustees believe it is in the beneficaries best interests (and if the courts would agree - if it’s tested thus).

There is so much that could go wrong - nobody knows the future.