Financial help for PILs - trust?

[balia]

We recently visited my PILs. DH's older brother had a quiet word and basically said that PILs were in financial trouble. They aren't very money savvy (not extravagant) and have made some poor financial decisions, I think (eg their mortgage - on a one bed bungalow - costs almost as much as ours does for our family home) He has suggested that DH and his other brother (ie the three of them together) set up some sort of trust, with PIL's putting the house in and living rent free, with some kind of agreed equity release to sort out credit cards etc and to give some small lump sums to their 2 half-siblings. The brothers would pay off the mortgage on the understanding that at some point in the future (ie when PILs die/can't live in it anymore) they get the family home.

We have no idea what this will cost or if it is even legal. Obvs if it all goes ahead it will have to be drawn up by sols etc but just wondered if anyone could give us any advice about it.

Many thanks.

There are tax considerations (inheritance and capital gains) that you should be wary of. There are trust tax implications too (exit and I think 10 yearly charges).

Get the property valued. what you want to buy is a remainder interest with the PILs having a life interest. You'd have to be precise about responsibility for upkeep and insurance. A good surveyor can tell you how much a remainder interest is worth bearing in mind the ages of PILs (the older they are, the more valuable the interest becomes). If what you're paying into the property amounts to the value of the remainder interest then you're giving good value for the property. It's akin to a private equity release. I think they are quite popular in France.

You'd need an accountant or a lawyer specialising in trusts and estates (perhaps mumblechum) to advise you further on this.

I think (eg their mortgage - on a one bed bungalow - costs almost as much as ours does for our family home)

That may be because the mortgage is over a much shorter term.

To be honest, in the light of what you say about inheritance, half siblings etc I would strongly urge you to get proper advice about the options before you start planning what to do and spending money on a solicitor to get agreements drawn up. There may be tax implications, inheritance disputes and all sorts to think about.

You'd be better off getting all the information together and talking through the situation with someone who knows the issues and potential pitfalls. You can get help through the CAB:
www.adviceguide.org.uk/england/your_money/money_management_index_ew/debt_help_with_debt_e.htm

or here:
www.cccs.co.uk/

You can also talk to an independent financial adviser to get expert help on personal financial planning and inheritance advice:
www.which-advisor.co.uk/?gclid=CICMn4-e9a4CFQkRfAodtzVCJA

I think the best way forward in your case would be to arrange for a financial advisor to visit them in their home - which is where all the relevant information is. Your DH and BIL etc can also attend too, so everyone is clear about the actual position, and the options.