Ex wants to give his share of our house to DS in trust...is it even possible?

[BornToFolk]

ExP and I split up about a month ago. From the start, he's said he would sign the house and contents over to me. We had a chat about everything last night and he's suggested signing his share over to our 4 year old DS in trust, until he's 18 or 21.

Is such a thing even possible? I'm not totally averse to the idea, as long as it has some advantage. I just need to keep the house for me and DS to live in. I think DP's motivation is just to provide for DS rather than "losing" all of his equity to me.

He's said he'll still sign it over to me if I want to, this giving it to DS thing is just something we are investigating. I am going to take legal advice, obviously but can't get hold of my solicitor at the moment so just wondered what the MN experience was?

That's what you might get if you apply to court under Schedule 1 of the Children Act. Fair offer.

Personally i would have it signed over to you if possible.

Thanks Collaborate. Is there any advantage (to any of us) by doing that, rather than signing the house over to me? Obviously, when I die (and I need to do my will...) the house would pass to DS anyway.

I would imagine that your DH is protecting it for your DS, in the event of you getting together with someone else who would ultimately have a claim on your property.

I'm not legal - but it makes sense to me.

It would be a way of reducing the chance of Ds having to pay inheritance tax when you and dh are no longer around.

I live in London. Our house is held in trust between the 3 DC for this reason. (I mention London because even our fairly modest semi would be valued at way over the IT threshold).

3littlefrogs it doesn't work like that. Unless you pay your children rent, it is deemed to be a gift with reservation, and you are charged full IHT on death. If your children move out and then later on you want to sell, you will not be able to claim the principal private residence relief for CGT, as it would be your children's to claim and they don't live there any more.

What you've done could turn out to be very expensive for you.

Gosh - I will get the paperwork out and look at it again. We paid a solicitor a lot of money to sort it all out for us.

Thank you.

second collaborate - that wouldn't work

In OP's circumstance, I have a friend who lived with P and DC and when they split he moved out and put the house in trust for the DC

As aj says, it is a way of ring fencing the asset for DS if you were to remarry/have further kids

Thanks for your comments, that does make things a bit clearer.

What happens if I want to sell the house when DS is a minor though, or even after that? And if I did meet someone else and they wanted to move in? I'd be paying the whole mortgage but only own half the house, wouldn't I?

I'm inclined to say just sign it over to me. Obviously should anything happen to me, DS would get the house anyway and it just feels like a simpler solution. Plus I do feel like I'm owed something...not only for how exP has behaved but also because I've been part time, on and off, since DS was born and plan to go part time again when he starts school, which limits my earning potential and ability to save for a pension. Owning the house would give me more financial security.

At this stage I can see your intention would be that your ds would get the house but in ten years you may have 3 more kids and your ds would only end up with a quarter and not the 50% his father put into the house. That is what your ex is trying to guard against.

However, given the age of ds you are right that you may well be trapped in the house. I believe you can have the equity transfer so to speak so your ds would have a share in a new property but you really need to talk to a solicitor. The amount of equity in the house is also an issue. If you have 50% equity then in theory you will be responsible for the 50% outstanding and your ex should only be putting 25% in trust.

I would definitely get legal advice and make sure the documents are tight

What % is the outstanding mortgage?

The friend I mentioned above put the house in trust to dc but ex remained in the property. Friend also makes all mortgage payments.

Your ex can surely only put an asset in trust unless he continues to pay the mortgage on the value he puts in trust I'd have thought

Most of the mortgage is outstanding. We moved here 2 years ago but had a mortgage since 2005. We've (I've) got another 33 years worth of mortgage to pay! There's not a huge amount of equity in the house, I wouldn't have though, given what house prices are doing at the moment and for a while we were on interest only.
DS is 4.5.

The amount of maintenance that exP is offering is generous so I suppose he could argue that he continues to pay the mortgage?

I would suggest to your exp that you would rather he kept a share f the house until either you sell the house or your dc reaches 21 - then you will buy him out of his share. Then your exp can give the money straight to the young man.

As you say you will be paying the mortgage and you could be tied in an akward way to your ds owning part of the house.

But there is nothing to stop your dp starting a trust fund now and then adding to this later with money from a sale or whatever.

It may be that the share of the house is not clear cut 50% to you and 50% to your ex - it may well be a 70% to you and 30% to your ex.

I think try to keep things as simple as possible and not make affairs complex and emotional by bringing dc into the equation

You should come to a formal agreement that gives you the equity in the house in exchange for a bit less maintenance. There is no real asset here and what happens if you slip into negative equity?

I would not get into a position where he Is claiming to contribute to the mortgage. You need to completely separate your finances.

There's not a huge amount of equity in the house

Then I really think your ex is taking the piss - he wants to put in trust something he hasn't paid for. ATM he is paying - one months - maintenence, what happens if three years down the line he stops paying?

Is there a way when you have put everything together you can let him walk away with that and you have the equity in the house and he doesn't? So you get the house and he keeps savings, pensions shares etc

Precious little savings Ivy. No shares. We both pensions through our work.

I'm trying to separate finances. I've got the form for the bank to take his name off joint accounts.

He did suggest leaving things as they are (i.e both names on mortgage, we both still own) but I can't see that continuing long term and we may as well have a clean split now. I think he wants to keep his hand in, partly out of a sense of responsibility so that if something goes wrong with the house he would pay a share. But I prefer the idea that it's all mine, even the responsibility.

We've agreed to continue our life insurance and critical illness cover so if something does happen to one of us, the mortgage gets paid off and the other person gets a lump sum for bringing up DS.

We've agreed to continue our life insurance and critical illness cover so if something does happen to one of us, the mortgage gets paid off and the other person gets a lump sum for bringing up DS.

which mortgage will that be - the one on your house or the one on his house?

Say he buys another house and then falls ill - will he be paying his own mortgage off or yours? As I doubt it will run to paying both

I was only thinking of my mortgage really! We were planning to talk to the financial advisor that sold us the product to find out if it's still appropriate and change it if not. I do still want to have some kind of life insurance on exP as I'd be stuffed if he stopped paying maintenance...

I know someone who did this. It was years ago and the legal implications may be different now. When the child (now in his 40s) reached 18 he forced the sale of the house. His mother hasn't recovered financially and neither has their relationship.

I don't have any legal knowledge about this but it doesn't sound good to me. I feel it is wrong that the house be put in trust, it will complicate matters for you and has implications for what you can do in the future. You are better to have a clean break I think.

Presumably you will run this past your lawyer before even thinking about agreeing it?

If you had stayed together, the house would have been yours together and you as a couple would have decided what to do with it - it wouldn't have been your son's house until either you gave it to him or you both died. Why does that principle change because you are separated? The house is a joint asset, the value of the asset should be sorted out but it is not the rightful property of your child, it is yours, or your ex's, or both of yours. Once it is yours, like any good parent, I am sure you will use that asset to the benefit of your whole family - whatever shape that family takes in the future.

This sounds like one of those gestures that seems nice but actually isn't - because it ties the hands of one of the people involved (you).

I do still want to have some kind of life insurance on exP

as far as I am aware it is illegal/can't do it, to take out life insurance on someone else unless you are business partners - this was certainly the case back in 1990. Talk to the financial advisor about it as he will/should know the legality of this.

You are not going to be married any longer and unfortunately you can't have a say in where or what your ex's life insurance is paid to, even if he says one thing it doesn't mean it will be stuck to a few years down the line when he may have another family and other children.

Yes this is the grime truth about if he pegs it money will stop

hmmm, it was the solicitor that suggested the thing about life insurance. Maybe I got the wrong end of the stick? Whatever happens I'll be getting advice from the solicitor/IFA.

To have joint life assurance, there must be a financial interest between both parties. Having a dependant child will satisfy this so you can keep your existing life assurance, or in deed, take out new policies on each others lives.