A house. 2 brothers. How does this work please?

[Damnyoureyes]

After some informal guidance about something that will come up in the future.
A house owned outright has been left in a will to two brothers.
One brother lives in the house and has done for life.
Other brother married, house of his own.

When the time comes, if brother living in the house doesn’t sell and move out but has no means to pay other brother his share, what happens then?

Brothers on very good terms, no bad feeling here at all, just curiosity really.

Is there a reason the brother living there can't get a mortgage for half?

This happened to a friend of mine. House was sold, resident brother used his share to buy something smaller. Non resident got half the proceeds.

If resident brother was left his share with right to live there for life, not much other brother can do. The asset will continue to appreciate.

I think that there is that clause yes, resident brother has home for life…. Not sure though.
Ok that’s that then.

He probably can get a mortgage but is nearing 50 and wouldn’t want a large mortgage around his neck at this time of his life.

When the time comes, if brother living in the house doesn’t sell and move out but has no means to pay other brother his share, what happens then?

That’s not really one of the choices. He needs to either buy out his brother, by getting a mortgage, or they sell up and the split the proceeds.

He should pay rent to the other brother (half market rate)

The house is part of the estate.

By the time the brothers come to inherit there may be, for example, a significant charge against it for care fees. By the LA, or if the family have had to do equity release.

Or if there is also cash and savings or other assets in the estate one brother could get their share in cash, the other as the house.

If the house is the only remaining asset and it’s full value is inherited by both brothers they both own it.

And the options then depend very much on the detailed clause of the will.

Is there a life interest and in what terms? Til death? Marriage? The resident brother moves?

Is the resident brother vulnerable or dependent in any way?

Is the resident brother providing care that would otherwise need to be paid for?

Hello neither of which will happen.

Brother 2 kind of accepts that he will receive nothing from the will or from the house because of brother 1.
This money though could be life changing for him. (It’s not much, probably £50k as house isn’t worth much)
Oh well, thanks all

That clause is so shitty. The parent basically disinherited one brother but in a way that they didn't own that decision.

@hollyhocksarenotmessy

He should pay rent to the other brother (half market rate)

This is the answer if selling is not an option.

Is the parent still alive and discussing wills? If they are id definitely raise it and point out it means only one inherits.

It all depends.

Whether the resident brother is dependent.
Whether there is a life interest specified in the will and on what terms.
Whether there is any charge over the house, and in what terms.
Whether the house forms the bulk of the estate or whether there is cash/ other assets of equal value.

Whether IHT is due.

So resident brother does not have any issues, fully functional working adult.

Now then..care costs could be brought into the mix in the future for the current owner.

Interesting food for thought, thank you.

Agree with @LorenzoVonMatterhorn brother two has effectively been disinherited.

I’d speak to a solicitor though-right to live may not mean right to not pay anything. And a £50k mortgage is nothing if he’s working.

I'm guessing you're married to the non-resident brother.

It all comes down to what the Will says. If it gives the resident brother a right to occupy for the rest of his life, rent-free, then that's that. If it just divides the property outright between the two then either resident brother buys the other one out or the house is sold and the proceeds split, unless they agree something different between them. It's not any of your money until after death though so it's a bit distasteful to be sniffing around like this.

Very little cash savings, enough to pay for a funeral.
House is the main thing.
Current owner is in his 70’s, ok health wise but obviously this could change and he could need residential nursing care, who knows what the future will bring.
House would need to pay for that.

Has the resident brother been caring for elderly parents? Did that impact his earnings/ ability to earn?

Distasteful or no, it’s information that needs to be gained prior to any events occurring.

I’m glad to know where care home fees will come from, this was on my mind as it isn’t cheap and it could be a good possibility.
It’s helpful to be prepared and know what’s what.

Unless the resident brother has been given the right to reside for life (or whatever it's called), the house will need to be sold and profits shared between the siblings. Or resident gets a small mortgage to buy the other sibling out. Speaking from experience, this can all cause a massive fallout.

50k isn't really a large mortgage though, even for someone in their 50s

No, no one has provided any care whatsoever to elderly relatives.
Fully functioning fella there in his 70’s.

Brother 2 kind of accepts that he will receive nothing from the will or from the house because of brother 1

Well, he will half own the house, but if the ‘life interest’ clause is watertight it is unfortunately an asset he can’t use in cash terms.

It also means that if brother 1 died first and the house was sold, Bro2 would be subject to Capital Gains Tax on his half of the house.

But maybe Bro1 would write a will leaving his share of the house to Bro2?

Bro2 can leave his half of the house to his own kids (if any).

That clause is so shitty. The parent basically disinherited one brother but in a way that they didn't own that decision.

Why is it shitty? I stand to be brother 2 in this scenario and have no issue with it at all, brother 1 has never known any other home and like hell would I turf him out for the sake of 60k. If I inherit the full thing when brother 1 is no longer around then bonus. But then, I'm very independent and would never 'expect' or bank on inheritance, more than happy to stand on my own two feet. And if my partner dared come on a forum (a la OP) to question my families finances he'd be toast.

What sparked this thinking is Covid really.
So many “what ifs “ in my head.
Not just the 2 brothers situation but lots of other situations within the family.
It’s brought to the forefront so many things worth considering and discussing.

Thanks for your insight and answers everyone, really helpful.

If the owner is in his 70s, anything could happen.

The value of a £100k house would be snapped up in 2 years of care fees.

Or he could live hale and hearty for another 20 years (our family has 4 of that generation living at home, 2 without any help at all, at over 90).