Fil signing over property, impact first time buyers

[Changeychangee]

We are hoping to buy in the next year or so. Purchase has been massively delayed by half a decade due to DH debt/furlough period.

FIL has decided to sign over his property, value circa 100k, to DH/SIL in life while remaining in residence.

This would mean that we go from being first time buyers to second time purchasers.

I am worried about

a) losing h2b isa bonuses 6k if buy under 250k and stamp duty costs if buy over 250k.

b) increased interest rate on our mortgage.

c) capital gains tax on second property when eventually sold.

c) SIL in the process of divorce from BIL who has money issues - FIL may end up out of home if sale forced by BIL.

d) claw back via deprivation of assets if FIL goes into a home.

I feel I have a valid concern about the potential costs to us over mortgage term substantially reducing the benefit of anything DH gets.

How would you handle this, am I blowing this out of proportion? What ways around this would you suggest??
I’ve already thought FIL could sign over to our DC instead or I could purchase a smaller property on my own rather than go in with DH.

I am already due to provide 85% of a six figure deposit and pay half the mortgage. I feel this is potentially another financial hit from DH side and I feel pinched enough as it is.

We were in a similar situation. Mums financial adviser told her she should put her (very expensive) house in our names, split between her and her three children. I was initially confused about why as this is was presented as a way to reduce the inheritance tax bill and avoid having to sell the house when she died to pay said bill but i didn't understand how this could be legal.

Digging deeper it looked like we would have to maintain some complex system where mum 'paid' us rent so as to avoid deprivation of assets accusations. It also as you said, transfers the asset into the estate of the children. All three of us are married and run businesses. If bankruptcy or divorce happens in your or SIL marriage then the house becomes a potential asset to be split and FIL could have the house sold from under him.

Also your FIL can't give you the house and then continue to profit off it himself by either living in it rent free or earning an income from it while it is someone else's name. This is classic deprivation of assets. He has to pay rent, or you/sil have to move in.

We obviously didn't go ahead, the risk was too great.

(I am not a finacial advisor fyi, just what i have picked up from dealing with mums estate.)

Can you present it to DH/FIL as potentially risking him losing his house to the divorce or even YOUR divorce or bankruptcy etc? He is putting his house at risk by giving to other people. If one of his children dies for example then their spouse or children would inherit that portion of the house and it could be sold.

If your H does this he’s an idiot

@Changeychangee all you can do is protect your money as much as possible.

Why does fil want to do this? There seems little advantage longer term and a lot of risk.

I think he is worried about potential fights with the two siblings or one (the more dominant one) taking more than due as this happened with himself and his own sibling
This is just nonsense, though.

If he writes a will his estate will be dispensed accordingly, nobody will be able to grab more than their allocated share.
I suspect it's actually a misguided attempt to avoid care home fees.

C) happened to a friend of mine. SIL would be insane to consider this. My friend's grandparent put their house in her name. Friend divorced, exH came after half of the value of the house. Which GP was living in.

Can you write a very unemotional, succinct letter to outline your concerns and ask for it to be given to the solicitor?

Ask DH, SIL and FIL to write down answers to the points you raise and request that they not sign until queries are all resolved to everyone's satisfaction.

Tell your DH that if he refuses to do this, then you will assume he has no regard for your family finances, nor respect for you as his wife.

Where do you currently live OP? Are you selling your family home in order to buy the new house? That would change the stamp duty issue.
Not many conveyancing solicitors understand this and I ended teaching mine. They even changed their new client forms after.

I've recently seen this exact situation with stamp duty play out 2 ways and it depends on where you currently live.

SIL is another issue. As are care fees.

@cupofdecaf we have been living in a house owned by my family with minimal charge to save deposit.

We are first time buyers.

There's a helpline run by HMRC that can go through the stamp duty implications with you.

So we sold our home that we lived in and bought another house. DH owns half of FIL house it having been signed over. No rents ever been paid. At first our solicitor said we had to pay higher rate stamp duty but that's not how I understood it so i phoned HMRC who directed me to the correct policy. Because we are married and selling the family home to buy another family home and we weren't increasing our number of properties as a couple, normal stamp duty. Had we been seeking a by to let to buy another it would have been different.

Friend of mine- parents signed their house over to her and sibling when they had financial issues years ago. Her and DH were in rented but wanted to buy a house. They were increasing the number of properties they owned as a couple. Her parents paid the stamp duty as they had created the situation. What they did do though is buy a cheap house so the stamp duty was small. Then in a few years they can sell their main residence and buy a big forever home without higher rate stamp duty.

Sounds like you are in my friend's situation. I'd suggest holding off until you've bought (and sister is divorced) or could you buy somewhere cheap and live there for a bit then buy a bigger house?

If they go ahead, would your DH share be worth more then your current savings?

I actually think this could be the end of your marriage as you will quite rightly resent him for the financial strain he will knowingly impose on you.

If you do divorce, you will get a share of that house. Divorce might be better for you and your children

Land tax helpline

@BurntOutGirl

The amount it is worth to DH is probably about half of our current savings, two thirds at best.

This sounds a hard situation for you, even more so as you are being cut out of the decision although it impacts you. Agree with PP that this might signal a huge strain / end of your marriage as you aren't being treated as an equal adult.

We had to look up some info on a similar topic a little while ago so I hope some of these links might be useful reading:

Article from a firm of lawyers noting the serious risks involved about giving away a property;
www.simpsonmillar.co.uk/media/can-i-give-my-house-to-my-children-to-avoid-inheritance-tax/

www.saga.co.uk/magazine/money/personal-finance/giving/what-you-need-to-know-about-signing-property-over-to-your-children

citywire.co.uk/funds-insider/news/can-i-give-away-my-home-to-avoid-inheritance-tax/a589586

Is Fil using a proper regulator solicitor or some cowboy advisor selling him a "scheme"? It's not always easy to tell as anyone can call themselves a lawyer - it's not a protected title like solicitor. And there are horrible firms out there that prey on the elderly, get themselves appointed as executors and attorneys, charge monthly fees for storing wills and setting up useless 'asset protection trusts'. It's a disgrace and makes my blood boil!

Reviving this thread. I had thought the issue had been put to bed, however SIL ambushed me in an impatient manner yesterday when I thought we were only there for a catch up. She seems intent upon this course of action. Already has siphoned off 20k of FIL’s money and suggested she take everything else (80k) into that account. Plus sign over house. Seemed to want to steamroller me into making DH cooperate. I’m baffled, there appears to be no grasp of the law whatsoever. DH will hit the roof if I so much as say anything about it. I haven’t been able to sleep and have been so anxious it’s felt like I’m going to have a heart attack.

How do I handle her? And DH? I feel quite cornered over this.

DH will hit the roof with who?
She's taken £20k from FIL? For what reason?

DH will hit the roof with me. He is very against me saying anything negative about his family. In one instance where I did and stood my ground myself and the DC were frozen out by all. Hence my anxiety with this latest issue, we are only recovering from that.

Apologies if rambling am exhausted.

SIL has instigated this path of action urging FIL to sign over all for some time. Possibly anxiety he will spend, or leave to partner, or it will go to care home fees. I don’t know.

Just revealed FIL has been saving in an account in SIL name, which he is entitled to do as been going on some time. But I’m concerned at the amount, that DH does not have an equal amount and that a still more substantial sum rests with him. I wasn’t aware of the amount of cash until yesterday and I am worried now that DH may lost out. He doesn’t seem to have any grasp of all this and is just wafting along with domineering SIL.

Do I email her to lay out the legal concerns and financial impacts on us? How best to approach DH and should I get separate legal advice? I don’t really have much standing here, though if the situation goes ahead it will really impact me.

Tell her your FIL's money is absolutely nothing to do with you. If he's still of sound mind, all his financial decisions are his own.

Tell her the house being put into both their names will affect you as FTB's but anything else is between her and her dad.

@Changeychangee I’m so sorry you are still having to deal with this.

Has SIL got her decree absolute and financial settlement in place? If not, that is probably the best way to approach it. Put it in writing from the perspective of you are really concerned her ExH may be entitled to some of the money in her accounts.

Also add in how concerned you are about the £ implications of not being FTB. Ask if they could delay until you have bought a home. Don’t mention about CGT, depravation of assets etc. it’s about kicking the can down the road.

Yes you need separate legal advice - get that first. You are going to have to be prepared to protect your assets.

I wouldn't email her. You said your H will kick off if you say anything against his family so getting involved in this without talking to him won't go down well.

@GoodChat I know I feel very uncomfortable about the whole thing. FIL functions pretty well, is still working but he can struggle with paperwork etc so she helps him with that.

I need to try and work out the financial hit on us. Unfortunately DH has reacted badly to me explaining how anxious I’ve felt in the night and asking for support. Taken SIL side immediately.

I think it's worth taking the financial hit and setting up an appointment with a solicitors for just you and DH. They can then explain all the legal and financial implications to your DH.