Advice re children owning a second home

[Sunshine6195102]

My sister and I have inherited a property from our grandmother (mothers side). We have sold it and are planning to buy a property close to us for our mother to live in for the rest of her life (combined with the proceeds of Mums current house). We want to safe guard it as neither of us have great marriages and my husband particularly is very controlling so I feel we may divorce at some point. My sister and I both have two young children each and would like for the 4 children to own the property somehow so it safeguards the property for their future (our mum in agreement) and so it protects it from our husbands should we divorce. Is there any way of doing this please such as putting it in trust etc? Thank you.

This isn’t a good idea I’m afraid. The DC will lose any first time buyer status which means that when they do come to buy their own properties they will have to pay higher stamp duty. In addition, if they marry in the future, their spouses would be entitled to a share of their equity - which would include the house. The only way to do it to avoid your DHs accessing the money is to put the new house fully into your DMs name, but should she need care later in life they would take the whole value of the house into consideration.

Yes, it can go into a trust. You should take legal and financial advice on this. Your children cannot own the house if they are under 18, but they could be beneficiaries of the trust, as could you, your sister and your mum.

A discretionary trust would mean that they would not be entitled to to the house, so spouses would not have a claim. I don’t think this would affect first time buyer status, as they wouldn’t own the house. But proper legal advice is essential.

There is no guarantee that a discretionary trust or any other approach would work. The Matrimonial Causes Act gives the courts the power to set aside any transaction that was made with the intention of stopping your husbands having a claim against the property.

This is poor advice. The benefits of already part owning a property would dwarf the benefits of any first time buyer status which may or may not be in place when the children are old enough to buy anyway. And they might not want or need to for many years in any case.

The best way to protect equity is dont get married. Never understood the clamour on this site to push marriage or expect that everyone gets married.

Spend the money leaving your crap marriages.

To add to my earlier advice...

Putting the property into trust or finding some other way to give it to your children may not work. The courts are able to set aside any transaction intended to reduce the financial settlement for your husband, so they can treat the house as if you and your sister still own it. If the transaction takes place within 3 years of divorce, it would be up to you to prove that you weren't trying to reduce the financial settlement. After 3 years the transaction can still be set aside but the burden of proof is reversed - it would be up to your husbands to show that you intended to reduce the financial settlement.

Having said that, this is an inheritance and you are clearly keeping it separate from the marital finances. In that situation, the courts will try to preserve your inheritance for you and will only dip into it if there is no other way of giving your husband a fair settlement. There is therefore a decent chance that your children's future will be protected even if you do nothing.

I would recommend consulting a solicitor.

The benefits of already part owning a property would dwarf the benefits of any first time buyer status which may or may not be in place when the children are old enough to buy anyway.

Surely the benefit would only exist if all beneficiaries decided to sell or were able to buy one of them out if the situation arose.

I think ownership between 4 individuals would get very complicated.

In most relationships, the woman is the weaker party financially. In that situation, marriage protects her interests should the relationship end. It also makes things much easier for her if her partner dies without making a will - she will automatically be entitled to inherit without having to go to court to fight for an inheritance. That is why it is frequently recommended on here.

Another approach would be to loan your mum the money and place a caution on the house deeds. So, effectively, you and your sister are providing a lifetime mortgage for your mum.

Either that or put the money in trust and then the trust lends the money to your mum.

You can change the will with a Deed of Variation and leave all the money to your children instead of to you and your sister.

If your grandmother died within the last two years then it is treated for inheritance tax and capital gains tax as though the change were made by your grandmother

If it is more than two years since your grandmother died then there may be IHT considerations if the money is not going to a direct descendent.

This explains what needs to be done:

https://www.gov.uk/alter-a-will-after-a-death

From there, the trust loans the money to your mum to help her buy the house and a charge is put on the property (just like when you get a mortgage) so that the house cannot be sold without repaying the money to the trust.

This will protect your grandmother's money from being taken for any care home fees.

Also, there is no problem with the children not being first time buyers etc as the trust is not buying the house but just lending money to your mum.

Get legal advice. My friend had saved £s to see her DS through uni. Unfortunately when she went through divorce from her twat DH (DS not his) this money that she thought was ring fenced was not. It was included in her calculation of assets. Very difficult situation and there was nothing she could do.

If you’re within two years of your grandmother’s death, I think you can vary the will so it’s as though it goes directly to your children.
However you definitely should get legal advice on this.

If it goes in trust for the children the trustees are supposed to act in the best interests of the children not their parent eg by getting a proper rent. Additionally if yoyr mum is putting into the trust (via sale of her house) then that .might be viewed as deprivation of assets if she needs care in the future.

Inheritances are not marital assets. Inheritances are expected to follow blood lines, not pass to husbands or wives. I’d check with a lawyer but I know I would not have had rights to my now ex ‘s very large inheritance at the time, even if I’d tried. It would have been a life changing amount for me, but it was all his by right and I left with nothing. I just wanted the freedom.

If an inheritance is kept separate from the marital finances, it is not a marital asset. However, the courts will dip into it if that is the only way to achieve a fair settlement.

Yes, I suppose, but fair is subjective. It’s not fair to take a gift from a dead relative, but the law is a blunt instrument. Seems as though everyone getting married should have a an agreement legally drawn up to not chase inheritances. Apparently that can be done..to have a consent order. Maybe they could draw one up with the DH that inheritances be protected for the children’s future

Can your mum afford to buy a property near you without adding the equity from your Grandma's house?

If you vary the will to go to your children you could just put it into savings and investments eg 9k per year into a junior ISA for each child.

"If it goes in trust for the children the trustees are supposed to act in the best interests of the children not their parent eg by getting a proper rent."

I'm not sure if you're aware but what are commonly called "lifetime mortgages" usually have an option to either pay the interest or have the interest rolled up and added to the debt.

In this situation, lending the money to the mother at a typical rate of interest used for lifetime mortgages and rolling up the interest until the mother passes away may well be in the best interests of the beneficiaries.

See a lawyer.

Say your primary concern is for the children to benefit.

Discuss the pros and cons of a trust, or of a simple Deed of Variation in which the money goes direct to the children now ( though this would mean the money is not available for your Mum’s new house).

OR a Deed so that the money goes to your Mum’s, and she leaves her estate to the children. Or what remains should she need care.

Meanwhile do not put the money in any joint account with your DHs, and do not use a penny of it for household , home or shared expenditure. Once you do that you have used it as ‘family money’ and it’s in the marital pot.

How old and how healthy is your Mum? If she doesn’t need the money to build / buy a house, just vary the money to her, divorce your DHs, and once you have the decree absolute, she could give it to you! Disclaimer; I am not a lawyer and this would seem fraught with many risks!

This might still count as an interest in property - it would have precluded someone from using help to buy for example. I’m not sure about the scheme that has replaced it.