Grandchildren & house inheritance

[FamilyHouse]

A real puzzle this one...

My parents want to leave their holiday home to their grandchildren for use as a holiday home. It has great sentimental attachment for most of the family (though not all - I’ll come to that) and not high value in monetary terms.

But how best to manage this? I can envisage many potential problems! They have another rental property and one possibility would be to put both properties into a trust so the income from the rental would part fund the upkeep of both, and some additional funds from grandparents estate, along with some form of payment for actual use.

However down the line what if there is larger expenditure needed?

And not all the family feel the same emotional connection - would it be best to pay them off so to speak from the get go?

I know we do need professional advice, and will get it, but it would be good to have some sort of idea of how we manage it beforehand. Perhaps this post would be better in relationships

Only 4 people can be on title deeds so something needs to be done regardless. All the general information on trusts and even family investment companies relates to estate planning & tax, and this doesn’t fall within those parameters.

The house isn’t in a location where it would get much in way of holiday home rental, but it’s of value to us as a family and there’s the desire to try and make this work, and though I’ve seen first hand the sorts of rifts this kind of situation can cause, we want to try!

Any advice??

Sounds like a disaster waiting to happen. There was a similar thread on here with the same scenario where it had actually happened. Some wanted to sell, others to keep, others to buyout and there was also a large maintenance bill to pay which only some could afford.

Ah I didn’t see that thread. Yes, I know how it sounds, but would love to try and figure out a solution!

House is in the UK.

You could ask family members which ones would want to keep holiday home to use and which ones wanted to sell. If you had about half of each could you sell one home and give proceedes to ones who do not want to use family holiday home and keep the other one and try to rent it out one or two weeks each year to cover council tax, gas, electric and general upkeep. You could say that each person that wants to use it pays a nominal fee of say £50 to cover utilities.

I am interested in what happend OP as we have a holiday home in France with 7 bedrooms and until this year we stayed for 6 weeks each summer and often a week or 2 over Easter too. My sisters, nephews and nieces often come to stay there both when there but also often for a week during spring or autumn. I don't charge them anything and we are just glad they can share it with us.

We would like to leave it in a trust for to use when they wish. It could be rented out for 2 or 3 weeks each year to cover cost of domestic house tax and utilities like water, and electricity. One of my nieces is an accountant and she has offered to take responsibility for renting it out and making sure all family members could book time in for a holiday when they wished. My 3 children seem happy with this arrangement as none of them want to sell it or see it empty for months on end. We have 6 b2l properties and these will be shared between our 3 children and foster son. I am of opinion it could work if family members want it too.

You want to keep it OP, but it is for your parents to to take advice about the best way of doing this. It sounds like a disaster in the making to me as well tbh. Who is going to be responsible for the maintenance costs and the bills? If the other rental property is left to someone else, you can't make them pay for the holiday home out of their proceeds!

What if the grandchildren don't want it as adults? They may not have the same feelings about it as you do, unfortunately.

caringcarer -You know you need your English Will translated into French and registered with Notaire? Also expect you know you can't disinherit your children in France and inheritance tax differs depending on how related the beneficiaries are to the deceased.

Some good points, thank you.

caringcarer Sounds similar, good to hear you think it can work if there’s the desire to make it work.

It’s my parents who want to keep it for future family use, and have asked us what we think. But yes I want to keep it too, I would happily take it on myself if I knew other family members weren’t interested. My brother & his three kids have a very strong attachment as do my children, and keen to try and think of as many potential pitfalls in advance. Divorce (though currently not on the cards for anyone I hope!) is something to bear in mind.

Something to consider is the financial situation, either now or in the future, of everyone involved. I am close to a family of three siblings who were left a property, much loved, as in your case OP. One sibling, although not exactly struggling financially, wasn't well off either. So she was in the situation of living quite a modest life, no money for luxuries, whilst owning a third of a property and having to contribute to the upkeep of it. All agreed to sell it in the end.

Yes I imagine it could be very difficult if you needed the money. I would hope however we could figure out a way to ensure that no one had to pay for any upkeep except for a contribution for actual use and that rental income from the other property would fund any major expenditure (or even be sold).

If the house was in some sort of trust could that avoid any feelings of ‘ownership’ rather an entitlement to use (at cost)?

My sdad ended up owning 4/15ths or some ridiculous percentage of a house like this. It was left to 5 of them but then after deaths, divorces etc it was all a mess. It was impossible to manage as there were people who had never even been who owned a bit and getting money for repairs etc was difficult.
Eventually one of the owners managed to buy everyone else out but they couldn’t get a mortgage and it took ages - someone had to be tracked down in Australia

My neighbours had the problem that they bought their siblings out of the parent’s holiday home, but then the siblings wanted to stay there as usual! It caused awful angst as the parents (still alive) were also still regarding it as their right to decide who stayed, and saying, “Awwww, don’t be mean, let Jim and Jane go as usual...”