Dp wants to use a lumpsum inheritance to become a part owner in the house - WWYD

[ForgetMeNotBlue1]

there is a bit of a backstory to this but just wanted to get your opinions as I'm wavering on this

when I met dp around 8 years ago, he earned a similar amount to me. Executive role, in a niche part of the music industry, in a job that he thought he'd be doing till retirement. Life, financially, was easy then because we earned the same.

In early 2019, dp lost his job, completely unexpectedly and because of his age and because of the music industry being in decline, he could not find another. After 6 months of him having no income whatsoever, applying for every job and getting turned down each time and getting more and more low about his prospects, we decided that he would just have to take the first job he could get, even if the salary was low.

he found a job earning 1/5 of what he was earning before that was part time, while still looking for another one that paid better and suited him better. Then Covid hit and there was nothing around. This isn't him not trying enough - I've heard some of the interviews he's done and some of them recently they have told him they have had hundreds of applicants for one role.

in the meantime, he's about to come into an inheritance. He wants to pay down the mortgage we have on the house (which I own in my own name at the moment) and get a share of the ownership.

from his position, I can understand why he wants to use his inheritance this way and gain an asset. But I am concerned that he will own say 1/4 of the house but is unable to contribute much to the running of it, due to his disposable income being so much lower.

it will help me because his contribution will practically bring the mortgage to zero so my disposable income will go up (but I will lose part of the asset)

this was always our plan, that he would become a part owner of the house, but this was when we earned the same and it made sense. Now that there's such a disparity, I can't decide in my mind what is fair and what isn't.

I think you can draw up some sort of legally binding agreement over contribution percentages based on how much each of you have put into the property (I read about this a while ago and I think it was referring to deposits?)

Sorry I can't remember more, but whatever you do, it should probably be a legal agreement, a house is a big asset that should be protected.

I'm not sure about fair but I wouldn't do it

Did you buy the property before you got together?

Are you both on the mortgage and what arrangement have you got around share of repayments?

thanks, yes that would be the plan. We can own the house in the % we contribute to it (tenants in common/trust deed).

How much is the inheritance? Would he be better using it as a deposit of his own? Do you have long term plans together, marry kids etc?

yes it's my property, bought around 10 years ago before we got together

if he contributed, the mortgage would fall to zero basically so we would own the house together with no mortgage

I think it largely comes down to how secure your relationship is and where you feel you are going. If you don’t think the relationship will last, then clearly don’t do it. If you think it will, then you both need to see a solicitor to safeguard your assets.

Do you plan to share finances in the future?

no we are both older - we won't have kids together (I am 48) and he is early 50s

in a sense, we have some degree of shared finances because we live together and before the huge drop in his income, he contributed a fair amount. Now it's dropped substantially, he can't contribute as much given his disposable income is so much lower.

Our relationship is fine, we are both talking about a long term future, but there is something making me jumpy about sharing assets with him

I think he might be better off investing it somewhere but I can totally see why he wants to contribute it towards the house - it makes my disposable income higher and makes him feel he has contributed which has been a huge issue for him since he had to take the lower paid job.

What about investing in a rental property?

Would the money not be better in some sort of pension plan?

The thing about tenants in common/split on percentage of ownership is IF you split up, would you be able to afford to buy him out, including inflation? iirc it's very difficult to get a mortgage 60+, would you be forced to sell a house you wanted to stay in. Sorry if you've already thought of this.

I wouldn’t.
He’s in a very precarious position, so he should anyway be keeping some ready cash in case he loses his job again / becomes too ill to work.

If you split up, and it DOES happen - you’d be having to raise a mortgage to buy him out not just his £x but his £x + % of equity growth. Do you fancy that?

Are you already covering a greater percentage of the household expenses? Probably yes, and that’s fair in a partnership with a higher earner... but is it still fair if his money goes on an asset for him not into making his contributions more inline with wealth?

If he was such a high earner before 2019, and us in his 50s, was he maximising his pension contributions back then? If he was paying 40% tax and didn’t make pension payments to get the full tax relief, he couldn’t probably make a big amount by doing so now (I think it’s 4 years you can go back) and it’s not tying it up long as he’s not far off 55. Can’t remember if you’re called to current year maximum salary, but it’s easily googled.

There’s a reason you’re wavering, and there’s a reason you’re not sharing the backstory whilst telling us there is one. Don’t do it.

Has he not been contributing towards the mortgage so far, before he lost his job? How long have you lived together?

he's got a bigger pension than me and I don't think can put more money into it - but that's an interesting point and I will ask him to look at it

yes, this is exactly my concern around the contributions vs the asset. He would own say 1/3 of the house but not be paying 1/3 towards the bills due to his income being so much lower.

thanks - you've all crystallised it in my mind. I am going to suggest he looks at the pension and the rental property but I feel far more comfortable owning my house myself.

I totally understand your reservations, OP. As a pp said, much better for him to put it into a pension plan. Apart from anything else, who knows where property prices are going in the next few years.

I wouldn’t.

The fact you are even asking says you have doubts.

So don’t.

Don’t forget, it’s not a one time decision. Don’t be rushed into it. If he pressures you, it’s definitely the wrong decision!

Your mortgage is manageable by you, and interest rates are at an all time low. So whilst it would save you some money, it may not be as much as you think. (separate to you no longer having the asset alone)

If he objects, you could stall for time over the pension suggestion (leave him to research) or tell him that his change of position has scared you enough that you don’t want money tied up in a mortgage.

Oops - cross post.

Sensible OP.

thanks all, that was really helpful x

You don’t sound like a partnership. Now he’s not a big earner you don’t want to be equal. The guy has hit hard times and has been struggling but hasn’t given up and now wants to put his inheritance into your property to make your outgoings less and you’re not feeling happy because you’d have to share your asset with him. It just sounds like a non serious relationship. He deserves someone there for him through the bad times too. (and I’m sorry if there’s some back story, this is just the way it came across from what I read).

Just no, absolutely no. There is no real advantage for you to this - losing your sole ownership of your asset would mean that you splitting up would be a disaster for you. Ok your mortgage would be gone but no... it's just not worth it, at all.

And how come he's the one older than you but he has no assets?

How long has he lived with you? Was he playing towards your mortgage until 2019 or even after that? Depending on how much it is he might be able to get an apartment or other investment property.

He is likely to feel insecure about accommodation in his retirement now. You could make wills now, if you haven't already done so - that's if it's a real partnership - and you don't plan on leaving your home to someone else. A rental property sounds like a good idea for him. Or investing it. Is there a small business he wants to start which wouldn't require much capital, or risk? This might be his opportunity.

we're not married honeyroar, nor do we have kids. We've been seeing each other for a long time now and I've been hugely supportive throughout this whole job loss period. I just feel nervous about sharing my house with him.

re his finances, he's just not as careful with money as I am. He was paying out a huge amount of maintenance to his exw and dcs (rightly so) and when I met him, he had debt that he was paying off too. I just don't think he's as careful with money as I am which would also concern me re the house and him owning a part of it.

sorry nervous of sharing ownership of the house I mean!

he's lived with me since late 2017/early 2018