Good idea to use my dc inheritance to buy dm’s house?

[Billi80]

My dc is only 9 and is about to inherit money. Would it be possible to use this to buy my dm (her dgm) house via a trust fund? My dm (her dgm) is very short on money and would give her a bit of respite in her later years. As my DD wouldn’t have access to the money till she is 18 it seems a better investment than ISAs, etc. Or is this idea bonkers?

You would need legal advice. Also what happens when your dd is eighteen and wants her inheritance, would your mother sell the house

No, what happens if the house value falls significantly in between. Falls into disrepair and needs to be knocked etc.

I’d be concerned about your DD wanting / needing to access the money just at the time when your mother is less able to move.

Also, would your mother be paying rent?

Anyone under 18 can not legally own a house.

If you’re the trustee, your duty is to the beneficiary of the trust not to your mum. I think you would be in shaky ground here (compared to equities or a property with a tenant paying rent). I’d also query what happens when your DD hits 18 and wants her money if your DM is still in the house at that point.

Certainly wouldn’t do this without legal advice as you’re potentially on the hook for breach of trust if it all goes wrong. Also suspect the solicitor acting on the purchase would have concerns about the source of funds.

Ideally it would be through a trust. In 9 years time my mother won’t realistically be capable of living there (stairs, etc). It’s in outer London, in an area becoming fairly gentrified so a good investment.

You cannot purchase a house in UK until you are 18

Why doesn't your DM just downsize now?

You can't buy a property until she is 18 and once she is 18 she might want to buy something different
Your duty as a Trustee is to your DD, your DM cash flow issues don't come into it.
Plus if your DM needs care it could be seen as Deprivation of Assets

No, they need to be 18.

Highly irresponsible what you're suggesting. You're their trustee and you're effectively gambling with their money.

It could only be through a trust. Even if you did it in your own name, there would be a constructive trust.

Will your DM be paying rent? If not, hard to see how it’s a good investment compared to a similar house with a tenant. You really need to take advice, op. This is not your money.

Agreed. The money needs to be left untouched until your daughter is 18. It’s her money.

(Inherited from who? What were the wishes of the person who left a child money - I’m guessing it wasn’t for child’s mum to spend it on someone else in an ‘investment’. Harsh but true.)

Not your money

The money needs to be left untouched until your daughter is 18. It’s her money.

Doesn’t need to be left untouched, it can be invested (appropriately). But I am struggling to see how this is a good investment compared to an actual BTL or investment portfolio.

I actually think property isn't an unreasonable investment for the money. It would need legal advice to set up the trust properly to make sure your dd's ownership cannot be disputed.

Unethical and illegal

If you are a trustee for your daughters money you need to use the money for her benefit only and this sounds like it would be more to help your Mum

Why doesn't your mother sell up and rent somewhere else at market value if she no longer wants to own her own property.

OP please consider the above answers (many of which are just flatly wrong from a legal perspective) "the court of public opinion" and make an appointment with a solicitor to discuss.

This is not true. You can own all sorts of things as a child, though typically acquired through inheritance. What you won't have is full capacity to make decisions over property.

Only if you set it up properly in a trust and charge DM market rate rent, as it is your responsibility to wisely invest the money and for it to grow appropriately. If DM is planning on living there rent-free or at a reduced rent, then…NO.

In England at least someone under 18 can’t hold title to a property - it would have to be held in trust for them

You can beneficially own it, but not legally.

In order not to be in breach of your fiduciary duties as a trustee, your mum would need to pay market rent for the property - otherwise, when your daughter asks why you didn’t invest the funds into a property that would have a greater return (eg a BTL in the same area), how will you show that the decision to buy your mums property was the best investment decision you could make to benefit your child?

You’d need to consider a capital gains tax at point of sale if daughter not lived there .
that is a large chunk out of any capital gains on property value. even in a trust it still needs to be paid. putting in another investment will avoid that

who is going to be trustees? daughters inheritence sounds at risk with your lack of legal and financial knowledge and conflict of interests !

No, this is not ok. You don’t know what will happen with the house or your mother in years to come, but you want to tie up money that is not yours. When your child is 18 they will need that money. If the person who
died wanted your mother to have it , they would have left it to her.

No, invest your daughters money and use your own money to prop up your mother.

Apart from anything, I work with trusts daily and they can be a total waste of money and make things way more complicated than they need to be.