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?

But what happens if you do this then your mum needs to move into a care home? Would the house have to be sold for that? presumably you would own the house? It would be in your banner, not your mum's?

Is she capable of maintaining the house?

What if your dc needs the money before that?

I'm not sure this is a good idea.

Of course. A child trust fund in her name and similar would work.

This^.

It is a legal obligation on the trustees.

If you think property is the best way to invest your DD’s money, then you should look for the property that would give her the best return. It’s unlikely, though, to be a great way to invest money for a sleeping investor. Managing property is a job that requires knowledge and a fair amount of time. Something that might be worth doing as a side hustle when she’s an adult if she wants a second job, though many btl owners of one property have been selling up because of the increased overheads the government have been introducing to protect tenants. Paying someone to do it would likely make the return less good than other ways of investing the money.

If you think your DM’s house is good because no one would have to “manage” it as a rental - you’re either intending not getting rent money (so not a good a investment for your DD) or you aren’t going to be treating your DM the way a tenant should be treated (not good for your DM and potentially leaving the trust open to lawsuits).

If your DM and her house really is the absolute best way to invest your DD’s money then it’s a good idea. But the chances of that being true are slim, since you’ve come to this idea from the perspective of it being a good way to help your mum out.

Sounds like a good investment. Andxan excellent safety net.

She'll gain by appreciation in the value of the property; it's not mandatory to rent it for income.

What a bunch of misery guts.

When you say why you're doing it, you mention your mum first. Not your DD. Which probably means you're doing it for your mum, and justifying it as an investment.

Will your mum pay rent? If not, it seems really unethical.

It's not your money to help your Mum. It's your dad's money. It should be invested to give maximum benefit to your DD. Property is a good investment but only if your Mum pays the full market rent. You could invest in a junior ISA for your DD.

Totally unethical - don't do it, it's not the right thing to do.

I think a brilliant investment and I'd have loved my parents to have done this. This is all we want for our kids future is it not? Stability that is..
I think seek legal advice but who's living in the house until your child is old enough?
I wouldn't tell your child about the house until you know how mature they are at 18 either (I know if I had my own house at 18 I would have gone WILD).
If you are going to live in the house till they're 18 you need to consider when they want you to move out when they want their house to themselves. A lot to consider but I think you're thinking of a great idea and one that I would seriously strongly want to do if I weee you! Good luck

Presumably the funds are now earning some interest where they are now.

Were you thinking of your dm paying rent after the sale? As then if not, what extra income are the funds making?

Or were you wanting to use your child's funds to buy the house and your dm then pay no rent? So the only way your dd is earning on that money, is via market related increase on the house.

Does your dm know about the money? Has she suggested this?

I cannot see how this is in the best interest of your dd in all honesty. And more important is that you will have made a decision that isn't yours to make.

I know; imagine owning outright a stable home in London?!

There's no reason OP and grandmum and the child shouldn't all live there in the interim. Put it in trust until the child is 25.

I can't edit my post for some reason.

I just reread the OP and see the child hasn't even received the funds yet. And you are already thinking up ways to use them !

I think there trust fund is there for a reason.

I hope it comes with lots of clauses for its safekeeping.

It’s mandatory to maximise returns and a trustee can:

1. Be sued for not doing so (if just negligent)
2. Be criminally prosecuted for misappropriating trust monies (if trust monies deliberately diverted for personal benefit)

Unless the OP’s DM pays full increasing market rent, the OP will find it impossible to justify buying this property not a similar property in the same area with a tenant.

If disapproving of the OP ripping off her own child to the tune of over £160,000 (London rent at £1500 a month for 9 years) makes me a ‘misery guts’, so be it. I hope the OP has the savings when her daughter sues for the money at 18!

Also, I’m pretty sure that is a low ball estimate of the amount.

Of course you would need legal advice. However I’m not sure you could purchase a property using a trust, with your DD as the beneficiary, but not living in the property. Because she isn’t then benefiting from it. Also, your DM would be benefitting from it, so presume that would need to be declared from a tax standpoint.

I think it sounds well intentioned but is likely very expensive in practice. Who would pay the legal fees associated with the complex arrangement? Again, your DD’s trust isn’t benefitting from this, so it shouldn’t be the trust.

I think you have to think of the two as very separate issues.

1. Unless a will says so, the child is entitled to the money at 18. The OP can’t ’put it in a trust until the child is 25’
2. If the mother buys a BTL the child will have a stable home in London and over £150,000 in rent (plus compound interest).

Nobody is saying it’s bad to have ‘a stable home in London’ just that this isn’t the way to do it. At best it opens up the OP to significant financial liability, at worst she could be prosecuted for misappropriating trust monies.

Good luck showing getting no income and /or other benefit for 9 years is in the best interest of the child!

Edited to say: I actually don’t think one property is the best investment anyway but if the OP is insistent on buying a house, it needs to be let for full market rent or possibly (legal advice needed), the child needs to live there.

Your daughter’s inheritance is for her benefit, not your mother’s. If you’re a trustee of your DD’s inheritance, using the money to benefit your mother could be seen as a fraudulent action.

I highly doubt she's going to do this without advice. Can you not see she's trying to secure a home for her child's future also? Honestly I wish my mother and/or father were able to do this for me as a child. All I strive for now is a forever home that's secure. Especially with OP child being a daughter. Let's face it. Life is hard as a woman. If OP DD has children in future she has a forever home to raise them in. One less thing to worry about and she has a lot more independency. I'd do this for my DD if I had a chance. Ofcourse legal advice first though.
So, little big head, stop being so judgy and negative. Happy Tuesday! Have a GREAT and POSITIVE day.

Sorry, OP, the idea is bonkers. What happens when your DD is eighteen? Is Granny dumped in the street so your DD can use her own inheritance? As others have pointed out, the inheritance is for your DD’s benefit - while it might suit you to help your DM, you are opening a minefield of complications. You need to find out the legal ramifications so that neither you nor your DM fall foul of the law, and it doesn’t lead to long-term family disputes. I’ve seen what problems inheritances can cause when families are not on the same page, and it can lead to endless problems, legal disputes, long-term bad feelings and family conflict.

Wow, this is low OP.

It would need to be done legally through a solicitor. Yes you can do it, presumably the profit of the sae would be what your mum would live off and what would be used if she needed a care home.

Is it a good investment for your dd? Yes she would own a property but if you're not planning to charge rent presumably, the only profit on her investment will be any increase in value. Whereas investment in stocks or high interest savings will likely profit more.

There is the element of supporting family, mutual benefit but your dd is not of an age to consent to d this.

You haven't answered any questions posed here.. why?
Have you discussed with your mother?
Does your mother own her house and does she want to sell to anyone, even her darling granddaughter?
Will she be willing to move in 9 years time when your daugter wants to move in, or sell the place?
Wil nyou be expecting a share in the profits when your DD sells?

Tbh, I think you have an ulterior motive for wanting to do this. After all, if your DM doesn't not own the house, she won't have to pay potential care home fees, and any dosh will be yours
But it seems you aren't responding to PPs, so guess we won't know

I think this is highly questionable and upon reflection a No for me.

I am a big believer in helping family but this is too messy and “not right”

• Property is an investment is a ???? Right now.
• As an investment it’s also somewhat unethical unless your mother plans to pay market rent to her GC.
• There is also ongoing maintanance to consider- given the high cost of building tradesmen and materials many houses are now depreciating assets to some degree.
• stamp duty costs are dead money
• what if she doesn’t want to live in a house in outer London at 18/20???
• the money is better investment in stocks and shares
• i don’t think given the wealth gap that is here/coming I could do this to my child (ie invest so poorly). A decade of compounding interest is £££

if your mother can’t afford her home she needs to sell and release assets and move into a flat.

It’s clearly not in your DD’s best interests your DD isn’t her white knight…

I'd be pretty disappointed if my dd was handed a house in London at 18 and said, 'Great, but where's my rent money off Granny?' and then sued me.

I appreciate this may be a bad idea and the legalities (which I know nothing about) need to be fully explored and understood before, which may well result in the OP not doing it, but I don't see any need to be assuming the OP is doing this without the best of intentions and sees it as a way of helping her mum while looking after dd's money. As I said, this may well be misguided but there's no need to describe her as 'low' and make accusations that we have no basis for.

I’d be fucking furious if my mum did this. I’d honestly never speak to her again, so sly.

Probably better off investing in the stock market than property. The tax changes in recent years mean property isn’t a good investment anymore (just my opinion, I’m sure others would disagree).

There are also gifts with reservation of benefit rules so you’d need to be very careful about your DM living there rent free from an IHT point of view.

Proceed carefully and only with expert advice.