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Original poster

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

229 replies

Billi80 · 06/01/2025 18:37

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?

OP posts:
Freddiefan · 07/01/2025 06:57

As soon as I hear 'trust' I think of my cousin. It cost her thousands of pounds to get out of a trust that her mother had set up. She said the only people who benefitted from it were the solicitor and the bank.

LivingLaVidaBabyShower · 07/01/2025 06:57

Liesmorelies · 07/01/2025 06:50

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 pretty disappointed if instead of using an inheritance to secure my financial future at a time where social mobility has never been lower my mother decided to use my inheritance to sub granny who grew up in an era where she had more socioeconomic mobility and opportunities to generate wealth than my generation could dream of.

i would never do this to my child.

Icequeen01 · 07/01/2025 07:02

petedicks · 06/01/2025 18:41

Anyone under 18 can not legally own a house.

That's not quite true. My DS bought a flat with an inheritance when he was 17. It wasn't enough to,buy the flat outright so it has a mortgage on it. DH's name had to go on the mortgage as well but our solicitor drew up a legal document stating we had no legal claim to DS's flat. The flat has been rented out since DS bought it (DS is now 25) and was used to help with his Uni fees.

Yikesthathurt · 07/01/2025 07:10

The trust assets are for the benefit of the beneficiaries. How will your mum pay rent? Legally she cannot benefit from the assets of the trust, so she needs to pay your daughter.

the trust must pay tax, but your daughter could be assigned the income and the trust gives a tax credit to her. This money must be used for her benefit.

Frankly you, as the trustee need to do some research into your legal responsibilities.

Yikesthathurt · 07/01/2025 07:11

Oh and the money has to go into a trust as the will clearly says she can’t have it until 18. That has created a Will Trust under relevant property rules.

DowntonNabby · 07/01/2025 07:16

Agree with everyone that you shouldn't be using the money to prop up your mum. If she's struggling, she should downsize. Especially if the money has come from your daughter's dad's side, which I'm guessing it has because you'd have said otherwise.

PussInBin20 · 07/01/2025 07:17

I’m not sure you would be legally allowed to do this. You need legal advice!

Yikesthathurt · 07/01/2025 07:19

Sasskitty · 06/01/2025 18:56

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.)

Edited
Show quote history

Actually leaving the money ‘untouched’ would also fail in her Trustee duties. She needs to take advice and a lower risk investment — yes even property, with a PAYING tenant, would be better than 9 year of no investment.

Trustees must act ‘as a prudent man’ when dealing with the assets of the trust.

Installing granny rent free would not work in that regard.
Granny paying MARKET rate rent, maybe, but not without a clear investment plan.

Dreamingofgoldfinchlane · 07/01/2025 07:24

ForMintUser · 07/01/2025 06:57

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.

I agree - invested well, the inheritance would be worth far more by the time the OP's DD turns 18 than it would invested in property and would be available to use for any purpose.

CandidHedgehog · 07/01/2025 07:28

Liesmorelies · 07/01/2025 06:50

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.

And I’d be pretty disappointed if my mother stole hundreds of thousands of pounds from me to benefit another family member so there you go.

MellowCritic · 07/01/2025 07:28

MrsPositivity1 · 06/01/2025 18:46

You cannot purchase a house in UK until you are 18

This is not factually correct. Whereas someone under 18 can't take legal control over a property, a property can be purchased for investment via the correct pathways... that's not to say op should do this, as this particular set up doesn't sound in the best interests of the child but rather another person.. op you need to seek guidance from your solicitor not mumsnet, you have a big responsibility here for managing your child's money, it's not your money , it's your child's I think perhaps you aren't the best person here to manage this but you shouldn't be here seeking advice you need to speak to your solicitor.

woolflower · 07/01/2025 07:32

There is so much more to this and you need proper legal advice.

Does your DM own the house, with or without an outstanding mortgage?

Is it a council house with right-to-buy? In which case I can see how it’s very appealing to buy it, but surely it’d need to stay in DMs name?

I’m assuming it’s no a standard rental as you’ve not mentioned landlord wanting to sell, and I doubt you’d get a good deal in this case.

All the options have knock on legal and potentially family impacts. That said if you did it with proper legal advice and then charged DM rent, it could be classed as good investment.

oakleaffy · 07/01/2025 07:38

@Billi80 My friend's partner {they weren't married} died, he owned a house that was left to her son that she had with him.

Her other son got nothing.

She sold the house and had she kept hold of it and rented it out, her son would have done phenomenally well - the area rocketed up in price over 11 years.

A seriously bad move to have sold it.

Property IS a good investment in 'wealthy' areas.

You need legal advice.

SizzlingPrickle · 07/01/2025 07:40

It’s just occurred to me - does the inheritance already belong to your daughter? Or has it come to you? If it belongs to your daughter and she settles her own trust then it makes a trust “settlor interested” and even more of a nightmare to administer. The alternative is a bare trust but that means your daughter automatically takes ownership herself at 18 and so could kick granny out then and sell up if she wanted to.

DecayedStrumpet · 07/01/2025 07:42

If you were hoping that housing benefit would pay your mum's rent to your DD, you should take a careful look at the rules around that as they are sticky about paying rent to family members

Jingleballs2 · 07/01/2025 07:47

It's not your money to use to help your mum out

AllThePotatoesAreSingingJingleBells · 07/01/2025 07:47

Liesmorelies · 07/01/2025 06:50

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.

What a shame you don’t have the same morality when it comes to OP stealing her child’s inheritance to spend on her mum:

And before you say it’s not stealing, it is. She’s not acting in her daughter’s best interest.

It benefits OPs mum while her daughter takes all the risk. In the next however many years anything could happen. Housing market crash. New roof. House burns down.

JMSA · 07/01/2025 07:48

YABU.

Kendodd · 07/01/2025 07:49

You say 'but DM house' not 'a' house. Is this a council house with right to buy discount?
If that's the case surely the house could then only me owned by your mum? This would affectively and legally mean giving your daughters money to your mum.
If its not a council house, would your mum be paying your daughter full market rent? If the answer to this is 'no' then absolutely no way should you consider it.

TheCheeseTax · 07/01/2025 07:53

You have a duty (as trustee, I expect?) to do what is in the best interests of the beneficiary. Do not think about anyone else, or you'll find yourselve in hot water. Take advice, be whiter than white.

2boyzNosleep · 07/01/2025 07:57

I think it's a terrible idea.

It's your child's inheritance, not her grandmother's. I can only assume that it's from her dad's side of the family of you and your mother aren't receiving any inheritance.

If you go ahead you need to get some sort of contract that covers every eventuality. Eg, If your mother needs care or a care home in a few years time, the property would be used against the cost of care. What if circumstances change in a few years and then you don't have the upfront money to resell?

You also need to check the terms of the will and your conditions as a trustee.

BeAzureAnt · 07/01/2025 07:58

See a solicitor and get advice.

Soontobe60 · 07/01/2025 07:59

cheekycee · 07/01/2025 05:21

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

Im assuming you didn't read the posts properly. OP wants to buy her mother’s house and for her mother to continue to live in it. There are 2 obvious things to consider- First capital gains tax. When the DD is old enough to take control of her inheritance and possibly decides to sell the house she will have to pay CGT on any increase in value. Next, the DDs first time buyer status will be affected meaning she will lose out on any benefit of being a first time buyer when she decides to but her own house where she wants to live.
In addition, should the OPs DM require care in the future, she would need the money she made from the sale of the property to fund her care home. Unless the OP had paid her full market value of the property and she paid full market rent to the OPs DD then deprivation of assets could come into play. The DD would have to become ‘landlady’ with all the associated financial implications that brings, not least having to pay income tax on any rent she receives.

Yikesthathurt · 07/01/2025 08:01

Soontobe60 · 07/01/2025 07:59

Im assuming you didn't read the posts properly. OP wants to buy her mother’s house and for her mother to continue to live in it. There are 2 obvious things to consider- First capital gains tax. When the DD is old enough to take control of her inheritance and possibly decides to sell the house she will have to pay CGT on any increase in value. Next, the DDs first time buyer status will be affected meaning she will lose out on any benefit of being a first time buyer when she decides to but her own house where she wants to live.
In addition, should the OPs DM require care in the future, she would need the money she made from the sale of the property to fund her care home. Unless the OP had paid her full market value of the property and she paid full market rent to the OPs DD then deprivation of assets could come into play. The DD would have to become ‘landlady’ with all the associated financial implications that brings, not least having to pay income tax on any rent she receives.

Show quote history

Trust pay CGT anyway. The only product that wouldn’t is cash (it pays tax at income tax rates that are higher), or a single premium investment bond.

one doesn’t avoid investments in order to mitigate tax.

CandidHedgehog · 07/01/2025 08:04

Something to bear in mind is that if someone else thinks a trust has been mishandled, they can go to court / report it to the police.

Even if the child succumbs to the ‘how can you sue your own motherrrrrr’ line of emotional blackmail suggested by several posters, if a family member of the deceased figures out what is going on, they can go to court to try and replace the OP as trustee. If successful they would then be negligent if they didn’t sue the OP for compensation. And that’s the best case scenario - worst case, they could convince the police a criminal offence had been committed.