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 it will be the daughters house all along, and the decision to have bought it will not have been hers.

What if she wanted to go live in another country and buy a house there, use the funds to travel, or anything thing else that she decides. The only benefit will be the market increase on the property if granny is living there rent free. The are much better ways to make a lump sum work over the years.

And posters who assume OP is a trustee and can even make this decision. It is very possible that she is not and has to apply to the trustees for this to be considered. The funds have either come from dd father or fathers side, as if it were from OP side, then surely her mother would not be in this situation.

Omg this post and the replies are absolutely terrifying. You can’t just do whatever you want. This is how so many people with POA end up taken to court. You have duties if you are trustee - @Yikesthathurt above has set out some good advice

You might be better looking at putting some (I'd split it and not invest all) into stocks and shares, it does carry some risks but long term the return on investment is always higher especially if you do it for 10 years +

I've done it with some money my children inherited and it's returned 12% so far.

Junior ISAs, pensions, then when DD is 18 she can move money into LISA, ISA, pensions, VCTs - all tax free and none of them can be done when the money is tied up in a house.

Premium bonds are also a waste of time (again just my opinion). Better off financially in the stock market in the long term.

Any repair costs would fall to your daughter, your mother should pay rent, your daughter may be resentful when she comes to buy a house in the future if she is not considered a first time buyer, so misses out on all the benefits of that. It sounds too risky to me.

Could not agree more.

If your mother would need to go into care the house may need to be sold in order to pay for the care if ahe didnt have th3 monwy. Be careful OP.

The full value of the trust has to be handed over at the age specified in the will. If there is no will, intestacy laws say the child gets full use of the money at 18.

Congratulations. You’ve just advised the OP to commit a serious criminal offence (hiding trust money).

Also, why is it ‘a brilliant investment’ when the OP could buy the house next door, get the same capital appreciation and also get 9 years of full market rent? Genuine question.

Your mother would have to pay a market rent for the property for it to be possible for it to be ignored under the deliberate deprivation rules for care provision. I think this is a bad idea and probably not legal, get proper advice.

There are very strict legal stipulations regulating what money held in trust can be invested in. I am as sure as I can be that the purchase of a house without full market rent coming in would be outside these rules. Stocks and shares are probably not allowed too. OP you need legal advice on this matter asap.

God I hadn't even considered this. If I was the daughter I'd be raging. If OP wants to bankroll her mum then she should use her own money.

Just wanted to add, I think your mum will get more help buy having little money/property when she needs care.

Taking your DD money that's meant for her and using it for someone else to benefit is very concerning. It's great that you want to help your mum, but dd money should not come into it.

Who would be the registered landlord of the property?

And who would pay the associated costs of being the landlord (buildings insurance, landlord fees, maintenance of the house)?

If your DM needed to move to a care home, selling her home (to a family member) might be construed deprivation of assets by the local authority.

As others have said this is likely not possible for all sorts of reasons, I would take legal advice. And look at the two situations (your daughter's good fortune, and your mother's declining health/finances) completely separately.

I would perhaps speak to a solicitor. I wonder if rather than buying it a loan secured on the property charging interest. A bit like those mortgage companies doing equity release. To be paid back when property is sold or at 18.

Great idea to consider investing it, but I would make an appointment with an independent financial advisor to explore the best ways to do this and whether investing in a property where your DM resides is wise. It will also depend on the terms of the inheritance (my DC get theirs at 21, not 18 for example) and whether that stipulates that it should only be invested and used for the benefit of the child recipient.

Please seek professional advice, not MN advice on this.

She has inherited and can’t have the money until 18 (according to the OP) It HAS to go into trust, none of these things are available to Trusts.

Why is it falling to the new generation to support the old? Why can’t you and your siblings help your mum find suitable accommodation?

Who has dd inherited from? If it’s from her dad’s side, they wouldn’t have envisaged the money being used to support a relative on the mum’s side.

You need legal advice. Would your DM pay rent? Your duties as a trustee would be to the trust, not your DM.

wouldn‘t it be better if your DM downsized now? To a more „age-appropriate“ property with less stairs etc?

I think the OP is saying if the money went into trust then her DD couldn’t access it until she’s 18, rather than she can’t have the money until she’s 18.

The OP (or someone else) will be looking after the inheritance in bare trust for DD while she’s under 18 regardless so can do all of these suggestions.

I used to rent a flat that was being held in trust for a child. They were obviously earning money from the rent I was paying as well though. I'm not sure you'd get away with having your mother live there for free.

If you are the trustee of the inheritance you must act only in the beneficiary’s interests. You cannot let your own or other people’s interests conflict with that duty. So your mums housing needs cannot be the motivation.

However, as a responsible trustee you should invest the money, not let it sit in an account. Property is a sound investment- houses don’t tend to fall in value and over the course of a decade there will undoubtedly be an increase, especially in London.

However, you’d have to charge your mum market rent for any property bought as otherwise you are again not acting in the best interests of the beneficiary, your DD.

Take legal advice.

I completely agree with this. I can see why what the OP is suggesting is a bad idea and possibly even illegal but I don’t have a clue how the money should be invested.

If it’s enough to pay for a London house in full, the OP needs proper financial advice, preferably from a fee paid advisor. My understanding is that trust money can be used for that as it directly benefits the beneficiary.

The new generation of kids (Gen Alpha) will be far more disadvantaged than the Boomer generation.

Why is it a misery to think any inheritance should be safeguarded and maximised instead of giving it rent free to her grandmother?

She says As my DD wouldn’t have access to the money till she is 18 I take that to mean it’s in the Will. However all hypothetical unless OP reengages.

The trust would own the house.

Not that I think it a good idea.