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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:
sloecat · 07/01/2025 10:29

Sdpbody · 07/01/2025 10:17

@sloecat , but the OP could use her child's inheritance to buy a house in a trust. The mother pays the child the rent, and in 9 years, the child will have a house to do with as they please.

We have used our children's money to buy the house.

If you read the OPs post you will see she wants to buy her mother’s house as her mother is short of money. It isn’t the same thing at all. She really needs to take financial advice not advice from mumsnet.

godmum56 · 07/01/2025 10:30

Another2Cats · 07/01/2025 09:20

While the house will (may?) appreciate over however many years, don't forget that any gain is currently subject to 24% capital gains tax. (With the present government, who knows what that rate may be in a few years time)

If you are holding residential property to make a capital gain then the rent you get from it in the meantime helps to offset the CGT charge.

Frankly, putting the majority of the money into a passive tracking fund would be much better.

Although, of course, past performance is no guide to future performance (especially with Trump about to come into office in the USA in a couple of weeks time) but take the S&P 500 Index for example - the biggest 500 companies in the US.

Tracking funds that accumulate dividends rather than paying them out are typically up more than 100% over the last five years and more than 30% up over just the last 12 months.

The FTSE 100 hasn't done quite as well. It's only up by about 29% over five years and 10% over one year.

Then there are various tracker funds that concentrate on other areas.

I would suggest the the OP's daughter would be much better off if the money is invested into a range of different tracking funds.

Show quote history

it IS mandatory for the trustee to get the best out of any investment so no leaving granny to live there rent free. Also (getting bored with saying it) granny living rent free in a house she sold to her grand daughters trust would be the epitome of deliberate deprivation. edit: sorry wrong quote, I menat its not mandatory to charge rent for the house.

HollyKnight · 07/01/2025 10:42

Would doing that affect your child's first buyer status? It might be better to put money into a lifetime ISA so she will get an extra 25% from the government, interest, and keep her first time buyer status. I don't really see how buying your mother's home will benefit your daughter unless your mother will be paying good rent.

Iliketulips · 07/01/2025 10:45

I think you know the inheritance can only be used for your DC's benefit, so unless you could argue it's a good idea to provide a decent home for her or is a sound investment in terms of property value guaranteed to increased over the years and a good level of rental income, you won't be able to do this.

battairzeedurgzome · 07/01/2025 11:19

No. There is a massive potential conflict of interest here. Trustees are required to manage the funds for the advantage of the beneficiary. You can't use the funds to make life easier for yourself or for a third party, even if they are related.

2boyzNosleep · 07/01/2025 11:42

Sdpbody · 07/01/2025 10:08

We've been investing money for our children since birth (now 7&6) and have just taken the money and bought a house in their name under a trust. We are renting it out currently and adding that money after taxes back in to their investments. In 12 years, the house price would have absolutely gone up, but we are also investing the same amount as before for them in to S&S.

That's your own money you've decided to save and you haven't rented it out to a family member and short on money who will need care in the next decade

At any point you can decide not to renew tenancy or give them notice to move out.

Parky04 · 07/01/2025 12:04

HollyKnight · 07/01/2025 10:42

Would doing that affect your child's first buyer status? It might be better to put money into a lifetime ISA so she will get an extra 25% from the government, interest, and keep her first time buyer status. I don't really see how buying your mother's home will benefit your daughter unless your mother will be paying good rent.

You have to be 18 to open a lifetime ISA.

HollyKnight · 07/01/2025 12:14

Parky04 · 07/01/2025 12:04

You have to be 18 to open a lifetime ISA.

Show quote history

Yes. It's better to keep the money to put into a lifetime ISA when she is 18 so she can get extra money and keep her first time buyer status. Buying a house now will mean she will lose out on that.

Startinganew32 · 07/01/2025 12:34

HollyKnight · 07/01/2025 12:14

Yes. It's better to keep the money to put into a lifetime ISA when she is 18 so she can get extra money and keep her first time buyer status. Buying a house now will mean she will lose out on that.

Show quote history

Not if the house is bought in the name of the trustee

HollyKnight · 07/01/2025 12:46

Startinganew32 · 07/01/2025 12:34

Not if the house is bought in the name of the trustee

Show quote history

That's what I asked originally. Would this affect her first time buyer status. If so, don't do it, keep the money for a lifetime ISA etc.

HollyKnight · 07/01/2025 12:50

Google says a beneficiary of a trust could lose first time buyer status, so that is something that needs to be investigated properly.

Mog65 · 07/01/2025 14:44

You need to see a financial advisor and or a solicitor. Get proper advise rather than what is offered here.
Albeit I do agree with what's being said tbh.

Original poster
Billi80 · 07/01/2025 18:41

Apologies for replying to all these brilliant replies so late. In all honesty I wasn’t expecting to get many and have taken them all in. Was really a broad question asked where people (clearly) know a lot more about finances than I do. In answer to questions, inheritance is due this spring and is from my side of the family. There is no father as I’m a lone parent. My mother has dementia and is immobile with various other health issues so moving out isn’t really an option. We do not have the funds collectively for a care home and she wants to stay and I doubt there are enough years left sadly for a conflict to arise in 9 years time. However I do not want to be sued or end up with a criminal record! I am meeting with a solicitor to discuss a setting up a trust fund next week. The idea came to me via a friend who is a financial advisor but it wasn’t the sole idea he suggested just the one that seemed to benefit and make the most sense to me who knows nothing about financial markets, etc. I certainly grew up in a property boom era and area so have always thought of property as a safe investment. However crashes do happen and I wouldn’t want this to do anything other than provide my DC with a safe asset when they’re old enough to use it. And again I’m sorry for being so discourteous in not replying sooner. Thank you everybody !

OP posts:
godmum56 · 07/01/2025 18:52

You don't have to have the funds for a care home, it will be your mother's assets that will pay for it. I find it very odd that an FA suggested this....prob not one I would trust with my affairs!

Original poster
Billi80 · 07/01/2025 18:54

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.

Not a council house and owned outright though she is starting equity release soon to fund my Dads care home costs

OP posts:
Original poster
Billi80 · 07/01/2025 18:56

Notquitethere60 · 07/01/2025 09:16

The fact that the OP has barely replied speaks volumes.
By the time the costs of buying, selling and capital gains are taken into account it would not be a good idea even if it could be arranged with some sort of trust.
Just because property has increased massively in the last 10 years it may not carry on.
Take some advice from a good IFA. Remember the money belongs to your daughter and is not for your mother’s benefit.

Apologies for not replying. Have been flat out with work and parenting since I posted and just managed to sit down. Thanks for your response though

OP posts:
CandidHedgehog · 07/01/2025 18:56

Billi80 · 07/01/2025 18:54

Not a council house and owned outright though she is starting equity release soon to fund my Dads care home costs

Show quote history

She shouldn’t have to fund his care home costs if the only asset is a home lived in by the other half of a married couple, though?

HollyKnight · 07/01/2025 19:00

It's not a "safe asset". Houses need to be maintained. You can't just buy a house with someone else's money. It would need to be generating income or something. Owning a random house does not benefit your daughter.

ViolinsPlayGentlyOn · 07/01/2025 19:02

OP, is the intention that your mother pay rent if you buy her house with your DD’s money? Several people have asked, but you haven’t responded.

2boyzNosleep · 07/01/2025 19:03

If your mother has no/small assets/savings then council fund her social care & care home costs

https://www.ageuk.org.uk/information-advice/care/paying-for-care/paying-for-a-care-home/

https://www.ageuk.org.uk/information-advice/care/paying-for-care/paying-for-a-care-home

mitogoshigg · 07/01/2025 19:04

If she has dementia then she may not have capacity to sell anyway, nor do equity, the court of protection will need to be involved unless someone holds power of attorney. I would suggest you do not discount her moving into more appropriate housing now, it may be for the best. I know all you want is he best for everyone but to ensure you protect your DD's best interests you would need to charge market and nt to your mother, and if you were protecting your mothers interests then she should be more suitable housing, conflict of interests are very much an issue

Original poster
Billi80 · 07/01/2025 19:08

CouldItBeAnyMoreObvious · 07/01/2025 06:28

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

Sorry have been caught up since original post. I haven’t discussed with my mother. She doesn’t want to sell or move. I wouldn’t expect a share in any profits or have an ulterior motive. The only way I would be profiting is in not panicking as much about my DMs well being and my DDs future.

OP posts:
godmum56 · 07/01/2025 19:09

CandidHedgehog · 07/01/2025 18:56

She shouldn’t have to fund his care home costs if the only asset is a home lived in by the other half of a married couple, though?

Show quote history

I think it can be delayed in circs like these and a charge put on the house. It depends on who owns the house. https://www.ageuk.org.uk/siteassets/documents/factsheets/fs38_property_and_paying_for_residential_care_fcs.pdf

https://www.ageuk.org.uk/siteassets/documents/factsheets/fs38_property_and_paying_for_residential_care_fcs.pdf

Original poster
Billi80 · 07/01/2025 19:11

ViolinsPlayGentlyOn · 07/01/2025 19:02

OP, is the intention that your mother pay rent if you buy her house with your DD’s money? Several people have asked, but you haven’t responded.

yes, she would pay rent. The idea (and it really is just an idea i am very happy to have contested), was for her to have chunk of money now as she has no other source of income apart from small amounts my siblings and I can give her.

OP posts:
HollyKnight · 07/01/2025 19:14

Chunk of money from where? And how is she going to pay rent when she has no income?

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