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?

We have been navigating the care system for years. A few years ago my parents qualified for council funded care. Since then she sold the original house, bought the current one and now has to fund most of my father’s care costs privately.

Op why are you and your siblings needing to provide your dm with all her income?
She will receive a state pension?
Quite honestly if she has reached this age and not managed her finances in a way to allow her to survive without you and her children providing her income why would you trust her with your own child's inheritance ?
It is not your inheritance to spend anyway it's almost fraudulent
A 9 year old does not have capacity to be invoked in that decision

I would be very worried about putting my child’s money into a house owned by someone needing care.

Google deprivation of assets. If you change the ownership of the house to your child’s trust then the value of the house could still be used for care costs - this time taking your child’s money instead of your mums.

It could also look like you are trying to dodge inheritance tax, and if your mum dies in less than 7 years your child could be liable for inheritance tax on that house as well.

Your mum needs to sell her house and pay for sheltered housing or a care home. Don’t risk your child’s money.

This doesn’t sound right at all. Local authorities can be horrendous at pressurising people into thinking they need to pay for care when they actually don’t. If you haven’t already taken legal advice on the care costs, it may be worth doing that when you see the solicitor about the trust.

The only way I would be profiting is in not panicking as much about my DMs well being and my DDs future.

That’s still a dodgy use of your daughter’s money.

Let me say this in words of one syllable:

this is not your money.

you cannot use it to look after your mother

you cannot use it to stop your panic about your mother

ir is not family money: it is your daughter’s money

if you are a trustee you have a legal obligation to use it to the best benefit of your daughter, not your mother

it is money for your daughter NOT your mother

Stop offering weak, borderline illegal excuses for defrauding your daughter to ease your conscience

A chunk of money from your daughter’s inheritance? YABU and I’m angry on your daughter’s behalf.

What you are proposing with using “a chunk of money” from your daughter’s inheritance is straight up fraud.

You and your mother sound incompetent with money and stubborn. I pity your daughter’s financial future.

No. This is your DC money and you should not use it unless they are older to be able to make this decision

OK, something isn't adding up here. If your mum is over the age of 60 and your parents were living in the same house, then the value of the home would be disregarded when the council did the financial evaluation.

Are you telling us the whole story here OP?

If they had divorced and/or were living separately then it may be a different matter.

But, in that case, I don't see why she would be funding your dad's care home costs.

There really does appear to be more to this situation than the OP is letting on.

The trouble with that is that people can only give advice based on what you tell us. If you don't give an accurate description of your and your mum's situation then you might (probably) will not receive good advice.

"...she has no other source of income"

I'm sorry but this makes no sense at all. Are you in the UK or another country?

In the UK, everyone over retirement age is entitled to apply for Pension Credit if their income is less than £218.15 per week for a single person or £332.95 per week for a couple.

What Pension Credit does is to top up your income to those amounts if you are receiving less than that.

Something really does not add up about this story.

A care home costs about 70k a year. I’ll leave the maths to you.

Thank you for clarifying!

"A care home costs about 70k a year. I’ll leave the maths to you."

OK, here are the maths.

If your mum and dad were living together before he went into care then the value of your parents home is totally disregarded when it comes to the council determining what assets he has available to pay for care.

If the house is jointly owned then it is totally disregarded anyway and if it is only in his name then it is still disregarded if your mum is over the age of 60 or disabled.

In that situation, as long as your dad has savings of less than £23,250 (in England) then he will not have to pay the full amount of fees and, once his savings drop below £14,250 then there will be no requirement to pay fees at all.

In contrast, if you choose to pay privately for a care home when you qualify for a free care home place then that is up to you and your mum to fund that.

It is certainly not down to the trust fund set up for your daughter to pay out for your father's care home fees.

I find the situation a little unclear but what I’ve gathered is that your parents have significant cash assets from the sale of the original home which now has to be used to pay your fathers care home fees. Your mother then used “her” half of the sale to buy another home in her own name. So now your mum has little spare cash because she invested all her money in her home? You think her selling the home and renting it back will release equity she can spend on herself now and if the house was bought by your DD’s trust than no one would be kicking her out to get in “better” tenants or to live in the place themselves. So she’d have some security on tenancy that she wouldn’t get if she sold on the open market.

If that’s the case, I can see why it seems like a good idea for your mum. I don’t know the ins and outs of care home funding or the tax or other legal implications though. But it’s still a matter of taking advantage of your DD’s money to benefit your mother. Whereas your decision making for that money is supposed to prioritise your DD. She is not old enough to consent to it being used for other people’s benefit to her detriment. And if that trust money could be expected to make more money if invested in a different way, then putting into your mother’s house is at your DD’s expense.

Your DD's inheritance should not be mixed up with your parents. If they have miscalculated their own finances - and it sounds like they have - that's on them. Leave your DD out of it.

💯

OP, you need to pause here. Read the above and put this idea out of your head.

Your interests are wildly conflicted. It is plain to any outsider (and court) that this money is being used for your mother's benefit and not your dd. You won't be able to justify your actions objectively nor that you carried out your duties as a trustee.

OP, please answer this question.

Is the 'chunk of money' you are paying your mother coming from your dd's inheritance? Are you suggesting you give your mother dd's money to spend for your mother's daily expenses as well as 'pay rent' to dd?

If so, you are not just going to be challenged. I hope someone reports you for fraud.

Is your child able to access any of the money before they are 18?

But the value of the house is disregarded and you say she has no other income.

If your DF qualified for council care at some point, what happened to stop that qualification? It sounds like something has gone very wrong with their financial planning.

This isn’t a matter of ‘doing the maths’ - if a person has savings / assets under the limit, the state pays.

Either way, you cannot use your daughter’s money to fix your parents’ financial issues.

Generally with a trust, the trustees not only have the power, they are required to invest for maximum safe returns. Otherwise inflation would massively reduce the value of the trust.

This doesn’t mean gambling - ‘safe’ managed stocks and shares funds are fine even if they drop in value, wildly speculative single share investments are not (for example).

In the OP’s case, I personally wouldn’t invest in a single property since the fund is only going to be invested for 9 years but if the OP chose to buy a BTL with an arms length tenant that would be an arguably reasonable use of the funds.

Buying her mother’s house would benefit her mother far more than the beneficiary (and may even disadvantage the beneficiary) and since there is an obvious conflict of interest would be much harder to justify.

Edited to say: Also, while it is not required, most trusts have at least 2 trustees. Since the child seems to have inherited under a will (money came from mother’s side but OP and her parents didn’t inherit), I’d be surprised if there wasn’t another trustee out there somewhere. Hopefully one who can stop this idea in its tracks!

Yes it does, but there are ways of funding them because few people can pay that amount of money out of income.

Certainly the family is not required to fund the fees, though they may have power of attorney and thus manage payments on behalf of the older person.

Get proper financial advice (not from Mumsnet) about your parents’ care. And, entirely separately, get proper financial advice about managing your child’s trust.

Why doesn’t she have at least a state pension?

I assume that the OP is imagining the ‘chunk of money’ to come from the sale of the house. So indirectly from her child’s inheritance.

It all sounds very murky, disorganised and uninformed. Not to mention impractical — if her mother has dementia she is going to need actual care herself before long.

It sounds as though the daughter has inherited some money from a person who has died (perhaps her father or other paternal relative). In the UK a person under the age of 18 cannot inherit anything until they reach the age of 18.

In that situation, this means that if they have been left something in someone’s will, there must be arrangements to look after the inheritance on their behalf until they are old enough to receive it themselves.

Depending on how the will was written and/or if the person died intestate then it is possible for the trustees to advance some money from the trust to help for the maintenance or education of the child until they reach the age of 18.

But you couldn't advance money from the trust just to allow them to go on a fancy holiday. Or to pay towards their maternal grandfather's care home fees.

@@Another2Cats , the OP says the money came from her side of the family but other than that, I completely agree with everything you have said.

This means the money must have been left in a will (since I can’t think of any way a 9 year old with a surviving parent would inherit on intestacy from that parent’s side of the family). Hopefully the will sets out what can and can’t be done with the trust money (and establishes a second trustee who can bring this idea to a screeching halt).

Get advice from a finacial adviser. Yes it costs but they should be able to help you invest they money wisely. A good adviser should be ale to make sure the money is safe and increases in value. You need to open a Junior ISA but which one to choose? That's where the adviser comes in.