Is this a crazy idea?

[Wiresring]

I'm middleaged, early retired with two young adult DC. Financially I am well set up and have always said I'll never remarry in order to protect assets for DC.

I have a house that is too big for me to maintain easily, but which currently I share with DS2. He does "help", quite a lot actually, but it's the responsibility of it that gets to me.

I also have a DP. He's solvent, comfortable, and working, but after a couple of false starts in life not in the same place as me. He's renting and likely to work until state retirement age. We spend a lot of time together, but I like that he's busy during rhe day, and sometimes, I travel alone, which I also enjoy.

I could sell my house, split the proceeds three ways, a third each to my DC to help them on the property ladder, and a third as my half of a new shared property with DP. He'd have to take a mortgage for most of his half, but his income would support that.

My DC would have had their inheritance, albeit less than they might otherwise get, but they'd have the benefit of it early. I think I'd set things up so DP keeps the new house if I die first. Cash and other assets to DC.

But what happens re inheritance tax if I die within 7 years? DC and/or DP have to sell up to raise the cash?

How could the ownership/mortgage be set up to recognise that the debt is DP's half? I.e. if we split or one of us dies, his share is half the value less the outstanding debt, whilst at the same time having the whole pass to the other on death?

As DC would you think this was great news, or that your mother was giving too much of your family home to new boyfriend? As DS2, how would you feel about being "paid" to move out so your mum can live with the new boyfriend. If it makes a difference, their dad is deceased.

There's also the possibility of care fees, but I do have some significant cash savings too. I could help DC with deposits without selling the house, but if I am to move in with DP, I'd like it to be somewhere that we each have an equal financial and emotional stake in, plus I want somewhere much smaller.

I haven't mentioned any of this to DP, at this stage it's just idle musing.

What if you split from DP and you only have that third to buy yourself a new property?

Ah good question. I'd have cash to buy him out, or to buy something else similar, but it would definitely make a difference to how comfortable I feel re savings etc.

Any other thoughts?

Assuming you are wanting to live with your partner, I think it’s a great idea But just make sure you have a cast iron agreement to ring-fence your 50% share of the property and consider practicalities in case it doesn’t work out.

Very little point sitting languishing in a big house you don’t need and watching your children struggle to get on the property ladder if you can / are willing to help them. Before you make any final decisions, I definitely speak to your children about it as they may not want your help.

I don't know the answer to all these questions, but I think the answer to the potential IHT question is that you would take out a life insurance policy for a period of 7 years, to cover the amount of IHT that would be due if you were to die in that time. Given that you're not that old, and if you are in good health, this might not be too expensive.

Sounds like a good idea but I'd want to actually go and look at some houses (not just on rightmove) to understand what's affordable for you and your DP, and I'd want him to have his mortgage agreement in principle in place before doing anything irreversible.

If you are worried about dying in the 7y period it's possible to take out life insurance against the potential IHT charge. There are specialist policies that pay out on a reducing basis to mirror the IHT sliding scale (google inter vivos gift insurance) but I think you may need to buy such a policy through an advisor. The policy is then put in trust so it doesn't form part of the estate.

Could you try living with him in his rented place for say, 6mths? Just to see you'd be ok as a co-habiting couple, independance can be a lot to give up... you might realise you're not wanting to live with someone else in a full-time relationship.

Middle age is too broad a brush to describe your circumstances, so what age are you and are you entitled to full state pension. Sounds like you need to get rid of the house, but gifting though generous what are your financials like after this? And if you ever break up even if it’s been done above board and you get your full share how will that leave you. Giving away two thirds of your house proceeds seems too risky.

I'm 55, yes entitled to full state pension but have private pensions that mean I'm not particularly reliant on it. He is a few years younger, with a good income, but little behind him. My concern there is that although he's fully expecting to work another 15 years, I suspect the work he does is vulnerable to AI. He's already lost some business too it, although atm other work has come in to fill the gap. I don't love the idea of connecting our finances, but we're already in a place where I wouldn't see him destitute, so that boat may have sailed. To be clear he has no expectations that I would support him, this is me catastrophising.

I have savings and investments, outside of the pensions, roughly equivalent to the value of the house.

Personally I wouldn't want to leave any of my money to a new partner rather than my children. I also couldnt ask them to leave home. I've got two adult sons with me at the moment ( not from lack of money to move out as I've already split an inheritance I got from my dad between them and one of them owns a doer upper). Personally i never want to live with another man again but what's wrong with him moving in with you first to trial it before making any permanent changes🤔

If did buy together I'd go for tenants in common so each can bequeath their portion to who they want, can always give them the right to live their as long as they want to, this is what my dad with his house.

Did that work OK for you?

My friend "inherited" her mother's house, but mother's new husband (of 20+years) is still living there and it has created all sorts of difficulties and disputes over adequate maintenance etc.

A colleague in your situation bought neighbouring flats with her new partner, each owning their own.

Now that, is a lovely idea. When my DC were teens I used to dream of a piece of land with three "tiny houses" so they we were all solely responsible for our own space 🤣

How long have you been with him? Are you certain you want to live with him and that he would be a good house mate?

I am also early retired in my 50s but have no intention of early inheritance, they can have what's left (likely to be substantial) but I won't take the risk of passing anything over too early. Way too many what ifs including the possibility of it being partially lost in DC relationships ending.

I wouldn’t be buying a new home with someone you don’t know that well (“new partner”) especially if his income is vulnerable to being adversely affected by AI. What would you both do if he couldn't pay the mortgage? Does he have any assets at all?

I’d worry a bit about the imbalance of both money and leisure time. Especially if you haven’t previously lived together. If he’s working full time and you’re not it’s relatively expected that you would do most of the cleaning and cooking etc. but then when he retires how would you readdress that imbalance to make sure you’re not the default for everything into old age.

without having lived together in a shared space are you comparable in terms of cleanliness expectations and cooking and other lifestyle factors.

@Wiresring you are currently in a very strong financial position, to even think/ponder co-mingling your assets, on such an unequal footing, imo would indeed be a crazy idea.

Protect yourself and your children, always, first and foremost..

Yes I know and that's the basis I've been working on up until now. But that does also mean I can't fully share a life with anyone.

I expect I would end up doing most of it ( another reason I thought I'd never live with anyone again), but I do that now. It doesn't really make any difference if I'm looking after my house that I live in alone, or my house that I share.

I call him "new" because he's not DC's Dad, but we've been together several years.

Get your sons to buy in the same building then! Though perhaps on a different floor

Please don't. Speak to a financial advisor. Tomorrow.

Could you just downsize then and use the funds to solely purchase a new home which you could share with your partner, with room for the children too?

Although, ultimately the decision is yours @Wiresring have you had a conversation/possible input from both the kids?

You may well tell that I am somewhat risk averse but it is all too common for women to end up being exploited, currently though, you are in a position of strength.

Does your partner spend much time at yours and what do the kids think of him?

Why, what would a financial advisor tell me? Charge me a fee to tell me DP could end up with a portion of my wealth? I know that.

I'm not saying I'm going to do it, but I've paid for financial advice twice in my life, once when DH died and once ahead of retirement. Neither told me anything I didn't already know, and both just wanted to steer me towards decisions that increased their income.

I'm well aware that purely on financial basis it would be daft, but not everything is about money, and what's the money for if not for life?

He does spend a lot of time at mine and whilst in no way a father figure, they like him as a friend if the family. He's helping DS with driving practice currently because it was a disaster when I tried

Gifts given above the £3000 permitted amount per year are subject to inheritance tax if you die before the 7 years if they would have had to pay inheritance tax on them had they been part of your estate but how much of the gift that is counted is on a sliding scale. - i.e less of the gift is included as part of your estate if you were to die in 6 years time Vs 2 years time

Deprivation of assets from a care point of view would be a separate thing to consider.

I'd get some advice on the logistics but from a practical perspective it sounds reasonable to gift some money from this sale to your gifts and to buy a house to share with your partner. I would look at a deed of trust to ensure that the division of this asset is as you intend should you split up or one of you die. We have a deed of trust as we put in unequal deposits.
You would want to make sure that it's split 50:50 and not the equity that is split and that your partner gets life insurance and maybe income protection/critical illness cover too so that should anything happen to him, his mortgage is paid off.

I expect I would end up doing most of it ( another reason I thought I'd never live with anyone again), but I do that now. It doesn't really make any difference if I'm looking after my house that I live in alone, or my house that I share.

By this do you mean housework and cooking? If so he’ll be getting a fabulous deal. What will you be getting out of it?