Inheritance - can I use my childrens' legacy to buy my brother out?

[zoggs]

Brother and I are executors and beneficiaries of our father's will. My 3 DCs inherit a set figure to be divided equally. Rest of the estate which includes a property, is shared between brother and myself.

My brother behaved very badly after our mother died. He did not execute the will properly and said and did things which upset my father and I greatly. My brother distanced himself for nearly 5 years and only reappeared 2 weeks before our father died.

As this is not a great time to sell property I would like to suggest that as the childrens' legacy equates to around half the value of the property I could effectively buy my brother's interest with their share. I would then redevelop the place and sell it when the market picks up. I would, of course, protect their investment and ensure they get a proportional return.

I know it's complicated but I cannot bear the thought of being tied to my brother in any sort of business arrangement, eg keeping the property and letting it out as joint owners. The alternative is selling to a third party which I do not want to do for financial and emotional reasons. I would never sell to him even if he offered me £10million which I know is not a financially sound response, purely emotional!

My DCs are aged 7, 19 and 21 and their inheritance stays in trust until they are 21 which may or may not complicate matters.

Sorry, can't help with the legalities, but have you discussed this with your older children? What do they think?

You obviously need to discuss this with your solicitor but I think that ultimately it depends on whether you would be acting within your fiduciary duties as trustee to invest the money in the property.

You need to act in the best interests of your children. Is it a good investment? Will the return be worthwhile? Or are you being lead by your emotions?

If the investment is a sound one I suspect you could go ahead but in these times it may be better to diversify your children's interests and not sink it all into one property.

I haven't discussed it with my children yet. Wanted to see if it was possible first. The property will be valued this week. It needs a lot of work but is in an extremely desirable area. It's a risk and I know I am emotional at the moment. I would not have enough cash to buy my brother out and redevlop it but I could remortgate my own house.

The money is your kids not yours to use so I would be surprised if you were able to spend it on the half of the house - even if it was in your kids names. You need legal advice on this.

You need to speak at least to your 21yo as presumably they will be entitled to their money straight away. With regard to the others, you certainly need to speak to them to canvas their views. When the estate is distributed, the money for the younger two will have to go into a trust (is there anything in the will about this, naming e.g. trustees?). If you are a trustee, then you have a fiduciary duty to ensure that the money is invested wisely. Whether investing in property is deemed to be wise in the current climate is debatable, but, if looking at it in the long-term, is perhaps not an unwise move.

I do think you need to take specialist legal advice on this as you could be laying yourself open to accusations of abuse of trust if you act without proper authority.

But if there is the chance that the property can be improved and sold on for more money than it is currently worth, and your brother has an entitlement to half the property, might he not want to hold on to his half in order to benefit from the eventual sale, or at least expect to be bought out for more than half of the current value of the property?

Sorry, not very helpful of me, but I just wondered if you had considered this.

you need hulababy her hubby is a probate solicitor

The brother will be entitled to half the current value of the property or half the value when it is sold. If the OP wants to spend money improving it after she has bought out her brother, he will not be entitled to any of the consequent increase in value. Why should he, unless he is prepared to fund half the improvements?

Oh no, I wasn't implying he had a right to any subsequent profits once the OP had bought him out. I just meant he might not want to let himself be bought out if he gets wind of what the OP is planning.

You should definitely seek legal advice. It is possible to effect a 'deed of variation' on a will. The deed effectively rewrites the will to suit the beneficiaries/executors and can be very useful in tax planning etc.

Maybe the brother will be happy to receive an instant payout - originally intended for the grandchildren - leaving the property which may/may not increase or fall in value to the OP and her children.

As executor, and probably Trustee of the benfits left to her children, the OP has an obligation to do with the beneficiaries money the very best she can to a) protect the capital and b) increase the value where possible.

I would make sure you talk to your 2 older children, particularly as your 21 year old presumable gets his/her inheritance now.

It really sounds like emotions are clouding things for you. Forgetting your love of the home and your problems with your brother, would you even consider risking your dcs money in another property at the moment? For it to be in the dcs best interest this needs to be something you would be doing without the emotional investment.

I don't think you can put your hand on your heart and say that you would be doing this if it were just "a property".

Legally? I don't know if you can or not.
Morally? I don't think you should.

Sorry if that's not what you wanted to hear. Of course, if your dcs support the decision wholeheartedly then there is nothing to stop you.

Actually, all this is exactly what I needed to hear. Sorry I haven't replied sooner but I was up at my Dad's sorting things out, including a valuation on the property.

I think my judgement is being clouded by my emotions at the moment. If I had the cash right now would I go out and buy another property with it? No, not unless it was a real rock-bottom bargain. Getting a bargain on my Dad's house would effectively mean ripping my brother off. I don't want to stoop to his level and anyway, my Dad forgave my brother just before he died and asked me to aswell.

I will sit on it and do nothing for the time being. Perhaps my brother will name a price but I don't think I'll involve the children at all.

Zoggs, glad I didn't offend you

That sounds like a sensible thing to do. It's so difficult mixing finances and emotions. There's no need to rush into anything.

Hope it all works out ok for you and the dcs.

The short answer is: not without your Brother's consent.