A financial one

[nowornevers]

Not a relationship problem and putting this here for a bit more traffic. Partner and I have decided to move into together after 6 years. I have a 19yo still at home, he has no kids.

The plan is to sell my house and I'd have c150k equity. He has £60k outstanding on his mortgage and his house is worth c£200. 50% of the equity in his house would be transferred to me which I'd ring fence for my son in the event if my death, with partner lifetime right to remain, or sell on any remarriage etc. I'd also take out a life policy to benefit my son. My partner intends me to be the beneficiary of his will, and then my son if I died first but of course that could change after my death.

We agree that I should give him £100k as half value of house and he'll use £60k of that to pay off the mortgage. That's the fair way of doing this isn't it?

We'd then each keep our respective leftover equity, and probably buy a shared asset like a Campervan with some of it. I earn around double what he does and proposed contributing proportionally to the household finance pot but he thinks it should be 50/50. As my son will be living with us I'd naturally contribute more but once my son left he'd rather 50/50. Equally, I'll be planning to slow down career wise in next few years as my job is high pressured so would be reducing my earnings at some point.

Does all of this seem fair and correct? Or is there anything we haven't thought of that would result in inequity?

Seems ok in principle. If his house is worth £200k then yes you need to pay £100k to get a half share in it. Technically he should be able to do what he likes with the £100k you give him, but I would expect he would need to use it to pay off the mortgage as the bank might object to you going on the deeds whilst there is still a mortgage that you are not liable for.

Thank @Aprilx. We did talk about that point re the mortgage as he mooted not paying the mortgage off and containing to pay it himself, but I pointed out the very point you've raised.

We're both just trying to establish the most logical and fairest plan. The interest rate hike is a compelling reason to clear the mortgage, though he has 2 years left on a fixed rate. Cheers

It all sounds OK in principle however all legal finalities, forms, deed transfers etc. need to be in place and sorted before you part company with any money.

Thanks @Marineboy67, will make sure we do that.

You need to make sure this is all sorted legally, are you intending to ring fence your equity as a value or a percentage?
I would imagine the mortgage company might not allow him to have/keep the same mortgage on a house he doesn’t fully own?

@HippeePrincess I am presuming I'd do it as a percentage (50%) I think this is fair given my earnings will be contributing to the upkeep, home improvements etc. Of course the value can drop but it feels like a percentage is fair to us both. I realise that after my death he could sell the house, live in a caravan and blow his money so my son's 50% might not be worth much, which is why I'll take out a life policy to benefit him.

Agree re lender and I think clearing the mortgage is the way to go. This then gives us a bit more freedom. He's a builder but his knees won't last forever

I'm confused how he could sell up and blow the lot so your son's 50% won't be worth much. Surely on sale of the house your son would get the 50% immediately?

Or how about if a new partner moves in, what happens if passes away before her? Your son may face a battle to get your 50%. I know you said it would pass to your son on remarriage, but your DP could have a living together relationship and this doesn't seem to have been considered.

Anither way to do it is that he could save the 40k extra he's getting from you and save mortgage payments he no longer makes, so that he can buy out your son within sonmany years if you pass before him.

It all sounds fair enough. Just make sure that you own 50% as Tenants In Common so that you can do what you like with your sure and leave it to your son. You also want 50% of the value of the property ringfenced, rather than the £100K, so that you benefit from any increase in equity.

I don't understand the comment about your sons 50% not being worth much if DP sold up and blew it all, because if he sold up then your son would get his 50% share at that point? obviously DP's future bequest is not guaranteed, he could meet someone else or yes, blow it all.

The will ought to state that the property must be sold if DP marries or co-habits I think, because as PP says, your DS could end up in an awkward situation if DP just lived with someone and then passed before them. They might refuse to move out, so best to sort it at the point of moving in.

Thanks @TeaMoreToast. Yes I've conflated that situation with one I found myself in with my ex re marital home. I left the home and for various reasons, didn't do a financial settlement but instead intended with my ex to create a trust for my share to benefit my son. But I realised this meant my son might get 50% of a caravan, on the basis there would be no control over what his dad did with the property. So we did a financial settlement in the end.

But yes the planned situation with my partner will be different and I will get solid legal advice to cover all scenarios. Your suggestion re the buy out is a good one.

Ultimately I think a life policy for my son is cleanest as whilst we both want to do the right thing by my son, I wouldn't want my partner in a complicated property situation when he was older and not being able to make the best decision for himself because of this. I appreciate your advice, thank you so much.

Thanks @skyeisthelimit, re your second paragraph yes I was muddling up this scenario with my prior situation. This is why I came for all this good advice

Obviously we will take legal advice on it all but I just wanted to be happy that our core position at this early stage is fair and neither of us have overlooked anything obvious.