Step children and inheritance

[A1056056]

Hi all
Just wondering if any one can offer any advice. Me and my partner have spilt up over the way we decide to split our inheritance between our children.
We have no children together. I have two and he has one from previous relationships. There is no plan to have any children together.
After lots of back and forth last year he decided to move in to my house. Then the word inheritance came up, something that had never crossed my mind! I knew we would need a pre-nup but never really thought about anything else.
We both have a mortgage on each of our houses.
My OH stated that if we kept both houses, moved in to mine and rented his house our assets would be combined. Therefore in regards to inheritance as he has one child his 50% would be given to his child and my 50% would be split 25% each to my children.

The issue that I cannot get my head around is the fact that as it stands now (we both have life insurance to cover the cost of our mortgage if we died)
My children would get half of my property which is £117500 each and OH's son, would get the full amount of his which is £135000.
Coming together the amount is £370000 (I will work it out as if we are keeping both houses)
Under OH's way of thinking his son would get 50% of the property estate and each of my children would get 25% each:
OH's son now gets £185000= 50%
My child now gets £92500= 25%
My child now gets £92500= 25%

OH's point of view is that he is taking on half of my liability now and vice versa with me and his house and therefore he owns 50% which to him means his son should get his full 50% and as I have two children my 50% would be divided therefore getting 25% each.

Our children are still relatively young all still at the later years in primary school so we would becoming together and taking on each other's children, although his son only comes every other weekend and my children go to their dads every other weekend. So I guess I assumed we would be a new family unit and each child an individual in our lifetime and after we have gone. My thoughts are the money should be split 3 ways as we are taking things on together as a family and that's how it should end too! My other half is soooo adamant that he is right that he can no longer be with me as he says 'isn't it enough that I'm taken on your children, putting a roof over their heads, paying for food etc' and then he says I expect him to give my children some of his child's inheritance! This is really painful to hear as I really do not want to take any of his child's money I just feel my way seems more fair for everyone but he says my way is only fair for me and my own!
We have both spoken to financial advisors, however this has been separate (our relationship hasn't really been in the right state to go together) and the one I spoke to agreed with me and said that is how most combined families do it. My OH's financial advisor said he was right and you work for your blood and pass on to your blood.
My oh did state that if he had a lot more money then maybe he would split things more towards my way but as he doesn't he has a duty of care to provide for his son!

A trust fund has also been discussed to ensure that neither of us would be in the position of after one of us died all the joint assessments would be sold straight away and that the surviving spouse would be able to live in the family home and that a certain amount would go in to a trust fund for whichever child's parent that died first.

Everyone we speak to has their own opinion and we are getting know where!
I am really starting to doubt my way is right as my oh is so adamant that he is right and that he can't be with someone that thinks it's right to tell someone what they should do with their own money! I am really concerned that I'm wrong and that if we never get back together and I meet someone else and they think the same as my oh I will have massive regrets.
I would like to know people's thoughts and if i am having the wrong outlook on how I have worked out the figures and percentages as it does not sit right with working out the amounts as 50% and 25%/25% but if this way is financially fair for everyone then I would love to know.
That is all we want, for it to be financially fair for everyone. The problem is deeming whose way is fair for everyone and that is where the conflict between us is happening.
Thank you for reading! Hopefully there is people in our situation that can help!

So your home is worth £235,000 and his is worth £135,000, but he thinks his son is entitled to £185,000, 50% of the entire pot?!

I really think you should walk away from this grabby man...

He sounds like a grabby bully tbh. Better just get rid.

He really is showing how unpleasant and grabby he is...

I think the issue is that what he is saying is either they consider that they are not entering the relationship on a 50/50 basis or they are. If they are, everything is divided 50/50, if they are not, OP pays for her children, he pays for his.

I do see his point in that in none recomposed families, when one partner is often contributing more to the household, it is assumed that everything would be split 50/50. I expect his argument is that OP can't ringfence her assets for her children, but then expect her OH to pay for 50% or more of everything because she has more children. I suspect that's what he meant by saying that he is taking on her children, although as often, said in a very poor way.

When people come in with different assets and different number of children, there is almost inevitably going to be someone losing out, either during cohabitation because one pays more than the other, so ends up with less disposable income they would otherwise have, or after separation, or after death.

There is no doubt that moving in with me, my OH's disposable income went down quite a bit. However, I invested in his assets, so all together, investment wise, he benefited. Then there is the issue of inheritance, in that I will inherit a lot more from my parents than he will, so from that perspective, I will then be richer than him yet, assuming we are still married by then, share everything with him.

The issue is that we can't read the future, so at some point, someone has to take a risk. It's that, or staying boyfriend/girlfriend in separate properties and totally separate finances.

Good post @swingofthings - makes everything very clear & you're so right - it does involve risk & a certain leap of faith.

He's benefiting in lots of ways - or would be if he rented out his house and moved in with the OP. His mortgage would be getting paid by the rent, he'd be living in a nicer house in (presumably) a nicer location, but he wants MORE.

I think you're lucky he's shown his true grabby colours before you're inextricably entwined with him.

He is being unreasonable. His son wouldn't get any less of you split three ways. It would be one thing if your partner was a multimillionaire and you had nothing to your name. But he is effectively asking you to contribute to his sons inheretance at your v children's detriment. With you split the intherantce to reflect that you have brought more wealth into the marriage or you do it evenly.

What happens if either of you inherit in the future? If his parents ( or anyone else for that matter) die (assuming he has them etc) then I'm guessing they might not want "their" money to go to your children so he's not going to put at into a joint pot is he. And this is obviously the case the other way round.

Whatever you do, don't get married and don't let him make any direct contributions to the mortgage and never agree verbally that he has any interest in the house. That way you keep what is yours, he keeps what is his. He is of course enriching himself by moving into your property, renting out his own house and keeping the income. Meanwhile all the wear and tear goes onto your house. What you probably should do is keep both your houses and buy a new one together. That way you each keep your own and the new equity in the new property gets split 50/50. Much better idea. Be very careful with this because beneficial interest, trust and equity can get messy. I advise a short session with a solicitor prior to marriage (if you insist on marrying) so that you can draw up prenups and deed of trusts to ensure you each retain what is yours.

Why does he think ring fencing your current assets and splitting assets from when you join your families together three ways is wrong?

If he’s only going to be contributing 50% towards bills and his own house will be rented out and his mortgage paid that way surely he’s in a far better financial position by moving in with you then he is currently?

How are you financially benefiting from him in any way? Your bills will go up when he moves in and has his son over so he’s rightly contributing towards those I bet his contribution will be less than what he pays out currently living alone.

I’d cut my losses, you’re not going to regret it.

Thanks Magda.

If he’s only going to be contributing 50% towards bills and his own house will be rented out and his mortgage paid that way surely he’s in a far better financial position by moving in with you then he is currently?
That's the bit that's not clear. If OP agrees to pay her full mortgage alone, whilst he only pays for the bills, and whilst he gets to keep any extra from the rental of his property (assuming there is any), then yes, it would seem unfair, however, if the agreement is that he contributes half of the mortgage in addition to the bills, plus sharing the extra from rental, then he is the one losing out on all fronts.

@swingofthings

then he is the one losing out on all fronts.

You can bet that will never happen.

@jonbb if you rent a house out it will have a lot more wear and tear, than if you live in it, and capital gains and other taxes on the income too. It’s something they should both consider, but DP renting his isn’t him getting the best deal. It can be quite a bit of hassle too.

OP, I've read all your posts again and I actually don't get the issue!

You say that you both agree that each can keep the equity that was build before getting together, so surely the same principle would apply to inheritance?

You've counted the inheritance, it would seem on the basis getting your life insurance that would pay the full mortgage now, but surely if you both keep your house separately, funds available for inheritance don't have to be combined and you are looking at the very small chance that you would pass away together at the same time.

This seems complete madness that this matter of principle, unlikely to come to fruition in real life would set your relationship to the point of thinking of separating!

I'm with him, your will as it stands should be split on the basis of your equity, so if you were to pass away, your kids get your house, if he passes away, his son gets his, end of.

I also don't understand why you would argue so much over something that is not set in stone. A will can be changed whenever you want, so you could do what you want and if things changes, amend the will accordingly.

I think that if they decide to live together, whichever house, old, his, hers or new, it’s going to be difficult and feel weird to not be their home. Financially and otherwise. Both of them.

However they could draw up a legal agreement to ringfence the equity when they move in, or just sell and then put in equal shares to a new house.

And from then on it’s 50/50 shares.

I agree and it makes sense to take the same approach when it comes to inheritance, each keep their property and these are ringfenced to the children two, so OP divides her house in two and her OH's house goes to his boy. If any wealth is added after they get together, that can go 1/3 to each child.

@swingofthings

I'm with him, your will as it stands should be split on the basis of your equity, so if you were to pass away, your kids get your house, if he passes away, his son gets his, end of.

That isn't what he's suggesting, if it was there wouldn't be a problem. Read the OP again, he thinks their assets should be combined, but then split in half - her children getting a quarter each, his child getting a full half. Her asset is worth a lot more than his. His child makes out like a bandit, her children lose out.

Because from what I interpreted from OP's post she wants everything to be half except the inheritance. She said he was ok with the basis that each keep the equity they have so far.

What seems to complicate matters is that OP has worked what the inheritance would be based on the life insurance they have that would pay out the full amount.

The infoi that is missing is how much equity there currently is in each property.

Bananasinpyjamas11 I know, I'm a ll, but he will be enriching himself, whilst op doesn't receive any rent for her property.

Why don't you buy a peppery together, each putting an equal amount into the house as a deposit.
Split 50 25 25 and then use any assets left over from own house to either put into trust for bio children or stocks etc.

*property

@noimaginationatall

Why don't you buy a peppery

Don't you have to wonder...in what universe is 'peppery' more likely than 'property' when you start typing. I'd go ballistic if I had to deal with posting from a phone or tablet that auto-corrected.

I've a feeling that, now that the OP has seen her DP's true colours, there will be no going back. Too grabby for his own golden child, at the expense of her children.

@jonbb no he won’t be enriching himself unless OP requires no rent or mortgage from him and he lives in her house. Even then, it’s just paying back his mortgage as the OP also pays back her mortgage iyswim. Except he’d gain less as he’d have to pay tax on his and she wouldn’t.

@juells yes it’s the previous asset issue. Should be simple to sort out though? I’ve had friends put in different deposits, get a mortgage together, put in equal shares and then when one left, bought out their shares. With a legal agreement there was no arguments.

All this talk of ring fencing. What is the mechanism. How would it work? I'm not sure how it is possible.