Important, I get this wrong, no sporty car for me ever!
Discussion
Hi all
Important calculation coming up and if I cock up the situation, it'll have a severe effect on my fun car purchasing powers for the next 25 years, so obviously this is life or death serious. I NEED HELP!
So the background info you PH genii need....
The boss and I bought a house with an outbuilding that needs converting to house my inlaws for a long as it takes ( could be 25 years at the outside, they are fit and not that old).
We bought the place on the understanding that they would contribute a sensible amount to the costs of providing said granny annex. Now, there is a big disagreement with the wife's siblings about how much they should be paying, with one sibling saying nothing, and one saying "a bit" but not putting any figures on it.
We think a sensible amount would be enough to cover our costs of tying up a chunk of our capital in said granny flat. We are not rich enough to do it for nothing, ( hence the thread title!).
If it comes down to a calculation being done due to the siblings wanting to screw us down to an absolute minimum contribution from the oldies, what costs do you clever PHers think are reasonable to include, bearing in mind we don't want to charge them rent as such....
Our thoughts are something along the lines of:
Our mortgage interest on the extra chunk of capital we laid out to get a property with a suitable annex
Wear and tear on the property while they are in there ( or alternatively that the annex should be made good once they vacate it, hopefully after a very long and happy period in residence)
Some consideration for the fact that we can't move until they are both dead!
Over to you guys, and please just don't tell me I am bonkers!
Important calculation coming up and if I cock up the situation, it'll have a severe effect on my fun car purchasing powers for the next 25 years, so obviously this is life or death serious. I NEED HELP!
So the background info you PH genii need....
The boss and I bought a house with an outbuilding that needs converting to house my inlaws for a long as it takes ( could be 25 years at the outside, they are fit and not that old).
We bought the place on the understanding that they would contribute a sensible amount to the costs of providing said granny annex. Now, there is a big disagreement with the wife's siblings about how much they should be paying, with one sibling saying nothing, and one saying "a bit" but not putting any figures on it.
We think a sensible amount would be enough to cover our costs of tying up a chunk of our capital in said granny flat. We are not rich enough to do it for nothing, ( hence the thread title!).
If it comes down to a calculation being done due to the siblings wanting to screw us down to an absolute minimum contribution from the oldies, what costs do you clever PHers think are reasonable to include, bearing in mind we don't want to charge them rent as such....
Our thoughts are something along the lines of:
Our mortgage interest on the extra chunk of capital we laid out to get a property with a suitable annex
Wear and tear on the property while they are in there ( or alternatively that the annex should be made good once they vacate it, hopefully after a very long and happy period in residence)
Some consideration for the fact that we can't move until they are both dead!
Over to you guys, and please just don't tell me I am bonkers!
You're utterly bonkers to want to be living in the same house as your in-laws 
Are they contributing anything from the sale of their house? Are they paying rent?
If the only thing you get is a warm fuzzy feeling, it wouldn't be unreasonable to expect some form of contribution from the others who hold family responsibility. If you're getting something out of it, not so much, and expect the family to moan like little girls in the fullness of time, when they get less monies from the will.
Really old MX5s are quite good fun, by the way.
Are they contributing anything from the sale of their house? Are they paying rent?
If the only thing you get is a warm fuzzy feeling, it wouldn't be unreasonable to expect some form of contribution from the others who hold family responsibility. If you're getting something out of it, not so much, and expect the family to moan like little girls in the fullness of time, when they get less monies from the will.
Really old MX5s are quite good fun, by the way.
We obviously know why the other two siblings have become involved.
All that I can contribute to this subject, is that it is a generous and kind arrangement, but if something unexpected goes wrong, then it can be disastrous.
Some instances have had press coverage occasionally. They concerned divorce or mortgage repayment problems. The parents were left with nowhere to live.
This clearly can sometimes be awkward for everyone involved.
Thank you for the mostly useful contributions
Yes we need to agree the level of contributions with the inlaws, but would also like to be a/ fair to the siblings and b/ talking to them in the future. Don't want to do them or ourselves out of a pile of cash.....
Problem is one sibling says it's our idea so we should pay, and the other is fence sitting. We may be forced in to getting a third party to try and assess our benefit and costs from the arrangement.
The inlaws will sell their place and give all siblings an advance on inheritance, once our costs are agreed and paid. One sibling is trying to convince them to adjust down the wife's inheritance share by the same amount they will contribute, effectively making us, relative to the other siblings, pay for housing the inlaws.
Therefore we are forced to fight our corner and it has all got a bit heated!
Yes we need to agree the level of contributions with the inlaws, but would also like to be a/ fair to the siblings and b/ talking to them in the future. Don't want to do them or ourselves out of a pile of cash.....
Problem is one sibling says it's our idea so we should pay, and the other is fence sitting. We may be forced in to getting a third party to try and assess our benefit and costs from the arrangement.
The inlaws will sell their place and give all siblings an advance on inheritance, once our costs are agreed and paid. One sibling is trying to convince them to adjust down the wife's inheritance share by the same amount they will contribute, effectively making us, relative to the other siblings, pay for housing the inlaws.
Therefore we are forced to fight our corner and it has all got a bit heated!
IMO rent them the outhouse and use the cashflow to fund the mortgage on doing it up.
Yes you might need a bridge loan of some sort. The bank might do this for you if they know its to improve the capital value.
You own all of the properties and they pay rent. Job done.
Alternately just sell them the piece of land their bit is on and forget the rest.
You should definitely do this on commercial terms IMO.
Yes you might need a bridge loan of some sort. The bank might do this for you if they know its to improve the capital value.
You own all of the properties and they pay rent. Job done.
Alternately just sell them the piece of land their bit is on and forget the rest.
You should definitely do this on commercial terms IMO.
Well you need to set the ground rules for both the outlaws and the siblings.
Both siblings should be offered the chance to pay for a granny annex, that they are so obviously keen that they don't miss out on. Make them put their money where their mouth is, and put up or shut up with the current situation, set them a deadline to get their own acts together to create a granny annex. Agree to a share of the caring that may need to be done, so that it doesn't all fall on one party should the time come that it is needed.
Then with the outlaws you need to discuss how things are financed that is fair to both yourselves and the siblings and it shouldn't just be interest on the capital that's for sure.
Planning inheritance is tough if the children aren't very mature and are afraid of losing out or getting less than another. Try to get them to understand that everyone is making sacrifices in one way or another and that fighting and resentment is not what is needed, let everyone get their chance and they will either run for the hills or take up the challenge
Both siblings should be offered the chance to pay for a granny annex, that they are so obviously keen that they don't miss out on. Make them put their money where their mouth is, and put up or shut up with the current situation, set them a deadline to get their own acts together to create a granny annex. Agree to a share of the caring that may need to be done, so that it doesn't all fall on one party should the time come that it is needed.
Then with the outlaws you need to discuss how things are financed that is fair to both yourselves and the siblings and it shouldn't just be interest on the capital that's for sure.
Planning inheritance is tough if the children aren't very mature and are afraid of losing out or getting less than another. Try to get them to understand that everyone is making sacrifices in one way or another and that fighting and resentment is not what is needed, let everyone get their chance and they will either run for the hills or take up the challenge
If you want your in-laws to live in a Granny annex at your place, build them one, grant them a tenancy that gives them security and do it. If you don't want them, don't entertain the idea. Absolutely do not, under any circumstances, link it in any way to inheritance - that way lies madness
ClaphamGT3 said:
If you want your in-laws to live in a Granny annex at your place, build them one, grant them a tenancy that gives them security and do it. If you don't want them, don't entertain the idea. Absolutely do not, under any circumstances, link it in any way to inheritance - that way lies madness
Absolutely this ^^^^.We moved 10 years ago and decided it would be a good idea to home my widowed mother. It wasn't an annex but she had her own rooms within our house. My mother offered me £30k as a contribution towards the extra cost of the house in question. That would have been very handy TBH but I declined as I absolutely did not want any inheritance issues regarding the ownership of our family home.
Anyway, my mother lived with us for 4 years (paying a modest rent of about £200 per month to cover all the bills). She then went to live with my brother for the final 3 years of her life.
18 months after she died and her estate had been settled my brother contacted me to say that he'd found a note he'd made some time before her death where she told him she'd given me an advance of inheritance of £30k and could he have his half share......
Op if you want a family on speaking terms dont do it but if you can self fund do not let the siblings decide how much should be deducted from the inheritance.
If the above funding way can't be done let the mum and dad split down the inheritance first then look in to building something hing with a agreement in place with them and you funding it.
This has got the potential to rip a family apart with all the added stress for the parents and you.
THINK ABOUT IT VERY CAREFULLY.
P.s I would see if there was a rise in value will the siblings be liable to claim as if they put in any amount that contributed to the rise in value of said property you could be in sticky situation again in the future. But I'm no expert so it may be all bulls
t that I've just put.
If the above funding way can't be done let the mum and dad split down the inheritance first then look in to building something hing with a agreement in place with them and you funding it.
This has got the potential to rip a family apart with all the added stress for the parents and you.
THINK ABOUT IT VERY CAREFULLY.
P.s I would see if there was a rise in value will the siblings be liable to claim as if they put in any amount that contributed to the rise in value of said property you could be in sticky situation again in the future. But I'm no expert so it may be all bulls
t that I've just put. I think you'd be much better off renting the "Granny annex" privately to a private tenant.
It will fly out of the door on spareroom.com or similar and you won't have the faff of renting to your in-laws (I would absolutely never do this unless I wanted to kill myself).
The very attitude that the siblings are expecting them to be put up for free stinks and I would say "either pay a nominal but decent amount ~ £500 or so depending on how nice the annex is ~ or stuff it.
It will fly out of the door on spareroom.com or similar and you won't have the faff of renting to your in-laws (I would absolutely never do this unless I wanted to kill myself).
The very attitude that the siblings are expecting them to be put up for free stinks and I would say "either pay a nominal but decent amount ~ £500 or so depending on how nice the annex is ~ or stuff it.
Just think about it.
If the siblings contribute ANYTHING:
- You need to calculate the current value of the plot undeveloped. VERY HARD (since it is attached to your house).
- Then when the parents shuffle off this mortal coil you need to calculate the value of the developed property. VERY HARD AGAIN.
- Then they might want their money back (with capital gain) INSTANTLY and you might not be in a position to pay since you aren't necessarily selling the whole house + annex. GOODBYE sports car.
The EXACT same math applies if your in-laws contribute to the building of the annex.
Since, in effect your wife will have taken some inheritance early in order to improve YOUR property.
Or again, would you be prepared to pay out something to the siblings if the in-laws die in a decade or so?
Here is the ONLY way I would consider it.
1. The in-laws need somewhere to live. That means either they own a place, paying a mortgage or not OR they rent. Either way it is costing them something even if it is just opportunity cost on the tied up capital.
2. So they CAN PAY RENT TO YOU. Either using the rent/mortgage they are paying now or by selling up their house and using that money to earning income from investments/interest income - whatever.
In other words, develop the property on your own dime and charge them a market rent.
You will get the money back from the development when you sell your property. It isn't just burning money.
Otherwise you are:
1. Causing an inheritance nightmare.
2. Seriously out of pocket.
If you want to ask them for a lower rent than market because you are a nice guy then fair enough but that's you being nice and you can't force niceness on your sister's siblings.
People always seem to forget that BUILDING PROPERTY tends to be value creative not value destructive.
You should be JUMPING at the chance to develop it.
I am almost 100% sure that it would give you a better return than whatever the incremental mortgage costs would be or what your savings are currently generating.
And don't ignore my first point - if you take a capital contribution from the siblings or in-laws you need current and future valuation scenarios spelt out and legally binding otherwise you are screwed.
If the siblings contribute ANYTHING:
- You need to calculate the current value of the plot undeveloped. VERY HARD (since it is attached to your house).
- Then when the parents shuffle off this mortal coil you need to calculate the value of the developed property. VERY HARD AGAIN.
- Then they might want their money back (with capital gain) INSTANTLY and you might not be in a position to pay since you aren't necessarily selling the whole house + annex. GOODBYE sports car.
The EXACT same math applies if your in-laws contribute to the building of the annex.
Since, in effect your wife will have taken some inheritance early in order to improve YOUR property.
Or again, would you be prepared to pay out something to the siblings if the in-laws die in a decade or so?
Here is the ONLY way I would consider it.
1. The in-laws need somewhere to live. That means either they own a place, paying a mortgage or not OR they rent. Either way it is costing them something even if it is just opportunity cost on the tied up capital.
2. So they CAN PAY RENT TO YOU. Either using the rent/mortgage they are paying now or by selling up their house and using that money to earning income from investments/interest income - whatever.
In other words, develop the property on your own dime and charge them a market rent.
You will get the money back from the development when you sell your property. It isn't just burning money.
Otherwise you are:
1. Causing an inheritance nightmare.
2. Seriously out of pocket.
If you want to ask them for a lower rent than market because you are a nice guy then fair enough but that's you being nice and you can't force niceness on your sister's siblings.
People always seem to forget that BUILDING PROPERTY tends to be value creative not value destructive.
You should be JUMPING at the chance to develop it.
I am almost 100% sure that it would give you a better return than whatever the incremental mortgage costs would be or what your savings are currently generating.
And don't ignore my first point - if you take a capital contribution from the siblings or in-laws you need current and future valuation scenarios spelt out and legally binding otherwise you are screwed.
xjay1337 said:
I think you'd be much better off renting the "Granny annex" privately to a private tenant.
It will fly out of the door on spareroom.com or similar and you won't have the faff of renting to your in-laws (I would absolutely never do this unless I wanted to kill myself).
The very attitude that the siblings are expecting them to be put up for free stinks and I would say "either pay a nominal but decent amount ~ £500 or so depending on how nice the annex is ~ or stuff it.
100% this.It will fly out of the door on spareroom.com or similar and you won't have the faff of renting to your in-laws (I would absolutely never do this unless I wanted to kill myself).
The very attitude that the siblings are expecting them to be put up for free stinks and I would say "either pay a nominal but decent amount ~ £500 or so depending on how nice the annex is ~ or stuff it.
Thanks guys, all interesting stuff. The model we are proposing is that the inlaws pay the cost of conversion, which we think also equates to the cost of servicing the extra mortgage for the annex element of the property for about 20 years.
We know the extra cost we paid for the annex as there is an almost identical property next door that sold the same time we bought ours, but it has no annex. So we can have a rough stab at how much it is going to cost to service.
So if the inlaws pay a lump upfront (of rent if you like) which we plough in to the annex, they get a lifetime lease in return, plus the benefit of speccing the annex how THEY want it (and wheelchair friendly).
If we charge rent then the siblings will kick off (profiting from the inlaws...). DoIng it the upfront way to me is a cleaner arrangement, and we retain full ownership. The inlaws will be protected by written agreement for provision in the event of divorce etc.
Sound fair?
We know the extra cost we paid for the annex as there is an almost identical property next door that sold the same time we bought ours, but it has no annex. So we can have a rough stab at how much it is going to cost to service.
So if the inlaws pay a lump upfront (of rent if you like) which we plough in to the annex, they get a lifetime lease in return, plus the benefit of speccing the annex how THEY want it (and wheelchair friendly).
If we charge rent then the siblings will kick off (profiting from the inlaws...). DoIng it the upfront way to me is a cleaner arrangement, and we retain full ownership. The inlaws will be protected by written agreement for provision in the event of divorce etc.
Sound fair?
schmokin1 said:
Thanks guys, all interesting stuff. The model we are proposing is that the inlaws pay the cost of conversion, which we think also equates to the cost of servicing the extra mortgage for the annex element of the property for about 20 years.
We know the extra cost we paid for the annex as there is an almost identical property next door that sold the same time we bought ours, but it has no annex. So we can have a rough stab at how much it is going to cost to service.
So if the inlaws pay a lump upfront (of rent if you like) which we plough in to the annex, they get a lifetime lease in return, plus the benefit of speccing the annex how THEY want it (and wheelchair friendly).
If we charge rent then the siblings will kick off (profiting from the inlaws...). DoIng it the upfront way to me is a cleaner arrangement, and we retain full ownership. The inlaws will be protected by written agreement for provision in the event of divorce etc.
Sound fair?
What happens if the in-laws give you the money to do the conversion then die in a car accident next year? Will you have the cash available to pay the siblings' share of that money back?We know the extra cost we paid for the annex as there is an almost identical property next door that sold the same time we bought ours, but it has no annex. So we can have a rough stab at how much it is going to cost to service.
So if the inlaws pay a lump upfront (of rent if you like) which we plough in to the annex, they get a lifetime lease in return, plus the benefit of speccing the annex how THEY want it (and wheelchair friendly).
If we charge rent then the siblings will kick off (profiting from the inlaws...). DoIng it the upfront way to me is a cleaner arrangement, and we retain full ownership. The inlaws will be protected by written agreement for provision in the event of divorce etc.
Sound fair?
I applaud your dedication to providing a home and support for your wife's family. I wish more people would look after older relatives in a similar way. Much better for everyone than shuffling them off to a care home.
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