Argument still raging about housing the outlaws!
Discussion
schmokin1 said:
walm said:
You have answered the question yourself about why you have to "stump up a lump sum... just to stay on a property we currently own"... because they might die far in advance of "spending" the equivalent value of rent.
e.g. Outlaws spend £150k doing up the annex and die a year later.
You are sitting pretty on a property you own but is far better than otherwise.
You missed the bit about us paying it back pro rata if this very thing happens!e.g. Outlaws spend £150k doing up the annex and die a year later.
You are sitting pretty on a property you own but is far better than otherwise.
Otherwise, I agree with you but charging them rent will be a non starter too as that will be "profiting"!
Wait, you could have a name for it, such an annual figure - something like "RENT"!
OK - so surely the total muppets (siblings) could have it explained to them that you have a VAST opportunity cost here...
You could (and presumably WOULD) rent out that annex once you took on an extended mortgage to do it up for that VERY PURPOSE!!
Now in fairness - that would be a profitable endeavour. So perhaps if you are feeling generous - offer them a BELOW market rent.
But at this point - something needs to be made crystal clear - one of two things is happening at that point:
1. Your outlaws are living somewhere nicer than they would without the discount. NO IMPACT ON INHERITANCE. (You are just taking a hit for their benefit, not for the siblings benefit.)
Or...
2. Your outlaws would have spent FAR MORE to live somewhere else of an equivalent standard. HUGE IMPACT ON INHERITANCE. For every £1 you under-charge your outlaws, the siblings are better off when the inevitable happens.
Again - your outlaws need to live somewhere - what are the other options and how much will they cost???
Your siblings-in-law clearly need to see that EVERY OTHER OPTION leaves them with less cash.
But to my very first point here - if you want to go to the trouble of that pro-rata suggestion you made then you are already talking about an effective rent.
SO YOU MIGHT AS WELL JUST MAKE THEM RENT.
The main point being that even you admit that if they croaked earlier than expected the siblings would have some claim over the improvements the outlaws paid for - which are now part of your property.
You WOULD have to pay up (and should).
Seriously - drop ALL the concern about interest.
Then do the math.
Can you + siblings find a common ground on rent where it IS NOT profiteering and you can get the numbers to work?
schmokin1 said:
Hi all
I wasn't keen on the rent option initially because I didn't want to carry a load more debt and a heap of money would go out of the estate to pay interest, and I would be passing on that cost to the outlaws, leaving less all round for any final inheritance for all three siblings.
This is the way I had hoped it would work:
Outlaws pay above sum up front, in advance, as a contribution to our costs of buying a bigger property than we otherwise would have, ie one with an annex (it's our capital that is used to buy the property, the outlaws do not own any portion of the property, nor are we offering to sell any portion, as I don't see why we should stump up a lump sum to the siblings when the outlaws vacate the annex, just to stay on a property we currently own). This lump sum enables us to convert the barn, and the outlaws would have a pretty strong say in the spec and finishes, as a side benefit of paying up front. If you want to call the up front payment as payment in lieu of rent, fair enough, I don't see it makes much difference...The benefit is as above, no extra debt for us or for the outlaws no extra interest to be covered, against piecemeal payments.
Once barn is ready, outlaws sell house, freeing up capital for an equal split of however much they want to release. This split does not involve deducting from our share any money we had up front. The up front money is a contribution to costs, not an advance of inheritance, the split comes after these costs are covered.
The outlaws effectively get a lifetime lease, we would take no payment while they are in there, and also pick up the cost of renovating the barn to rentable standard when they vacate (remember this might be after 20 years or more). Also remember we are committing to provide them with accom for the period and can't just sell up and move willy nilly!
The sum we are asking for up front is about 1/3 of what the open market rent would be over a 20 year period. The outlaws are in good health, and at least one of them could be expected to live another 20 years. We said to the siblings if they both die or have to go into care homes in short order then we will pay back a sensible amount pro rata- I don't have a problem with that because we could then rent it out to cover our costs.
Anyway, we might have to go down a develop it ourselves and charge some rent model, or call the initial payment an interest free loan to be progressively written off as the years tick by, if we can't get any sensible agreement with the siblings....
If we have to get a mediator, fair enough (hence this follow,up thread) but either way the missus and I have to be reasonably happy with the financial arrangement or it won't happen.....
Cheers all
Schmo
I was beginning to think this was the case. You need to ditch that 'extra up front sum'. Obviously the other siblings want any uplift from that. I wasn't keen on the rent option initially because I didn't want to carry a load more debt and a heap of money would go out of the estate to pay interest, and I would be passing on that cost to the outlaws, leaving less all round for any final inheritance for all three siblings.
This is the way I had hoped it would work:
Outlaws pay above sum up front, in advance, as a contribution to our costs of buying a bigger property than we otherwise would have, ie one with an annex (it's our capital that is used to buy the property, the outlaws do not own any portion of the property, nor are we offering to sell any portion, as I don't see why we should stump up a lump sum to the siblings when the outlaws vacate the annex, just to stay on a property we currently own). This lump sum enables us to convert the barn, and the outlaws would have a pretty strong say in the spec and finishes, as a side benefit of paying up front. If you want to call the up front payment as payment in lieu of rent, fair enough, I don't see it makes much difference...The benefit is as above, no extra debt for us or for the outlaws no extra interest to be covered, against piecemeal payments.
Once barn is ready, outlaws sell house, freeing up capital for an equal split of however much they want to release. This split does not involve deducting from our share any money we had up front. The up front money is a contribution to costs, not an advance of inheritance, the split comes after these costs are covered.
The outlaws effectively get a lifetime lease, we would take no payment while they are in there, and also pick up the cost of renovating the barn to rentable standard when they vacate (remember this might be after 20 years or more). Also remember we are committing to provide them with accom for the period and can't just sell up and move willy nilly!
The sum we are asking for up front is about 1/3 of what the open market rent would be over a 20 year period. The outlaws are in good health, and at least one of them could be expected to live another 20 years. We said to the siblings if they both die or have to go into care homes in short order then we will pay back a sensible amount pro rata- I don't have a problem with that because we could then rent it out to cover our costs.
Anyway, we might have to go down a develop it ourselves and charge some rent model, or call the initial payment an interest free loan to be progressively written off as the years tick by, if we can't get any sensible agreement with the siblings....
If we have to get a mediator, fair enough (hence this follow,up thread) but either way the missus and I have to be reasonably happy with the financial arrangement or it won't happen.....
Cheers all
Schmo
If you can't get this to work using an initial gift that is equal for all siblings then you are not going to get it to work.
Don't take extra early inheritance ahead of the other two. Complete the annex with a loan. Get a rental agreement. You'd be an idiot not to just on the basis of divorce risk let alone creating aggrieved and rightly so, siblings.
Ultimately, you are doing this for financial gain so as with any financial transaction just do it properly.
In reality, your last post reads as if you don't even have this property that you've been talking about but rather you're hoping to trade up to a bigger gaff on the back off getting an extra upfront payment over the others?
DonkeyApple said:
You'd be an idiot not to just on the basis of divorce risk let alone creating aggrieved and rightly so, siblings.
I'd also think the inlaws would be idiots giving away the proceeds of the sale of their house and then being reliant on the OP for accommodation for the rest of their lives. Lots of things can change over the next 20 years.In my mind the only equitable solutions :
1) As already stated several times, the OP refurbishes his barn and the inlaws pay rent.
2) The OP gifts or sells the barn to the inlaws and they pay for the refurbishment of their own property.
Both of those options mean the inlaws retain their capital and should things change further down the line they can walk away.
I was right with you until you laid it out like they give you a lump and then whatever is left gets split between you all. This means your inheritance is huge compared to the others.
The only way I can see is that you buy a place big enough and they move in and pay you rent. If they decide to sell up and gift you all a chunk then fine. If you cant afford to buy a place big enough maybe you can negotiate to see how much lump they may be willing to gift you all - but they need to have enough investments or income to pay rent for the rest of their lives.
The only way I can see is that you buy a place big enough and they move in and pay you rent. If they decide to sell up and gift you all a chunk then fine. If you cant afford to buy a place big enough maybe you can negotiate to see how much lump they may be willing to gift you all - but they need to have enough investments or income to pay rent for the rest of their lives.
NorthDave said:
I was right with you until you laid it out like they give you a lump and then whatever is left gets split between you all. This means your inheritance is huge compared to the others.
No it depends on when they die.If they die shortly after gifting the lump (and OP doesn't pay any back) then you are right.
But if they die in 30 years time after living rent free for a relatively small upfront lump then they have effectively ripped off the OP to the benefit of siblings inheritance (paying less rent than they otherwise need to if renting elsewhere).
I do like that idea of just selling them the annex and they can do with it what they like.
Or another property very close by while OP rents annex out to third parties.
That is another clean option too.
What happens if the in laws give a lump sum then a little down the road you and the wife split up? Then you've got one almighty battle between you, your wife, your in laws and the siblings. That would be fun!
Buy and renovate yourself and then rent to the in laws. It's the only sensible option.
Buy and renovate yourself and then rent to the in laws. It's the only sensible option.
do not let your finances get clouded -keep it simple and straight cut. You renovate and absorb that cost yourself and then rent it out to the inlaws - market rate.
if you dont then you would open yourself up - siblings think your on the take, if the inlaws pay for the upgrade then you are as you would be getting a massive hike on the inheritance. think if the show was on the other foot. yes its your inlaws to do with as they please however those siblings will harbour a grudge....
remember that rental income could have tax implications as well. so you may actually end up way out of pocket.
Get the figures of a retirement flat with a warden, work those costs out for 20 years, show to siblings. Ill bet they would get worried about their inheritance if they saw how quick that eats away at the savings.
sounds like a hiding to no where this does. total mess could result with the siblings aggrieved over what they see as you winning.... What happens in later life, what about your holidays or times you are away from the house who would look after them ? or would you be tied to them and caring for them.
if you dont then you would open yourself up - siblings think your on the take, if the inlaws pay for the upgrade then you are as you would be getting a massive hike on the inheritance. think if the show was on the other foot. yes its your inlaws to do with as they please however those siblings will harbour a grudge....
remember that rental income could have tax implications as well. so you may actually end up way out of pocket.
Get the figures of a retirement flat with a warden, work those costs out for 20 years, show to siblings. Ill bet they would get worried about their inheritance if they saw how quick that eats away at the savings.
sounds like a hiding to no where this does. total mess could result with the siblings aggrieved over what they see as you winning.... What happens in later life, what about your holidays or times you are away from the house who would look after them ? or would you be tied to them and caring for them.
One thing to be sure of and plan for, I have done a similar thing with my in laws, essentially I bought their house at a discount which allowed me to buy a bigger house and convert part of it for them. There are a few things we addressed.
I have agreed to house them to second death or care home
1) what would happen if we split up, I would want to get my share of my capital out of the house. Answer is, agreement that I will rent somewhere (within limits) and apply that rent to the capital value of the house when 2nd parent dies.
2) Parents in law pay no rent but make a monthly contribution to utilities, I don't want to create two seperate households for council tax , stamp duty etc.
3) Make sure they have their own entrance so you can all come and go without seeing each other.
4) Make ground rules early on about entering each others houses, sort out who parks where, does bins etc etc
5) You will be looked on as a free handyman and warranty service.....get used to it
6) The nightmare begins when they can no longer drive....shopping etc
Good Luck
If you get any grief from the siblings just grin and suggest they house them
I have agreed to house them to second death or care home
1) what would happen if we split up, I would want to get my share of my capital out of the house. Answer is, agreement that I will rent somewhere (within limits) and apply that rent to the capital value of the house when 2nd parent dies.
2) Parents in law pay no rent but make a monthly contribution to utilities, I don't want to create two seperate households for council tax , stamp duty etc.
3) Make sure they have their own entrance so you can all come and go without seeing each other.
4) Make ground rules early on about entering each others houses, sort out who parks where, does bins etc etc
5) You will be looked on as a free handyman and warranty service.....get used to it
6) The nightmare begins when they can no longer drive....shopping etc
Good Luck
If you get any grief from the siblings just grin and suggest they house them
jezzzzzzzzzzzusssssssssss FFS how is this topic still going?????????? How is this topic number 2 poke my eyes out pleaasssee and biatch slap me.
The OP has had so many of the same suggestions made - fund it yourself and rent it to them otherwise you are feking MAD
flogging a dead horse, punching thin air head against a wall, blood out of a stone.
losing the will to live........
The OP has had so many of the same suggestions made - fund it yourself and rent it to them otherwise you are feking MAD
flogging a dead horse, punching thin air head against a wall, blood out of a stone.
losing the will to live........
s off abroad with all the money and splurge it on Sherry and Horlicks
superlightr said:
jezzzzzzzzzzzusssssssssss FFS how is this topic still going?????????? How is this topic number 2 poke my eyes out pleaasssee and biatch slap me.
The OP has had so many of the same suggestions made - fund it yourself and rent it to them otherwise you are feking MAD
flogging a dead horse, punching thin air head against a wall, blood out of a stone.
losing the will to live........
There is a bit of thread drift going on, I only asked for recommendations on who might advise us! You have the option of closing your eyes while reading the thread though...The OP has had so many of the same suggestions made - fund it yourself and rent it to them otherwise you are feking MAD
flogging a dead horse, punching thin air head against a wall, blood out of a stone.
losing the will to live........
schmokin1 said:
superlightr said:
jezzzzzzzzzzzusssssssssss FFS how is this topic still going?????????? How is this topic number 2 poke my eyes out pleaasssee and biatch slap me.
The OP has had so many of the same suggestions made - fund it yourself and rent it to them otherwise you are feking MAD
flogging a dead horse, punching thin air head against a wall, blood out of a stone.
losing the will to live........
There is a bit of thread drift going on, I only asked for recommendations on who might advise us! You have the option of closing your eyes while reading the thread though...The OP has had so many of the same suggestions made - fund it yourself and rent it to them otherwise you are feking MAD
flogging a dead horse, punching thin air head against a wall, blood out of a stone.
losing the will to live........
its like watching the bad runaway train movie with a bomb on it but worse........ .......... You about to get onto that train...... Look forward to the ending just so it ends finally !! ...don't worry I have my eyes glued shut now.
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