Legal/Tax issues - Parents moving in?

[jdwoodbury]

I am taking the 1st tentative steps in considering with our next house move allowing my wife's parents to move in with us (in an annexe). I would be very interested in hearing from someone who had been through this before as I have some reservations about this, yes about my in-law's but more about the financial implications.

So here is the current plan...

1) Parents sell their bungalow for circa £250k and move in with us until we sell
2) They release £100k to put into the new house move
3) They want to give £50k to their other son as early inheritance (to get him on the property ladder)
4) They keep £100k back so they can live the life of riley before they get too old

My concerns with this are as follows:

1) Would my in-laws need to part owners in my property to ensure they can actually transfer that money to the purchase?
2) Are they actually allowed to gift that sum in one go to my brother-in-law (I expect not)
3) Will my house be at risk if they cannot afford care costs if they needed to be in nursing care at a later date?
3) What are the other gotchas I have not considered yet?

I fully expect I need to speak some professionals in this matter but where to go to? A property lawyer or tax advisor or both?

Regards,

JD

[ringram]

Sounds boring and claustrophobic.

You might want to think about planting a tyburn tree while you are at it.

[jdwoodbury]

ringram said:

Sounds boring and claustrophobic.

You might want to think about planting a tyburn tree while you are at it.

Dont get on with your in-laws then?

[Sarnie]

Will you be mortgaging the property?
Are the in-laws giving you the £100k and do not want it back or is it repayable to them?

[Steffan]

I am a retired graduate Chartered Accountant. Given the complexity of the arrangement and the sums involved I think that both you and your parents you would wise to seek advice prior to entering into the arrangement. All the taxation and inheritance issues can be avoided with appropriate timely structures. As can the possibility of care costs for your parents when aged. But you need specialist professional advice. BEFORE you enter into such an arrangement.

[jdwoodbury]

Sarnie said:

Will you be mortgaging the property?
Are the in-laws giving you the £100k and do not want it back or is it repayable to them?

Yes I will be mortgaging the propertly, they do not expect the 100k back...although we have discussed the idea that if the relationship breaks down we would exit the deal and return their investment.

Clearly I will get some financial advice but interesting in hearing anyone with similar experience.

FYI - I dont want to circumvent my in-laws paying for care later in life (they are entitled to the best care they can get), what I dont want is to risk losing MY house over it.

Regards,

James

[Sarnie]

jdwoodbury said:

Yes I will be mortgaging the propertly, they do not expect the 100k back...although we have discussed the idea that if the relationship breaks down we would exit the deal and return their investment.

Clearly I will get some financial advice but interesting in hearing anyone with similar experience.

FYI - I dont want to circumvent my in-laws paying for care later in life (they are entitled to the best care they can get), what I dont want is to risk losing MY house over it.

Regards,

James

Unfortunately, no lender that I'm aware of will lend where a portion of the deposit is being provided by someone who will be living at the property but not on the mortgage.

[Steffan]

Sarnie said:

jdwoodbury said:

Yes I will be mortgaging the propertly, they do not expect the 100k back...although we have discussed the idea that if the relationship breaks down we would exit the deal and return their investment.

Clearly I will get some financial advice but interesting in hearing anyone with similar experience.

FYI - I dont want to circumvent my in-laws paying for care later in life (they are entitled to the best care they can get), what I dont want is to risk losing MY house over it.

Regards,

James

Unfortunately, no lender that I'm aware of will lend where a portion of the deposit is being provided by someone who will be living at the property but not on the mortgage.

I would agree 100%. You do need specialist professional advice. You can avoid all the pitfalls and downsides if you get specialist advice before you complete the arrangements. You are seeking a complex avoidance arrangement. Treat it as such.

[anonymous-user]

Definitely get proper advice and get all agreements down in a legal document.

Hope for the best, but plan for the worst!