Bank of Son or Daughter...
Discussion
In an unusual twist on the Bank of Mum and Dad, my wife and I are in the position of considering financial support to her mother to buy a house.
Broad context - she's 77, has a cash lump sum that won't get what she needs localish to us so we are considering topping up by anything from 50-150k.
Obviously that could be gifted and therefore just subject to 7-year IHT rules. We could then require a will to return our portion of the house value to my wife when the inevitable happens. However if care is ever required then all that money could fritter away.
Ideally we want a more concrete stake in our 'investment' - e.g having my wife on the title alongside her mother, as tenants in common with proportial stakes, my wife's part then presumably ringfenced from any potential care costs? But presumably this would incur the second-home surcharge on stamp duty given we already own our own home.
Any other ways of doing this type of thing?
I'm aware there are plenty of pitfalls whatever way, but then so do alternatives.
Broad context - she's 77, has a cash lump sum that won't get what she needs localish to us so we are considering topping up by anything from 50-150k.
Obviously that could be gifted and therefore just subject to 7-year IHT rules. We could then require a will to return our portion of the house value to my wife when the inevitable happens. However if care is ever required then all that money could fritter away.
Ideally we want a more concrete stake in our 'investment' - e.g having my wife on the title alongside her mother, as tenants in common with proportial stakes, my wife's part then presumably ringfenced from any potential care costs? But presumably this would incur the second-home surcharge on stamp duty given we already own our own home.
Any other ways of doing this type of thing?
I'm aware there are plenty of pitfalls whatever way, but then so do alternatives.
aspender said:
We could then require a will to return our portion of the house value to my wife when the inevitable happens.
Do you not need to be careful in respect of inheritance tax?I would have something legal drawn up specifying shared ownership (I'm assuming there's no mortgages involved) so that the money you put in is also the money you take out and isn't taxed. This would, presumably, also cover you in respect of your stake being susceptible to be used on care home costs.
DONT
If you need to think about it for a while then think about it and DONT do it.
Just got out of the same sort of thing, all seamed a kind and good idea but it caused all sorts of problems resentment and upset both ways.
No matter how well you get on and how close you are it will end in tears.
I have 3 close friends who have experienced the same with immediate family members.
This is not the first PH thread on this topic and others have said the same.
Please dont do it.
If you need to think about it for a while then think about it and DONT do it.
Just got out of the same sort of thing, all seamed a kind and good idea but it caused all sorts of problems resentment and upset both ways.
No matter how well you get on and how close you are it will end in tears.
I have 3 close friends who have experienced the same with immediate family members.
This is not the first PH thread on this topic and others have said the same.
Please dont do it.
Dixy said:
DONT
If you need to think about it for a while then think about it and DONT do it.
Just got out of the same sort of thing, all seamed a kind and good idea but it caused all sorts of problems resentment and upset both ways.
No matter how well you get on and how close you are it will end in tears.
I have 3 close friends who have experienced the same with immediate family members.
This is not the first PH thread on this topic and others have said the same.
Please dont do it.
Do you want her to move in with you instead then? If you need to think about it for a while then think about it and DONT do it.
Just got out of the same sort of thing, all seamed a kind and good idea but it caused all sorts of problems resentment and upset both ways.
No matter how well you get on and how close you are it will end in tears.
I have 3 close friends who have experienced the same with immediate family members.
This is not the first PH thread on this topic and others have said the same.
Please dont do it.
Joking aside thanks, I appreciate the hornets nest this kind of approach will likely involve but as I said in the OP the alternatives are all unpalatable.
aspender said:
Do you want her to move in with you instead then?
Joking aside thanks, I appreciate the hornets nest this kind of approach will likely involve but as I said in the OP the alternatives are all unpalatable.
I suppose one thing to consider is what happens if you *need* the cash.Joking aside thanks, I appreciate the hornets nest this kind of approach will likely involve but as I said in the OP the alternatives are all unpalatable.
We bought my in-laws a house about 18 years ago - in my head it's just an illiquid savings pot now.
If my m-i-l lives to a hundred I'll probably be dead before any cash comes back!
From the ring fencing prospective of your shared purchase it is still possible for a Council to request a house sale to help pay for a care home - I believe this is not the case only if someone like a Partner or child is actually living in the house with her.
The other issue you haven’t mentioned would be if your MIL requires care assistance in her / your home which potentially can also demand fairly quick payment.
The other issue you haven’t mentioned would be if your MIL requires care assistance in her / your home which potentially can also demand fairly quick payment.
We're chewing over a tangentially similar situation - "parents want to move near us, can't afford house".
Options we've mooted:
1) Lifetime mortgage
2) Part share purchase (can't remember what it's actually called - where you buy 30% of a house or whatever: thinking about it, are these F2Bs only?).
You may have already looked at these
Are there any other family involved? That's what worries me: that they would accuse us of profiteering after the event. We're still talking about it...
Options we've mooted:
1) Lifetime mortgage
2) Part share purchase (can't remember what it's actually called - where you buy 30% of a house or whatever: thinking about it, are these F2Bs only?).
You may have already looked at these
Are there any other family involved? That's what worries me: that they would accuse us of profiteering after the event. We're still talking about it...
We helped FIL buy a house - he owned a quarter of it and his three kids owned a quarter each.
We didn't put a quarter of the value in though - he was £75K short (due to an ill-advised equity release scheme on his previous house) so we got £75K 10yr IO mortgage between the three kids. He gifted us £1000 each every Christmas which more or less covered the cost.
The bugger was still alive and kicking 10yrs later and the option to get another IO mortage seemed tricky, so we paid the loan off between us.
When he passed away a few yrs later, house was sold and the solicitor sent us a quarter of the proceeds. As it happened, due to buying at the height of the market and seling before the Covid bubble got going, the property saw very little increase in value so no CGT issue based on us nominally buying a quarter of it at the outset.
We didn't put a quarter of the value in though - he was £75K short (due to an ill-advised equity release scheme on his previous house) so we got £75K 10yr IO mortgage between the three kids. He gifted us £1000 each every Christmas which more or less covered the cost.
The bugger was still alive and kicking 10yrs later and the option to get another IO mortage seemed tricky, so we paid the loan off between us.
When he passed away a few yrs later, house was sold and the solicitor sent us a quarter of the proceeds. As it happened, due to buying at the height of the market and seling before the Covid bubble got going, the property saw very little increase in value so no CGT issue based on us nominally buying a quarter of it at the outset.
aspender said:
Dixy said:
DONT
If you need to think about it for a while then think about it and DONT do it.
Just got out of the same sort of thing, all seamed a kind and good idea but it caused all sorts of problems resentment and upset both ways.
No matter how well you get on and how close you are it will end in tears.
I have 3 close friends who have experienced the same with immediate family members.
This is not the first PH thread on this topic and others have said the same.
Please dont do it.
Do you want her to move in with you instead then? If you need to think about it for a while then think about it and DONT do it.
Just got out of the same sort of thing, all seamed a kind and good idea but it caused all sorts of problems resentment and upset both ways.
No matter how well you get on and how close you are it will end in tears.
I have 3 close friends who have experienced the same with immediate family members.
This is not the first PH thread on this topic and others have said the same.
Please dont do it.
Joking aside thanks, I appreciate the hornets nest this kind of approach will likely involve but as I said in the OP the alternatives are all unpalatable.
If she does and they are not contributing to this idea, the obvious problem to point out is that in (x) years' time when this financial arrangement is put to the back of the mind, they tend to forget that the proceeds of the estate (specifically the house) on death do not get split evenly.
This can cause resentment, regardless of who did what and what contracts are in place.
Shirly, or even surely, the answer here is a granny flat/annexe to your own home?
Even if it means a move for yourselves to a more suitable property?
You get to keep an eye on granny, and she gets the security of help close at hand.
You do not mention dementia, but we moved my late father in with us about ten years ago. It lasted about 8 months before we had no other options open other than a care home, I was lucky that the LA picked up most of the cost.
Even if it means a move for yourselves to a more suitable property?
You get to keep an eye on granny, and she gets the security of help close at hand.
You do not mention dementia, but we moved my late father in with us about ten years ago. It lasted about 8 months before we had no other options open other than a care home, I was lucky that the LA picked up most of the cost.
ferret50 said:
Shirly, or even surely, the answer here is a granny flat/annexe to your own home?
Even if it means a move for yourselves to a more suitable property?
You get to keep an eye on granny, and she gets the security of help close at hand.
You do not mention dementia, but we moved my late father in with us about ten years ago. It lasted about 8 months before we had no other options open other than a care home, I was lucky that the LA picked up most of the cost.
That’s because your father didn’t own a property (and I assume had few savings) which is another reason to take up your suggestion rather than do it as the OP is proposing. Even if it means a move for yourselves to a more suitable property?
You get to keep an eye on granny, and she gets the security of help close at hand.
You do not mention dementia, but we moved my late father in with us about ten years ago. It lasted about 8 months before we had no other options open other than a care home, I was lucky that the LA picked up most of the cost.
ferret50 said:
Shirly, or even surely, the answer here is a granny flat/annexe to your own home?
Even if it means a move for yourselves to a more suitable property?
You get to keep an eye on granny, and she gets the security of help close at hand.
You do not mention dementia, but we moved my late father in with us about ten years ago. It lasted about 8 months before we had no other options open other than a care home, I was lucky that the LA picked up most of the cost.
Interested that you've presented this with zero downsides. This is another option that we're considering. I a) like the privacy of my own little family unit. b) like my big garden. I was going to start my own thread so happy to not derail this one.Even if it means a move for yourselves to a more suitable property?
You get to keep an eye on granny, and she gets the security of help close at hand.
You do not mention dementia, but we moved my late father in with us about ten years ago. It lasted about 8 months before we had no other options open other than a care home, I was lucky that the LA picked up most of the cost.
Panamax said:
No, they aren't. It's time to get real. Unless, of course, you and your family enjoy paying voluntary taxes.
Thanks for that insightful comment. You clearly understand the whole situation well beyond what I’ve chosen to share here. Thanks to the relevant replies, they been useful. The approach I asked about is being considered as are all the others mentioned but already well understood.
ferret50 said:
Shirly, or even surely, the answer here is a granny flat/annexe to your own home?
Even if it means a move for yourselves to a more suitable property?
You get to keep an eye on granny, and she gets the security of help close at hand.
I'm surprised that more people don't do this. The OP's OH keeps a close eye on her mum, combining the two lots of money might enable them to afford a bigger/better house, free babysitting, Grandparents get to enjoy spending time with their grandkids, saving a fortune on running one house rather than 2.Even if it means a move for yourselves to a more suitable property?
You get to keep an eye on granny, and she gets the security of help close at hand.
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