property held in trust due to a will

robnye

This is bit of a tricky issue.

some background:
My FIL died in dec 02
My MIL is his second wife (and him her second husband)
My wife is from his first marriage and my MIL has 2 sons from her first marriage

Their mirrored wills stated that if one died, then the property was kept in trust by the other until they died, the person could live in the property and had to keep it maintained.

The will’s also stated that the remaining person could not have lodgers, co habit nor marry and continue to live in the house.

My MIL is due to retire late next year and she has been getting her financial affairs in order prior to retiring, apart from some scary stuff appearing relating to her pensions, she is a little worried about the house situation.

Having visited my MIL with my wife and kids recently, the late night topic was discussing the cost of maintaining the house and how the will is worded, (my wife had already gone to bed) (broaching this with my wife is another hurdle to get over).

My MIL has said that she looks at the house as being her pension pot, and wants to change her will to reflect her reliance upon the property. She is restricted due to the clauses in the will, in that half of the house is kept in trust for my wife and brother in law, whilst the other half is hers to do so as she wishes (although ultimately it will probably go to her 2 sons)

She has suggested, the following, the property value appox in dec 02 was £200,000 (not sure how we can verify this, I have landreg website an approx valuation of £270,000, for greater London although her postcode is essex, so the valuation is a little high) therefore my wife and bil share is £50,000 each. This (£100K) value of the property at the time of my FIL death be protected and noted in a codicil, therefore any increase in the property value, due to her having paid for work to be done and general improvements/maintained (ie conservatory etc) after my FIL death would increase the value of her portion of the property for her benefit when she retires, when she could possibly downsize.

Whilst I understand her suggestion and can see where she was coming from, I don’t fully agree with it (although i didn’t mention this at the time), Having thought about this later on, I feel that the 50% share of the property as at dec 02, should not be stagnant, ie it should increase by inflation at least. Whilst this would appear to be cutting into her portion, (the landreg figs for dec 05 show the property value as £318000) it does show an increase in value way above inflation over the past 3 years (17.7%)

Does this sound fair?
What do people think?
Has anyone come across this type of codicil written into a will?

Mumstheword

If half the house is hers and half is in trust for his children, then I think that's the way it should stand. If she wants to change things around, thenmaybe it's time to sell up and for her to rehouse herself with her portion of the current value of the house.

If what she is suggesting is that, rather than your wife and her brother owning half the house, they only have a right to half of the house value at the time of their father's death, then they are going to lose out heavily on that basis. If MIL had wanted to split the proceeds of the house back then, she should have done that. In effect, she has seen the price rise, and then suggest in hindsight that they take half of the house value at the time of death.

Dont forget that her half of the house has increased too!! She seems to want to pocket the whole increase, when she has known all along that she didnt own the whole house.

I can understand her worry about spending money on the house when she doesnt own it all. But - the will stated that she must maintain it, in return for being able to live there for life, presumably rent free. And as for a conservatory, it wont increase the value of the house by very much. If she wants to buy one, then she needs to take into account that she wont get much back for it if she sells, and needs to decide whether her enjoyment of a conservatory whilst she is living there is worth the cost.

I refer to my first point - maybe it's time to sell the house.

robnye

thank you , two of your points , i had thought about, but as its not my inheritance i was trying to think of other possible reasonable (at the time) options, but as you say if the value of the house had increased wihtout her doing any thing, would she still be asking the same question, i dont know.

I think the real answer is that when she retires she wont be able to afford the upkeep of the property on a daily basis - ie she is working full time now.......
the conservatory had been started by my FIL before he died (some time in fact, he never did things very fast!), my MIL paid to have it finished after he died out of savings she had (although i suspect it was money from the will), also as you have said, she has had the benefit of the conservatory for the past 3 years.....

jenniferpa

The other thing you might want to investigate is whether the portion of the will referring to lodgers, cohabitation or remarriage is actually enforcable. The courts have generally been unwilling to allow a will to force life choices on survivors. The whole arrangement seems very ill-advised. Having said that I agree that the fairest thing to do is if she needs to realise her equity in the house for pension purposes that it should be sold and the trust wound up. I'm sure your FIL envisioned that property prices would rise and his expectation was that the chiildren of his first marriage would benefit accordingly.

Jennifer

robnye

jenniferpa - funnily enough, she did mention that when she went to have her revised will drawn up (along the same lines as the first one) the solicitor had said that wording of the original will was actually out of date, which does bring to question everybody's will (if you have one), should they be updated regularly using the latest wording of the law.

are you aware of any recently reported cases where this has been questioned......

and yes i agree my FIL was quite an astute person and would almost definately have had the future in mind, should the worst case scenario happen. admittedly property prices could have fallen, again would MIL have been asking about reducing the amount of the portion in my wifes trust, due to market forces......

Mumstheword

if property prices had fallen, would MIL:-

1 - have said never mind, you can have the £100k that half the house was worth at the date of death, I will bear the loss, or

2 - we've both lost out.

However, should have or would have doesnt really matter. She is asking if the arrangement can be changed now, which would leave you out of pocket, unfairly in my opinion. You seem to have kept a good relationship with her (judging by the fact that you visit and stay), and hopefully that will remain. But I would say that if the current arrangement doesnt suit any more, then offer to sell and split the proceeds half half between her and the trust.

Dora_the_Explorer_5

Your FIL made his wishes quite clear in his will. If your MIL is unhappy with things now - tough, it was her husband's decision and should be respected. She has equity in the property which she can liquidate or not - her choice. Just as it was her choice to spend her money on the conservatory - I'm assuming she wasn't pressured into doing that and that she didn't ask for a 50% contribution from her husband's children.
If she is unhappy with the terms of your FIL will should she not have voiced her concerns several years ago? Or is she having a lightbulb moment?
My opinion - for what it's worth, is that she's trying to rip your wife off; if the property is worth half a mill in ten years time and her attitude is that your wife is entititled to a measly 50k....................I think you get my drift.

Bossyboots

Agree with everyone else. This arrangement is clearly not what FIL intended and MIL is now seeking to obtain a larger share of the property than is truly hers.

I wonder how much of this is spurred by her own sons looking to their future inheritance.

robnye

dora: i think she is having a light bulb moment...... partly due to impending retirement and possible lack of money when she does retire.

bossyboots: her sons are both quite comfortable. one had fallen out with her and they have only recently started conversing again, so i dont the sons are pushing this issue

thank you every body.... i sometimes am known to see too much good in people..... so your comments and thoughts have certainly added another dimension..... my MIL may be trying to increase her share in the property, she may not. At this moment in time, nothing has been said to my wife or BIL, who are the recipients of the will, should the matter be raised now, at least i can give a clearer view on the current and future position

my next dilemma is should i respond to the MIL and how.

if the current will does state no lodgers/co habiting, would it be worth her looking at that side of it. as i said i have seen her figures re when she retires, so fully appreciate (1 of) the reasons for wanting to do it.

Dora_the_Explorer_5

At her age who's to know if the person sharing the house is a lodger or a co-habitee?
Perhaps it might help to take a view about the FIL's intentions when he made the will? HTH

margaretclare

Dora_the_Explorer wrote:

At her age who's to know if the person sharing the house is a lodger or a co-habitee?

Well, they might....this nearly happened when my DH walked out on his last marriage. Although I wasn't responsible for the break-up, the marriage was dead long before I ever offered him the chance to move in with me, we had to pretend that I was just renting him my spare bedroom and he was paying me rent, rather than the true state of affairs. Ex and her solicitor were trying to have my assets (mortgaged bungalow!) included in the divorce settlement and I could have ended up paying her. Luckily it didn't happen. Age didn't come into it - we were in our early 60s then!

IMHO this is iniquitous, that a deceased spouse should lay these kind of conditions on a widow/er. No remarriage and no cohabitation, for goodness' sake!! So from beyond the grave, he is condemning her to a life of loneliness, no matter what possibilities may arise for her after his death.

I never thought I would meet someone and remarry after my first husband's death in 1992 - I was 56 then. But it happened when I was 62, I fell wildly in love all over again and it has worked out so well. In our local paper yesterday, a couple in their 80s are getting married this week, and they say 'age has got nothing to do with it - it's never too late'.

Margaret Clare