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Trust in Bond - A conveluted situation

Hi all,

Apologies if a question of this variety has been asked before. I have looked through some of the various topics on this website but not having a great amount of legal knowledge and slightly different personal circumstances I could not really understand how this would relate to me.

I think I will start by listing my personal circumstances…

In my immediate family there is my mother and father, myself and my younger sister. Approximately 11 years ago my mother and father split up and started living in separate homes, my mother with a new partner, who she currently still lives with and has a mortgage with her partner on a different house.

My father has remained in the family home and has been paying the mortgage for the intervening period (my mother never contributed to the mortgage when she was living with him). They have never formalised their divorce. There is approximately £8k left on the mortgage, <5% of the asset value.

I have recently been told by my mother that she has accumulated approximately £35k of debt on credit cards (no primary debt) and as such she wants to either take some money out of the family home to repay her debts. There has always been an informal agreement between my parents that the family home would not be claimed by either of them, but would be mine and my sister’s inheritance. My mother does not want to sell the house and eject my father, and my father definitely does not want to sell as he is retired and would not be able to afford either rent or a new mortgage.

They have both been advised that it would be possible to do the following:

My father signs the house over to my mother, with a legal agreement that 75% of the asset will be put into trust into mine and my sister’s name. This will leave my father with 0% of the asset and my mother with 25% of the asset. Also guaranteeing mine and my sisters inheritance. With 25% of the asset my mother will be able to take out a long term loan with which to pay back her debt. My mother will officially my mothers tenet, and she will not either be able to eject him, or sell the house without mine and my sisters permission.

I have no clue if this is even possible, how secure my father will be, what will happen to the asset if my mother defaults on her loan.

I have advised my father to seek independent legal advise, to cover his best interests but would just like to gain an opinion from the experts here.

I do not even know if it would just be best for my mother to declare herself bankrupt. At the end of the day it was here decision to leave, she has been living outside her means for years whilst my father has been struggling to get by and to continue paying the mortgage. I simply do not think I would trust her with any credit again as I think she would inevitably start this cycle all over.

Any help/advice would be greatly appreciated.

Kind regards,

Replies

  • milliemonstermilliemonster Forumite
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    I've been Money Tipped! Chutzpah Haggler
    Where does your mother's new partner fit into this? if she has run up £35k of debt within the last few years since she left your dad, I would be pretty annoyed that she now wants your dad to forfeit his asset to pay off her debts she has accummulated with someone else?

    What neither of them fail to realise is that if what you suggest happens, and at some point in the future your mum needs long term care, her asset would probably need to be sold to pay for it, on top of this, if you and your sister owned the property yourselves with your dad living there, what if you or your sister ever run into financial difficulty?

    this kind if situation is fraught with problems, it's not as clear cut as you seem to make out as none of you can forsee the future.

    If I was your father's daughter, I would be suggesting to your mum that she sorts her debts out independently through either a DMP, bankruptcy or even an IVA after she has taken independent financial advice or even god forbid ask her new partner to help out and not use more debt (which a loan against the house would be) to try to solve it.
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  • Thanks for the advice millimonster.
    Where does your mother's new partner fit into this? if she has run up £35k of debt within the last few years since she left your dad, I would be pretty annoyed that she now wants your dad to forfeit his asset to pay off her debts she has accummulated with someone else?

    I totally agree, however as they are still technically married does this not leagally entitle her to 50% of the asset and could she not therefore force the issue if she wanted to?
    What neither of them fail to realise is that if what you suggest happens, and at some point in the future your mum needs long term care, her asset would probably need to be sold to pay for it, on top of this, if you and your sister owned the property yourselves with your dad living there, what if you or your sister ever run into financial difficulty?

    Regarding LTC, and in this case would the council pay for her care minus the 25%? And would the asset only be sold if my father had passed away?
    If I was your father's daughter, I would be suggesting to your mum that she sorts her debts out independently through either a DMP, bankruptcy or even an IVA after she has taken independent financial advice or even god forbid ask her new partner to help out and not use more debt (which a loan against the house would be) to try to solve it.

    I totally agree, and have been trying to push this point, but what affect would insolvency have on the familly home, and/or her current morgage with her current partner.

    To be honest my mums partner is a money grabber, he is trying to force my mum to devorce my dad and take 50% of the house! Its totally unbeleivable, as if he has any right to the house.

    I understand that this is not a simple situation, and believe me I am not trying to make it out that way. I am just trying to consider all options and do the best for both my mum and my dad (mainly my dad)

    thanks again
  • TonyMMMTonyMMM Forumite
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    MajorDanby wrote: »

    I totally agree, however as they are still technically married does this not leagally entitle her to 50% of the asset and could she not therefore force the issue if she wanted to?

    Not necessarily - your mother and father really need to get a grip and formalise their situation by agreeing a divorce settlement and financial split. It will save an awful lot of problems in the future with care requirements/ inheritance issues etc.
  • Tony,

    I have been harping on and on about this to both of them. They are simply refusing to do it. It doesn't seem to matter what I say.

    For any financial settlement, the house would have to be sold, neither of them of willing to take this step. I am really at my wits end with the both of them. In this familly dynamic I am the parent, with my mother and father the children who are refusing to listen to reason....
  • I get the feeling from your first post, but correct me if I'm wrong, that your dad seems to be ok with giving up part of his asset to your mum to help her out, is that the case?

    I would imagine, but am no legal expert that as you mum has been in another relationship for the last 8 years and has a mortgage for another house with her new partner that any court would see that the house she 'owns' with your dad would not be a 50/50 split, esp as you state that your dad always paid the mortgage, can she prove she has ever contributed to the mortgage? esp in the last 8 years? what was the value of the house when she left? it may be they would decree that she was only entitled to a portion of the value of the house at the time she left and not it's value now, although that could be higher than it's worth now!

    I have a friend who has just divorced and owned her house which she paid £90k cash for before she met her husband, they were married 12 years and he paid for all the furnishings, home improvements including a large extension, conservatory full double glazing etc and credit card debt off for her during that time ending up with a 70k mortgage in the process on it, she has never worked, when they divorced, the settlement the court agreed was for him to have £20k and she keep the house that is now worth £250k, this was only last year, even though his name was on the deeds, so it isn't just a case of a 50/50 split, these things are usually much more complicated.

    I would be pushing your dad to keep well out of it and hang on to his home, your mum's mess is hers
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  • Savvy_SueSavvy_Sue Forumite
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    MajorDanby wrote: »
    They have both been advised that it would be possible to do the following:
    One has to ask, who has advised this, and in what capacity? Because as has already been pointed out, there are two people in this situation who each need independent legal advice, because what may suit one of them may be very detrimental to the other.

    And that's before you get started on you and your sister's position, which is different again.

    I'd like to say I hope to goodness they each have a will, except that if they divorce then it would be invalidated. However, as things stand at the moment, their 'informal agreement' that the house won't be claimed by either of them is worth absolutely diddly squat. If your Dad dies first, then the house could pass direct to your mother under the rules of intestacy. And she has a moneygrubbing partner you say? And if your Mum dies first, then her partner might argue that the house needs to be sold to pay off her debts, because it's partly within her estate.

    But I'd resist this, and encourage your Dad to resist this ... and encourage him to go for divorce!
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  • dzug1dzug1 Forumite
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    MajorDanby wrote: »

    I do not even know if it would just be best for my mother to declare herself bankrupt.

    Doesn't that mean that her creditors will come after her share of the house?
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