Parent moving in with family

Bams

Hi all

I have been searching the internet and believe I may need to speak with a solicitor, however before I do I thought I would reach out to you guys.

We have recently built a new property with a parent provided finance for and has moved in with us having sold their previous property. This providers them with financial security in the future as they only have the state pension as I will be paying for all bills, mortgage and food etc.

I can see several ways of sharing the equity in the house but not sure what is fair as the parent has 2 children and I want to make sure that when she finally passes away that everyone has been treated fairly. The new house is worth substantially more then the old one so any % increase would see a much larger monetary value which I would need to find for the other child. To further complicate matters the value of the house is 1 amount but as a new build we spent considerable more.

My view on the options are:

1. A straight % share based on the value of the property
2. A straight % share based on the cost to build the property (which is more than option 1 and leaves parent a smaller share)
3. A forumla that decreases share over the years (as I'm paying for all bills etc) as I am saving the parent large amount of bills and worry

I am sure there are other options and I am keen to hear all and any advice.

Thanks in advance

BitterAndTwisted

I think, rather than trying to focus on what precise monetary value to place on this shared property, you might be better off concentrating on exactly what would happen to the parent's share upon their death. How would you be able to compensate the parent's children for their shares of ownership if it was to be inherited by them? If the parent's share was left to their children you might be in danger of having to sell the property to find the sums required if you don't have it available in savings or can't remortgage.

Bams

B&T, you completely right and I am looking at that as well, however thats part of the reason for looking at the parents share of the property as this could be

Option 1 - 33%
Option 2 - 28%
Option 3 - £x,000 reducing over time

To put this into cash if the property increased at 2% per year for the next 10 years then the difference between option 1 and 2 could be £110k vs £150k so I would need to find either £55k or £75k and want to plan.

pmlindyloo

Personally I would keep this very simple.

If the parent put in £????? and the mortgage is £???? then I would put the house into tenants in common with a percentage based on those figures.

Then the parent makes a will leaving his/her assets to whoever. The assets at the time of death would then be her/his percentage of value of the house at the time of death.

My reasoning behind this is the value of the parent's previous house at the time of her/his passing would have gone up or down just like this house will.

Of course there may well be discrepancies in the comparative increase/decrease but this is something that no one can predict so, again, I suggest, keep it simple.

Yes, the parent has positives from their moving in with you but no doubt you have positives too.

If it seems fairer to you, you could suggest that they pay a contribution to the bills. Up to you.

Not an easy thing to resolve and no right or wrong way.

The most important thing is, as B&T says, how are you going to find the money to give to the beneficiaries when the time comes? and what does the parent say about all this?

Good luck! (I'm not even going to mention the dreaded deprivation of capital if the parent needs to go into a residential home!)

Get thee to a good solicitor.

Bams

pmlindyloo thanks to you for your input as well.

I was all set to go with this option until it was my father (not the person living with us) who pointed that if the parent had been left in their own home then they would not have been able to stay there and would have had to either downsize to realise capital or sell and rent. The latter would have meant that over the years they would have eat into their capital and possibly left nothing for either child.

The parents income is just the standard pension so they have very little money available hence taking the option to live together and I just want to make sure that everything is as fair as possible to the parent, children and me!

I agree that it may be a solicitor question to ensure there is no comeback in the future

pmlindyloo

Bams wrote: »

pmlindyloo thanks to you for your input as well.

I was all set to go with this option until it was my father (not the person living with us) who pointed that if the parent had been left in their own home then they would not have been able to stay there and would have had to either downsize to realise capital or sell and rent. The latter would have meant that over the years they would have eat into their capital and possibly left nothing for either child.

The parents income is just the standard pension so they have very little money available hence taking the option to live together and I just want to make sure that everything is as fair as possible to the parent, children and me!

I agree that it may be a solicitor question to ensure there is no comeback in the future

Whilst this may be true (don't know the financial facts) the parent may well have had options other than selling up. For example, if they only had the state pension they may have been entitled to Pension Credit which, if they received the gurantee PC, would have 'passported' them to Council Tax Benefit and Housing Costs (if they had a mortgage) They may have decided to rent out a room. They may have won the lottery

Hope you see where I am going!

That's why I said 'keep it simple'.

M husband and I actually did the same thing with my Mother-in-law but my OH is an only child. Don't think I would have done it if there had been siblings. As you are realising it is far too complicated and could lead to lots of 'fall outs'.

I wish you the best of luck.

poppysarah

Bams wrote: »

Hi all


We have recently built a new property with a parent provided finance for and has moved in with us having sold their previous property. This providers them with financial security in the future as they only have the state pension as I will be paying for all bills, mortgage and food etc.

What did the person providing the money expect from the deal?


You need to think (needed to think about ... any arguments now seem pointless) ...
if anyone of you dies, marries, divorces, etc.

Chunters_a_lot

We were in exactly the same situation. We bought a home together with my Mum. My Mum essentially paid for a one third share of of the property we all lived in. We looked at this as her having no liability to pay any mortgage costs (she bought her share outright).

The mortgage was therefore just in mine and dh name. So we had a deed of trust drawn up protecting Mums share of the property. Five years later my Mum died Our home was valued and my sister inherited a sixth of the value. We were luckily in a position to pay that money to my sister without either having to sell the property or re-mortgaging. I think this a key point - you need to protect your Mums investment in your / her home for both her and her children.

Another key point is that needs to be considered is your partner / spouse? I'm not sure from your post whether or not you live with a partner but if you do - what would happen if that relationship ended? You need to consider the consequences for your Mum as well as for you. My greatest fear was that I would get divorced and my Mum (as well as me) would end up having to sell a home we loved that suited our needs.

One more thing! Are your Mother and Father still married? If so that would be a further thing to consider in terms of inheritance.

ETA - What if you / your partner die before your Mum? Again not something any of us like to consider but another fear of mine was that if I died my Mums future housing would need to be protected as much as possible. Not that I think my dh would have chucked her out on the streets but a only a quick look through this board and you will find worse things have happened between families

BobQ

Bams wrote: »

Hi all

I have been searching the internet and believe I may need to speak with a solicitor, however before I do I thought I would reach out to you guys.

We have recently built a new property with a parent provided finance for and has moved in with us having sold their previous property. This providers them with financial security in the future as they only have the state pension as I will be paying for all bills, mortgage and food etc.

I can see several ways of sharing the equity in the house but not sure what is fair as the parent has 2 children and I want to make sure that when she finally passes away that everyone has been treated fairly. The new house is worth substantially more then the old one so any % increase would see a much larger monetary value which I would need to find for the other child. To further complicate matters the value of the house is 1 amount but as a new build we spent considerable more.

My view on the options are:

1. A straight % share based on the value of the property
2. A straight % share based on the cost to build the property (which is more than option 1 and leaves parent a smaller share)
3. A forumla that decreases share over the years (as I'm paying for all bills etc) as I am saving the parent large amount of bills and worry

I am sure there are other options and I am keen to hear all and any advice.

Thanks in advance

As someone once said, nothing would ever be accomplished in life if all possible objections first needed to be overcome.

I think you need to approach this from the viewpoint that its a really good thing that you are doing to make your Mum's life easier. Morally your Mum owns about a third of the house and you should put it in her name under a tenant in common arangement..

All sorts of things could have happened had she remained in her own house, but I suspect that like many pensioners without a good income she would have lived in deteriorating property she could not afford to maintain. This arrangement at leasts ensures a comortable retirement without having to worry.

Her other children have no real rights in this matter until your mother dies and then only so far as she wants to grant them.. Its her money to do as she wishes with.

Firstly, its up to to you and your mother to get a solicitor to draw up an agreement that protects both your interests. That could include giving you the right to remain in the house after her death or vice versa.

Second your mother could make a will in which the other children's shares were were held in trust until the property was sold or for so many years after her death. There are many options but I think these are secondary to your mother's interests when she is alive.