Inheriting 50% of house with Sibling as Co-Owner/Occupier?

Sea_Shell

Good Morning All

What are the pro's and con's of Inheriting a house from a parent, when you get 50/50 with a sibling, but they are already living there rent free.

a. What if they can't afford to "buy you out"
b. How can you "chuck them out" to sell it to get your capital out.
c. Can you set up an agreement that they can pay you an agreed monthly allowance for letting them live in your 50%.
d. Would a parent, in view of the above, leave all 100% to "sit-in" sibling, and effectively dis-inherit the other.

Would like to hear your views or experiences on this. Is a happy ending for all parties possible??

Thanks.

da_rule

If they can't afford to buy you out then they can't. You can force the sale through the courts, but this is expensive and not guaranteed to succeed.

In terms of agreement, you can have it for anything you want as long as both parties agree. All you need to consider is any tax liability arising out of any income.

getmore4less

Situation like this are far from ideal where you may want to exit and face resistance, selling up front is often the best option

As a non resident joint owner you get exposed to CGT on disposal.

If the parents want to protect the current live in, there are other options rather than gift them 100%.

Parent leaves the house 50:50 in trust with a life interest to the live in. Avoids the CGT exposure
can occupant responsible for all maintenance
can have exit condition like is single they get married, kids finish education.
...

covering your points.
a. could they get a mortgage or have you as the lender.
b. court order not cheap.
c. taxable income, if they can't afford a mortgage can they afford the "rent".
d. see above.


What outcome you want will determine how well it will end for you.

xylophone

The parent can choose how to leave his assets - if he decides that he wants to leave the whole of the property to one of his children then he can do so, but it would be as well for him to leave a letter of explanation in his will (or so word the will) explaining why he has made this choice.

The parent's will might direct that the house should be sold and the proceeds shared between the beneficiaries in certain proportions - this would give any of the beneficiaries the opportunity to buy the house from the others.

The parent might choose to leave the house in trust for one beneficiary with a lifetime interest to another.

The parent would be well advised to consult a solicitor when making the will and leaving a letter of explanation/wishes where required.

Gigervamp

Something else that hasn't been mentioned yet is the extra SDLT that the sibling who isn't living there will have to pay if they want to buy a house, as it will be classed as a second property.
Also, if they need means tested benefits any time, they will be deemed as having capital that they can use, so won't be able to get benefits.

It would be better for the house to be sold and both children to be given 50% share from the sale.

KRB2725

If the parents make the children executors and direct that the house be sold and split, would there not be a legal obligation (as executor) for the resident sibling to carry out the wishes of the deceased?

G_M

Unless there is a compelling reason for the parent to protect one sibling's right to stay in the property (eg that child is vulnerable or the other child is hated), it is unwise for all sorts of reasons (se posts above) to specifically leave the property to both 50/50.

Why mention the property at all? Simply leave the estate to be shared 50/50. The Executers can then discuss with the Beneficiaries (who may/may not be one and the same) whether one will but out the othe other who will keep the property, or whether the property should be sold and the money shared.

The parent should take proper legal advice from a solicitor specialising in wills & estates.

TBagpuss

a. What if they can't afford to "buy you out"

Then you discuss with them how to deal with the issue, ideally to sell the property so they can use their share of the proceeds to buy somewhere different / smaller. If all else fails, you can apply for an order for sale, which is slow and expensive and will no doubt destroy the relationship.

b. How can you "chuck them out" to sell it to get your capital out.

You (or the executors on behalf of the estate) apply for an order for sale from the court.

c. Can you set up an agreement that they can pay you an agreed monthly allowance for letting them live in your 50%.

Yes. If not done in the will, you could set up formal declaration of trust defining your respective insterests, resposibilities etc and setting out how each you you could bring the arrangement to an end. It would be wise to get proper legal advice, and you'd need to make sure that you were clear about the effect on you in terms of potential future CGT liability, tax liability on the income, and SDLT issues if you were to buy a diferent property.

d. Would a parent, in view of the above, leave all 100% to "sit-in" sibling, and effectively dis-inherit the other.

That depends on the parent. They would be perfectly entitled to do so.

Sea_Shell

Thanks for all those replies. Food for thought. Lots of "what if's" at the moment as i'm just over-thinking (too much) ahead to possibilities for the future (not actually happened yet), but I can envisage being in this position, hopefully not for many, many years though!!. However armed with this information, if it came to it i'd try my best so that all parties know the ramifications of their decisions.

The down-side of these types of forums I guess....you see the pickle some people are in, gain a little knowledge and you start to consider all the what-ifs.

I'm also keen to hear from anyone who's been on the receiving end of this sort of thing, as either sibling, and what their experiences were.

Thanks again.

missprice

Sea_Shell wrote: »

Good Morning All

What are the pro's and con's of Inheriting a house from a parent, when you get 50/50 with a sibling, but they are already living there rent free.

a. What if they can't afford to "buy you out"
b. How can you "chuck them out" to sell it to get your capital out.
c. Can you set up an agreement that they can pay you an agreed monthly allowance for letting them live in your 50%.
d. Would a parent, in view of the above, leave all 100% to "sit-in" sibling, and effectively dis-inherit the other.

Would like to hear your views or experiences on this. Is a happy ending for all parties possible??

Thanks.

Is there no middle ground, maybe leave house to live in sibling and all other effects to non live in sibling?
Maybe if there is insurance on the deceased, the whole amount of insurance minus whatever costs is left to the non live in?
Possibly get another insurance policy that simply pays out to the other sibling the equivalent to house value.
Just ideas,

xylophone

I'm also keen to hear from anyone who's been on the receiving end of this sort of thing, as either sibling, and what their experiences were.

I have indirect recent experience of this - a middle aged single lady with one sibling - she had stayed in the family home ( had been left a fifty percent interest by her late father) caring for a widowed mother who became increasingly disabled and needed full time attention.

Her sibling had married, left home, had children and set up a successful company.

The mother's will left her 50% interest in the house solely to the daughter who cared for her, with the balance of the estate to be shared with her other child and her grandchildren.

The will was properly drawn up by a solicitor but unfortunately he did not advise the writing of an explanatory letter, nor suggest the possibility of a life interest with reversion.

Both siblings were named as executors. The married sibling was extremely bitter and the battle over the will went on for over two years, costing a mint in solicitors' fees and emotional distress.

In the end a settlement was reached but at what cost........