Helping out children financially

Cacran

We bought son a house. We paid half towards house for daughter. She had a partner who got a mortgage for his half, but it had to be in joint names. The relationship has broken down. Don't know if he will pay mortgage. She has a child (our grandchild). The child is not his.We can pay off the mortgage. Should we put it in our name so we would be joint owner with her. Would it be better to give her the money and put it in her name as we are retired and having a lot of savings can be a drawback. ???

-taff

Unless a deed of variation was drawn up the house is jointly owned by them and she would have to buy him out to the value of half the house, which depending on how long they've been there would have implications regarding the equity, so she may have to buy him out for more than you or she, are expecting to pay.

Rambosmum

He could sell you his half of the house. He would likely want half of market value though (which is his right) rather than the value of the mortgage. The other alternative is that they sell the property, split the sale price 50/50 and he pays off the mortgage and she retains 50% as cash. he could be a Kn*b and insist they pay off the mortgage (if it is in joint names) and then split the equity.


Was there a deed of trust set up at the time setting out would happen in this situation?

paddy's_mum

This is a complex situation with all kinds of rights in law and obligations that the parties signed up to.

In my view, the best advice anyone can give you is that you need to see an experienced solicitor pronto.

Can any of you afford not to?

Good luck.

AnotherJoe

If you effectively buy 1/2 the house you will have to pay 3% SDLT extra which wont be payable if you just pay off her mortgage and she owns the whole house.
Whats your reasoning to possibly keeping half the house instead of giving your daughter the whole house (especially since you did that for son)?

TBagpuss

I would suggest that you wait until she and her ex have sorted out their finances - if you give her anything too early then that could become part of their joint assets.

Once they have reached an agreement, and depending on what that is, you could either give her the money to buy him out, leaving her the sole owner of the property, or could give or lend her money to add to her share of the sale proceeds, to help her buy a new property.

if the 50% you gave her before was less then the amount you gave your son then I would lean towards waiting until she has resolved the financial situation with her ex, then topping up what you gave her, so she has had the same help her brother had.

If her house was more expensive so she's already had the same, consider lending rather than gifting any extra.

Having the house in joint names with you would cause issues with stamp duty now, and potential CGT or IHT later, but you would need to get proper legal and tax advice before you decide so you know the pros and cons (and of course make sure that you are not getting into possible deprivation of assets territory!)

xylophone

https://forums.moneysavingexpert.com/discussion/comment/74804505#Comment_74804505

It seems to me that legally (as they are unmarried and your grandchild is not his), they are in the same position as friends who have made a joint purchase where one party put up a gifted deposit?

There was no declaration of trust as to what would happen if they split up/wanted to sell etc?

She needs to buy him out and you are willing to gift her the money to enable her to do so?

They need to reach a formal agreement (use a solicitor) and arrange matters with the mortgagee (who may well insist on the early repayment fee).

The money will be a gift (as was the original deposit) and a PET in terms of IHT.

With regard to deprivation, you are not making this gift with the intention of depriving yourselves of capital to enable access to means tested benefits ( and in any event are fit, well and prosperous) but rather to help out your child and equalise lifetime gifts between your children?

Pennysmakepounds

Cacran wrote: »

We bought son a house. We paid half towards house for daughter. She had a partner who got a mortgage for his half, but it had to be in joint names. The relationship has broken down. Don't know if he will pay mortgage. She has a child (our grandchild). The child is not his.We can pay off the mortgage. Should we put it in our name so we would be joint owner with her. Would it be better to give her the money and put it in her name as we are retired and having a lot of savings can be a drawback. ???

Unfortunately, which ever way you decide to do it (buy him out / sell the property / Pay the mortgage) that fact is half the 'Asset' is legally in his name, if he is on the deeds of the property as a joint owner.


Buying him out /and then paying the mortgage.
If he agrees to sign over the house for 'X' amount to you, you would still have the mortgage to pay on it.


so what ever amount the 'X' amount is that you settle with him for signing it over, it is an 'Extra' cost to you.


Selling it
What ever the selling price is, he would be entitled to 50% of the NET. (The sale price minus the mortgage).


So you effectively lose 50% of your initial investment in the property.


This is the way I see it, in simple terms.

Please get proper legal advise.

Cacran

The reason we didn't want to buy her the whole house was because the house was so much more expensive, almost twice that of my sons.
The reason I am asking is should we own half her house is that my husband is so cross about it all he does not want to pay this money. Thought if it were in our name it would still be ours.

PasturesNew

Imagine if you no longer existed.

If the house had been half bought, you had no more money and were long gone. No "magic money pot".

She'd have to sell it and buy something smaller. Is that an option?

Or are you awash with money and can afford to give both siblings a fresh cash injection each of equal value?

It wouldn't be fair for her to end up with a house twice the value ... as that was never the intention. That wasn't meant to be the plan.

Cacran

They are not conversing at the moment, other than him sending gifts, messages to get her to reconsider.
My 8 year old Grandaughter doesn't understand and wants him back. There are a number of reasons why it would be a disaster to have him back. He has done something unforgivable this time. He may dig his heels when he realises he has no chance, or on the other hand he may be okay as he knows he has done wrong in a big way.
Our daughter works but her income is not enough for her to get or maintain a mortgage or rent. If she went back to renting, which she did before he came on the scene, as we gifted her the capital for half the house, she would not get any housing benefit. She would not be able to afford to live.
We do not live in the same area as her and should she come home Grandaughter would need to change schools and she would have to change her job. We would be very cramped it is just not a very good idea.
We can't really see the way, other than us buying the house for her. She is such a lovely girl too and we adore our Grandaughter.