Mother-in-law and money

Grumpy_chap

chubster said:

When we bought the house MIL sold her house and paid £20k towards the house we live in now.

What did the house cost to buy in total?
What is the house worth now?

KxMx

unholyangel said:

MalMonroe said:

macman said:

If she has a income of £8k plus p.a. and only pays you £1K, then I suppose that you could take the long view that, unless she is spending it all, then your wife's inheritance is accumulating by an additional £7Kpa....
But £1K wouldn't have covered the costs ten or twenty years ago. Even if you are content for her to live rent-free, then your council tax and utility bills split 3 ways would cost more than that.
Does she contribute to food bills etc?

She won't have an income of £8k plus pa at all. I don't know where that rumour started. It'll be far less than £7k pa. And she'll have clothes and shoes to buy, birthday and Christmas gifts, toiletries etc. According to OP she doesn't contribute to food bills, no. IMO she'd be better off living alone because she'd be entitled to all the pension credits and housing benefits, etc. She'd be even wealthier then. 

If she's in receipt of a full state pension, it can't be "far less" than £7k pa or else it wouldn't be a full state pension. She could technically be in receipt of a state pension around 12-14k (or more) if she inherited her husbands. 

She would only qualify for pension credit & HB if her income was less than £9k - it may not be. In that instance, it would bring her income up to 9k. HB doesn't necessarily cover the whole rent either. Let's assume it's only the full basic state pension she gets and the small private pension is just £120 pa. That means they'd get an extra £1900 maximum. Do you really think £36 a week is going to cover council tax, gas, electricity, any extra rent over the HB award, food, insurance, replacing items as they break etc.

I think you'll find she'd be much worse off, despite having more income coming in. 

The lady in question has 80k capital.
Means tested benefits are not payable if you have over 16k.

chubster

Grumpy_chap said:

chubster said:

When we bought the house MIL sold her house and paid £20k towards the house we live in now.

What did the house cost to buy in total?
What is the house worth now?

House cost £100k to buy, now worth about £300k I think.

maman

.I guess one solution would be to downsize to a much smaller house but MIL has made it clear she does not want to do this 

This stood out for me. I can understand that your MIL may not want to do this but is it her choice? Does she have any financial interest in the house, can she dictate? It's not at all uncommon for couples to downsize when they retire to free up equity to supplement reduced income. MIL can't have it both ways in that she's not prepared to put her hand in her pocket to  help finance  your (i.e. all three of you) current lifestyle but digs her heels in when you suggest steps to reduce your outgoings. 

The sticking point is your wife's attitude. I can understand she doesn't want to upset her mother but does she have a view on downsizing? Leaving your current home? Do you have a view on less space ? MIL's presence would be far more 'intrusive' in a smaller property with you and your wife spending more time at home. Maybe it won't come to this and just the 'threat' of downsizing will be enough to make them reconsider. 

unholyangel

KxMx said:

unholyangel said:

MalMonroe said:

macman said:

If she has a income of £8k plus p.a. and only pays you £1K, then I suppose that you could take the long view that, unless she is spending it all, then your wife's inheritance is accumulating by an additional £7Kpa....
But £1K wouldn't have covered the costs ten or twenty years ago. Even if you are content for her to live rent-free, then your council tax and utility bills split 3 ways would cost more than that.
Does she contribute to food bills etc?

She won't have an income of £8k plus pa at all. I don't know where that rumour started. It'll be far less than £7k pa. And she'll have clothes and shoes to buy, birthday and Christmas gifts, toiletries etc. According to OP she doesn't contribute to food bills, no. IMO she'd be better off living alone because she'd be entitled to all the pension credits and housing benefits, etc. She'd be even wealthier then. 

If she's in receipt of a full state pension, it can't be "far less" than £7k pa or else it wouldn't be a full state pension. She could technically be in receipt of a state pension around 12-14k (or more) if she inherited her husbands. 

She would only qualify for pension credit & HB if her income was less than £9k - it may not be. In that instance, it would bring her income up to 9k. HB doesn't necessarily cover the whole rent either. Let's assume it's only the full basic state pension she gets and the small private pension is just £120 pa. That means they'd get an extra £1900 maximum. Do you really think £36 a week is going to cover council tax, gas, electricity, any extra rent over the HB award, food, insurance, replacing items as they break etc.

I think you'll find she'd be much worse off, despite having more income coming in. 

The lady in question has 80k capital.
Means tested benefits are not payable if you have over 16k.

You are entitled to HB if you receive pension credit - even if you have savings over 16k
The 16k limit doesn't apply to pension credit - they have their own rule of 10k capital. But having above that doesn't technically stop you being eligible, just the credit is tapered depending on how much over the 10k you are. 

But I was humouring the poster in question. 

74jax

chubster said:

Grumpy_chap said:

chubster said:

When we bought the house MIL sold her house and paid £20k towards the house we live in now.

What did the house cost to buy in total?
What is the house worth now?

House cost £100k to buy, now worth about £300k I think.

In which case I'd look at downsizing and giving mil 60k to find her own place. However, it's your wife that I see as the issue.  You need her to lead this. Is it a deal breaker to continue as you are? 

JReacher1

chubster said:

Grumpy_chap said:

Thanks,
Is the £8k/year MIL income about right?
Did MIL make a previous capital contribution?

I am really not sure about her total income, it isn't something that gets discussed at a guess I would say £9k a year. When we bought the house MIL sold her house and paid £20k towards the house we live in now.

Maybe would have been fairer on the MIL to mention this at the beginning. So as well as paying you £1k a year she also gave you £20k when you bought your house. As a guess she is probably not on the deeds so when she does pass away that’s £60k you’ve made off her (based on the house trebling in value). Probably a reasonable amount to cover the cost of her living with you. 

maman

I agree that the information about the £20K sheds a very different light. In fact I know of someone personally whose MIL paid off the DD (only child) and SIL's mortgage (£25K) and now simply contributes to food bills. This MIL is a bit younger though and still eats out so doesn't contribute very much.
So, now even without appreciation in the MIL's investment, we're on to £3K a year for any bills that are incurred over and above what OP and his wife would pay to live alone. This needs to be added to the spreadsheet. 🤔

macman

JReacher1 said:

macman said:

JReacher1 said:

And of that £134 a week the OP wants to take £100 of it

No.He said £400pm, which is £92.30pw. 
Her income is not £134pw, iI's that plus her work pension (unknown but let's say £19pw) and savings interest (maybe £15pw. ). Total £168pw.
The OP is suggesting maybe £92pw, but appears open to compromise. The point is that there's a huge gulf between £92 and £19, and MIL doesn't seem prepared to offer a penny more than she's paying at present, which is clearly unsustainable. 
Her £1K doesn't just cover rent, it covers food, electricity, gas, water, insurance, phone, council tax... possibly transport...
What would you suggest is a reasonable compromise?

The majority of these figures are made up so are basically nonsense. 

Why is it unsustainable? The OP’s wife will have a view on the family finances and she is happy with the current arrangement. It seems only the OP has a problem with the current situation. 

Made up? I think not. In the absence of any actual figures from the OP, they are reasonable estimates based on the limited info we have. But they are the lowest her income can be-it could be higher, depending on the work pension. 
And you've not answered the question. Based on the only figures we do have, what is reasonable? 
PS: I see that the OP has now come back and given a figure of around £9K, which was roughly what I estimated it to be originally. That's £750pm, of which she is currently paying £83pm. Are you seriously suggesting that paying just 11% of her disposable income in return for 'full board and lodging' is equitable?

maman

It depends whether you are looking at MIL as a lodger. I don't think OP wants to do that, at least his wife doesn't.