Can it work? Buying sister out of share of mum's house to be able to live there

martin2345uk

RAS said:

And get that divorce sorted out before you do anything else.

If you have to pay your ex 50%+ of your inheritance and the equity in the current house, it's bye bye to any idea of buying out your sister.

On this point - would 50% automatically have to go to my husband? Or would that only be if he asked for it? Reason I ask is that I know 100% he would never ask for it, and he would not want it - it's an amicable split, when we sold our house he only took what he'd put in, made sure I got the deposit back in full as I had paid that, never wanted half of my savings or anything like that, and is a morally sound man - but if it's the case that anything I get, half would automatically have to be transferred to him then yes that puts a different spin on matters....

TBagpuss

martin2345uk said:

RAS said:

And get that divorce sorted out before you do anything else.

If you have to pay your ex 50%+ of your inheritance and the equity in the current house, it's bye bye to any idea of buying out your sister.

On this point - would 50% automatically have to go to my husband? Or would that only be if he asked for it? Reason I ask is that I know 100% he would never ask for it, and he would not want it - it's an amicable split, when we sold our house he only took what he'd put in, made sure I got the deposit back in full as I had paid that, never wanted half of my savings or anything like that, and is a morally sound man - but if it's the case that anything I get, half would automatically have to be transferred to him then yes that puts a different spin on matters....

No, definitely not.
Firstly, a divorcing couple is always free to agree financial issues between themselves, you then ask the court to approve your agreement so it becomes a legally binding order.  A Judge can either approve the order or refuse to approve it (typically because it's been badly drafted or is unclear, or because it's not clear why it's fair, so normally they would write with questions and then approve once the questions are answered) 
Secondly, inheritance are treated a bit differently to assets that you built up together.
Normally, the position would be that he would not be entitled to any of your inheritance BUT the court is entitled to take into account the fact that you have it, when considering what your respective needs are.

So in a situation where you might otherwise have had more than 50%of the joint assets, for instance if you were the main carer for young children, or earned a lot less, and therefore needed more, a court would take into account the inheritance in considering whether you did actually need more from the joint assets.

It is possible for your ex to try to claim the inheritance and it is open to a court to make an order which gives him some of it, but it would be unusual and typically where e there were not enough other assets to go around and he had a pressing need which could not be met without his having some of the inheritance.

That said, it's always sensible to get things sorted out formally as soon as you can, to avoid any issue. people do change, particularly when money is involved.

So far as your mum's house is concerned, you could buy out your sister if she was happy with that. IF we assume that the will basically tells the executors to get in all the assets , pay £10K to each grandchild then split the balance 50/50 between you and your sister, then then if the house is worth £500K and assuming that there are no other big assets, and that any bank account should enough to cover funeral expenses etc (so that the house is what's left when all debts and expenses are paid)

the £500,000  would have to be used t o pay the £40,000 legacies then the balance of £460K split equally, so you and your sister would get £230K each.
So you would need to be able to borrow /raise £270K to pay out the £40K legacies and your sister's £230,000, and that would leave you with the house with equity of £230,000 .

If you sold your house, you have about £100,000 equity so would need to be able to get a mortgage for the other £170,000, which should be do-able if you currently have a £21K mortgage

Obviously the numbers will change a bit depending on what other assets and liabilities your mum had, and on the actual value of the house once you are in a position to get it valued.

martin2345uk

Thank you very much Bagpuss that’s a very helpful and reassuring post ♥️