Advice please - sibling wants to buy family home

diystarter7

pleasedelete said:

Much more complicated than you make out
Capital Gains tax on whichever house  he doesnt live in- has he factored that in? 
Deprivation of assets- how old is he?
What other assets does he have? Is inheritance tax going to be an issue- how old is he- what is his health like?

He needs to take financial advice. 

No financial advice need as he appears to have capacity.
However, I have thumbs upped you post as it can apply to some.
However, in this case based on the info to hand, dad
will do what he wants and he more than enough to live as he wants.

As I said in my previous post, the OP needs to say that to his dad as I'm more worried re sister having the capacity to manage a mortgage and a property.

Bowties

Thank you all very much. Great advice and i feel much better prepared.
Just to answer a few questions that came up:
1) An Estate Agent valued the house... the same one that my dad bought it off! I'm not convinced the valuation is quite right as it was valued in October and i'm sure things have changed a bit since then.
2) My dad is single. He has a partner but adamant he is never going to marry again.
3) He is 72 and in very good health
4) He wanted to be mortgage free by the time he was 70 and has no intention of borrowing off the Norfolk property

I've decided i'm going to ask hard about the numbers involved. How they propose on raising the funds and pay the deposit and I will not give any final agreement until I have had time to digest, reflect and research everything!

thegreenone

Bowties said:

Thank you all very much. Great advice and i feel much better prepared.
Just to answer a few questions that came up:
1) An Estate Agent valued the house... the same one that my dad bought it off! I'm not convinced the valuation is quite right as it was valued in October and i'm sure things have changed a bit since then.
2) My dad is single. He has a partner but adamant he is never going to marry again.
3) He is 72 and in very good health
4) He wanted to be mortgage free by the time he was 70 and has no intention of borrowing off the Norfolk property

I've decided i'm going to ask hard about the numbers involved. How they propose on raising the funds and pay the deposit and I will not give any final agreement until I have had time to digest, reflect and research everything!

5)  Dad will not allow Son-in-Law in the meeting.
6)  You and Sis will use this opportunity to talk to Dad (fully but tactfully) about what he proposes to do with the Norfolk house, in his Will, re his partner.  Left in trust/she gets booted out/gets left a lifetime interest etc etc.  Just so you and your sister know exactly what he wants and will be singing from the same hymn sheet when the inevitable happens - hopefully many years hence.

pleasedelete

diystarter7 said:

pleasedelete said:

Much more complicated than you make out
Capital Gains tax on whichever house  he doesnt live in- has he factored that in? 
Deprivation of assets- how old is he?
What other assets does he have? Is inheritance tax going to be an issue- how old is he- what is his health like?

He needs to take financial advice. 

No financial advice need as he appears to have capacity.
However, I have thumbs upped you post as it can apply to some.
However, in this case based on the info to hand, dad
will do what he wants and he more than enough to live as he wants.

As I said in my previous post, the OP needs to say that to his dad as I'm more worried re sister having the capacity to manage a mortgage and a property.

Of course he needs financial advice, it isnt dependent on capacity, he needs to understand his liability and get advice as to whether it can be mitigated in any way. 
He is 72 and owns 2 homes. 
He needs advice on CGT and deprivation of assets. At 72 it will be seen as deprivation of assets if he needs care. 
We also don't know whatever other assets he owns- so may need broader inheritance advice. 

sienew

Bowties said:

1) An Estate Agent valued the house... the same one that my dad bought it off! I'm not convinced the valuation is quite right as it was valued in October and i'm sure things have changed a bit since then.

Values (at least in my area) have significantly increased since October. A revaluation is essential before agreeing a sale price. It could easily be 10% more which would actually be a fairly large increase in your share.

I wouldn't concede anything. Fair market value should be paid and the amount your father doesn't require (to pay his mortgage/expenses/wants for himself) should be split 50/50. If your sister wants to use her 50% as a deposit and can get a mortgage to buy you and your father out that's fine but it must be at full market value.

Under no circumstances would I accept your share of the cash being paid at a later date (either by your sister, father or in his will). This is guaranteed to end badly for you.

I think it would also be fair and would show you have your fathers best interests at heart to also mention that any split should be done after his expenses. That could include estate agents costs, moving costs, removal vans, taxes, bills while the property is empty ect. Simply getting the property value, removing the mortgage amount and then splitting the remainder 50/50 will probably leave your father with quite a lot of costs.

Bowties

With regards to the Norfolk house, he doesn't even live with his partner and she is very comfortable. We never know what will happen but I cannot see her taking any sort of advantage out of him. Honestly, she is far more well off than he is. 
One suggestion that I did hear was that I was going to get a larger percentage of the Norfolk property to make up the difference that my sister cannot afford in his will - but I made it crystal clear I will not accept this. Norfolk will have to and always will be a 50/50 split between myself and my sister (if he decides to leave it to us).
And I absolutely do not mind what my dad does with his money. He can spend it all now on whatever he likes. But if he is going to gift us an inheritance, I just want it to be fair. But I completely accept that it his money and he can do with it whatever he wants. 

Schwarzwald

elsien said:

She can’t afford it but she’s set her heart on it and you want everyone to come out of this happy?
Not going to be happening - there’s lots of things I want but can’t afford, including a nicer house in a bigger area. So I don’t have them.
Your sister needs to get realistic and you need to practice your broken record technique. “I’m sorry but there’s one of me and there’s two of you. I don’t think it’s fair to split any differently than 50% of the current equity.”  Repeat ad nauseam every time an alternative is proposed. 

Along with, (if needed) “no I don’t want a bigger share of the Norfolk house instead, because none of us have a crystal ball to know if there will be any inheritance at all.”

Whilst in your head reminding yourself that you are not the one being selfish. 

Probably sister set her heart on it as it is her chance to get a property, which - as it sounds - is typically out of reach and she hope that the family set-up (and hoped financial support) enables her to do it.

nothing wrong with that in principle - as long as it is not to the detriment of father/brother

Schwarzwald

Agree with sentiment: dont agree to anything in the meeting. Ideally state this upfront at the opening of the meeting, and then stick with it.

attendance of your sis’ husband not ideal but ultimately depends on how he behaves, can be good for the meeting but also pretty bad for you, depends on his character.

overall sounds as if you might benefit from a professional and/or friend asssting you in this or acting as sparring partner to discuss as you dont seem v experience/confident with these type of matters.

tax and other implications as outlined by others important to understand in detail. Otherwise the good intent might prove financially costly, esp for your father.

at age 72 even if healthy today, everything can chance overnight - unfortunately.

sienew

Bowties said:

One suggestion that I did hear was that I was going to get a larger percentage of the Norfolk property to make up the difference that my sister cannot afford in his will

This is where things can get rough if you aren't careful. It can be tempting to maybe accept less today for the promise of a larger amount in the future but wills can be charged at any time. 

Your father might not have any money left when he dies. He might want to give it to someone else. He might outlive you. You might fall out. You mentioned your sister is very persuasive, your father being healthy gives her plenty of time in the future to persuade him to change the will (not saying she will do this but it's a possibility). There are so many potential pitfalls. It's the worst of all worlds.

I expect this is the suggestion your sister is going to push hardest so be ready for it.

Brie

I'd be going into a meeting with a list of questions and concerns.  Make sure you go through all of them, even if it's a "well I have down here a concern about sis's affordability but she's already covered that".

re deprivation of assets....if dad is in his Norfolk place and needs care that he cannot afford (thinking in home carers) then you and sis will be looked at to pay for it as he has "given away his money".