Hypothetical inheritance question regarding buying in-laws house

pjs493

My husband died last year suddenly and unexpectedly. His parents have said for years that their Wills leave everything to the surviving spouse and then their estate would be split evenly between my husband and his sibling. They also mentioned that they have a clause that if one (or both) of their children predeceased them, the share of inheritance from that child would go to their grandchildren. They own a house that is worth well over a million and have substantial amounts in investments too.

My husband and I had two children together, so unless they change their Wills, when they die my husband's share will go to our children. My in-laws are advanced in age and assuming they have a clause in their Wills that states that the children have to reach their majorities before they have access to their inheritance, I assume their share would be held in trust until they become of age. My children are very young and its likely that my in-laws will die before my children turn 18 (or whatever later age they've stipulated). I don't know who they have named as trustees under this clause but I assume it is my brother in law in our situation. Obviously I don't want to ask any prying questions and they were always really standoffish whenever my husband tried to talk to them about the 7 year rule and other schemes that could reduce IHT etc. Their attitude being that they built up their empire so their children could too - typical boomer attitudes.

My husband and I dreamed for years about living in the family home. We had always hoped that when the time came, his brother would be happy to be bought out of his share of the house so that we could move into it with our children and make it our forever home. The expectation was that after IHT, the investments left to my husband and our own money would be sufficient to buy out his brother if his brother was amenable to the idea. Depending on how much the rest of the estate is worth it might have involved us selling any property we owned at the time too. We really never knew how much they have in liquid assets.

My question is, if the inevitable happens to my in-laws before our children reach their respective majorities, what are the chances of me requesting from my brother in law (or whoever the trustee is) that I buy out my brother in law's share of the house so that I can live in it with the children and basically make it our forever home? I currently have enough in my own estate to but half the house if that makes a difference in any way.

What may be a stumbling block is that relationship between my husband and his brother have always been at best frosty, and since my husband died, I have not even had a phone call from my brother in law to offer condolences. Again, assuming that following the death of my husband, and in the event of the death of his elderly parents, the brother in law is named as trustee for our children.

elsien

Honestly, I just think there’s too many hypotheticals here for anyone to even begin to speculate.
 All you can do is as and when they pass, (if they haven’t sold the house before then and downsized or moved into care) is  take it one step at a time and see what the will and any Trust say.


You can make any request you like - if the will says the house has to be sold and it makes it easier for the executors to go with you at full market value rather than an alternative buyer  they may go for that, but sometimes family dynamics get in the way.

pjs493

elsien said:

Honestly, I just think there’s too many hypotheticals here for anyone to even begin to speculate.
 All you can do is as and when they pass, (if they haven’t sold the house before then and downsized or moved into care) is  take it one step at a time and see what the will and any Trust say.


You can make any request you like - if the will says the house has to be sold and it makes it easier for the executors to go with you at full market value rather than an alternative buyer  they may go for that, but sometimes family dynamics get in the way.

They’ve both basically said they’ll never leave the house and will bring in care if it’s needed. My husband and I were been prepared to move in to provide care if it was needed and talked about factoring that into our future a lot before he died, although I’m not sure how practical that is for me now with two young children on my own. 

They would never ever sell it. 

I just wondered if it would be a reasonable request to buy out my brother in law’s share (the rest being in trust to my children) so we could move into it, if what they expect to happen, happens. 

bobster2

Your idea depends on not just your BiL being willing to sell his half of the equity in the house to you - but also that he will decide that the best way to hold assets in trust for the grandchildren would be in the form of equity in this house (rather than as other forms of investment). With you living in a home that is owned 50% by you, and 50% by your children.
Under these circumstances what would happen when your children reach 18? And perhaps want their own place? Or access to their share for some other reason?
As a trustee he might quite reasonably not approve of such an arrangement.

Flugelhorn

All sounds incredibly complicated and yes the children will own half the house - at 18 they can do exactly what they like with it - most young adults would want the money out and buy their own place somewhere else 

Best to let BIL sell the house and put the money into trust for the children

pjs493

bobster2 said:

Your idea depends on not just your BiL being willing to sell his half of the equity in the house to you - but also that he will decide that the best way to hold assets in trust for the grandchildren would be in the form of equity in this house (rather than as other forms of investment). With you living in a home that is owned 50% by you, and 50% by your children.
Under these circumstances what would happen when your children reach 18? And perhaps want their own place? Or access to their share for some other reason?
As a trustee he might quite reasonably not approve of such an arrangement.

Thank you for this insight. I think in that scenario I’d buy my children out of their share if they decided they no longer want it. By the time they turn 18 they’ll both also have access to their JISAs which will have a substantial amount of money in them, enough for a house deposit. 

There’s also the point to make, I suppose, that they’d end up with my share of the house purchased from my BIL when I die. So ultimately in the hypothetical scenario they’d both end up sharing the house if they didn’t decide they wanted to sell off their share inherited from their grandparents. 

My in laws have a substantial amount in assets apart from the house too. I suppose it all comes down to my BIL but I would assume he’d rather keep the house in the family than sell it to release all the equity and just hold cash assets in trust for the children. I suppose his other option would be to rent it out to provide an income for himself and the trust. 

pjs493

Flugelhorn said:

All sounds incredibly complicated and yes the children will own half the house - at 18 they can do exactly what they like with it - most young adults would want the money out and buy their own place somewhere else 

Best to let BIL sell the house and put the money into trust for the children

When the children reach 18 they’ll have enough in their JISAs and the cash assets from my in laws estate to buy a house. My in laws house wouldn’t need to be sold to provide them with the funds to do this. 

bobster2

pjs493 said:

bobster2 said:

Your idea depends on not just your BiL being willing to sell his half of the equity in the house to you - but also that he will decide that the best way to hold assets in trust for the grandchildren would be in the form of equity in this house (rather than as other forms of investment). With you living in a home that is owned 50% by you, and 50% by your children.
Under these circumstances what would happen when your children reach 18? And perhaps want their own place? Or access to their share for some other reason?
As a trustee he might quite reasonably not approve of such an arrangement.

Thank you for this insight. I think in that scenario I’d buy my children out of their share if they decided they no longer want it. By the time they turn 18 they’ll both also have access to their JISAs which will have a substantial amount of money in them, enough for a house deposit. 

There’s also the point to make, I suppose, that they’d end up with my share of the house purchased from my BIL when I die. So ultimately in the hypothetical scenario they’d both end up sharing the house if they didn’t decide they wanted to sell off their share inherited from their grandparents. 

You need to reconcile yourself to the fact that when your children are adults they may not want what you want.

You seem to have in the back of your mind the idea that they might want to hold equity in this house (which they may never have any sentimental attachment to) for decades until you eventually die. All the while they would be accruing capital gains tax liability (as it wouldn't be their primary residence) and having to pay additional stamp duty on the places they buy for themselves (because they are already a property owner).

When they turn 18 - they might want to use the JISA as a deposit and force a sale to get their equity immediately so they can have a smaller mortgage on their own place, pay less stamp duty, have less CGT liability, or just buy a nice car.

Pollycat

pjs493 said:

bobster2 said:

Your idea depends on not just your BiL being willing to sell his half of the equity in the house to you - but also that he will decide that the best way to hold assets in trust for the grandchildren would be in the form of equity in this house (rather than as other forms of investment). With you living in a home that is owned 50% by you, and 50% by your children.
Under these circumstances what would happen when your children reach 18? And perhaps want their own place? Or access to their share for some other reason?
As a trustee he might quite reasonably not approve of such an arrangement.

Thank you for this insight. I think in that scenario I’d buy my children out of their share if they decided they no longer want it. By the time they turn 18 they’ll both also have access to their JISAs which will have a substantial amount of money in them, enough for a house deposit. 

There’s also the point to make, I suppose, that they’d end up with my share of the house purchased from my BIL when I die. So ultimately in the hypothetical scenario they’d both end up sharing the house if they didn’t decide they wanted to sell off their share inherited from their grandparents. 

My in laws have a substantial amount in assets apart from the house too. I suppose it all comes down to my BIL but I would assume he’d rather keep the house in the family than sell it to release all the equity and just hold cash assets in trust for the children. I suppose his other option would be to rent it out to provide an income for himself and the trust. 

I wouldn't assume anything of the sort - unless your BIL has said anything about his intentions regarding the house.

pjs493

bobster2 said:

pjs493 said:

bobster2 said:

Your idea depends on not just your BiL being willing to sell his half of the equity in the house to you - but also that he will decide that the best way to hold assets in trust for the grandchildren would be in the form of equity in this house (rather than as other forms of investment). With you living in a home that is owned 50% by you, and 50% by your children.
Under these circumstances what would happen when your children reach 18? And perhaps want their own place? Or access to their share for some other reason?
As a trustee he might quite reasonably not approve of such an arrangement.

Thank you for this insight. I think in that scenario I’d buy my children out of their share if they decided they no longer want it. By the time they turn 18 they’ll both also have access to their JISAs which will have a substantial amount of money in them, enough for a house deposit. 

There’s also the point to make, I suppose, that they’d end up with my share of the house purchased from my BIL when I die. So ultimately in the hypothetical scenario they’d both end up sharing the house if they didn’t decide they wanted to sell off their share inherited from their grandparents. 

You need to reconcile yourself to the fact that when your children are adults they may not want what you want.

You seem to have in the back of your mind the idea that they might want to hold equity in this house (which they may never have any sentimental attachment to) for decades until you eventually die. All the while they would be accruing capital gains tax liability (as it wouldn't be their primary residence) and having to pay additional stamp duty on the places they buy for themselves (because they are already a property owner).

When they turn 18 - they might want to use the JISA as a deposit and force a sale to get their equity immediately so they can have a smaller mortgage on their own place, pay less stamp duty, have less CGT liability, or just buy a nice car.

It’s probably an assumption that they wouldn’t have any sentimental attachment to a house that’s been in their family for generations. 

I’d also possibly be in a position to buy them out too when they turn 18 if they really wanted to release the equity, but as I mentioned in an earlier post. They’d inherit my share from me anyway. So if I bought them out, they’d end up still owning it when I die anyway. One of them may then wish to move into it and buy the other out, or they might simply want to sell the family home. It would be their choice. 

pjs493

Pollycat said:

pjs493 said:

bobster2 said:

Your idea depends on not just your BiL being willing to sell his half of the equity in the house to you - but also that he will decide that the best way to hold assets in trust for the grandchildren would be in the form of equity in this house (rather than as other forms of investment). With you living in a home that is owned 50% by you, and 50% by your children.
Under these circumstances what would happen when your children reach 18? And perhaps want their own place? Or access to their share for some other reason?
As a trustee he might quite reasonably not approve of such an arrangement.

Thank you for this insight. I think in that scenario I’d buy my children out of their share if they decided they no longer want it. By the time they turn 18 they’ll both also have access to their JISAs which will have a substantial amount of money in them, enough for a house deposit. 

There’s also the point to make, I suppose, that they’d end up with my share of the house purchased from my BIL when I die. So ultimately in the hypothetical scenario they’d both end up sharing the house if they didn’t decide they wanted to sell off their share inherited from their grandparents. 

My in laws have a substantial amount in assets apart from the house too. I suppose it all comes down to my BIL but I would assume he’d rather keep the house in the family than sell it to release all the equity and just hold cash assets in trust for the children. I suppose his other option would be to rent it out to provide an income for himself and the trust. 

I wouldn't assume anything of the sort - unless your BIL has said anything about his intentions regarding the house.

A few years ago my husband and his brother talked about it and my husband explained that we would be interested in buying him out when the time came. My BIL raised no objection to the idea then. He and his wife have no intention of ever wanting to live in it, they get the vapours if they need to travel outside the M25, but there is a sentimental attachment to the family home. So unless his view has changed, I’m sure he’d want to keep it in the family. The only change since they had that conversation is that my husband has died.