My daughter, her partner, child and baby due this spring live with us as they cannot afford to rent or buy somewhere.
They have been with us for five-plus years. What arrangements can we make when one of us dies as there will not be enough money to maintain the house?
In our will our daughter inherits the house with her two stepbrothers who are both in their 50s. She is in her early 30s.
Can we draw up a document that will help her as I know she cannot afford to maintain our house, but she could not afford to rent straight away.
My husband is 80 and I am in my 70s and it’s a major concern for us.
Rachel Waller: You could alter your wills to put assets in trust for your three children
Tanya Jefferies, of This is Money, replies: It is common for adult children who remain living in the family home, and potentially caring for elderly parents for many years, to be unable to afford to stay on after they lose both of them.
You are therefore sensible to think ahead about providing for various scenarios, and it is worth going back to the solicitor who drew up your wills or consulting a new one on the best way to fulfill your wishes.
We asked a lawyer with long experience in this area to explain the main issues to consider and the options open to you.
Rachel Waller, contentious wills, trusts and estates partner at Excello Law, replies: I assume that you own the house you live in now, and that it is large enough to comfortably accommodate you, your husband, your daughter, her partner and their (soon to be) two children.
However, I am unsure what maintenance is needed, whether there is a mortgage outstanding on the house, and how much it would cost to maintain the house.
Therefore, for the purpose of answering your question, I have assumed that you live in a large property, perhaps with a mortgage, and that you and your husband plan to leave your estate to each other when the first one of you dies.
If you are contemplating the scenario where you have both died, and your daughter and her family are living in the large house but unable to afford it, you have a number of options to prepare for this eventuality.
First, if you have sufficient other assets, you could leave your entire estate to your daughter and use those other assets to pay any inheritance tax that might be due and provide enough income to your daughter to maintain the property.
This would mean that your daughter and her family could remain in the house, but might mean that your step-sons would receive nothing.
Another issue is that if your daughter married her partner and then they divorced, your daughter could end up losing the house in any case.
Therefore, a better alternative might be to alter your wills so that your assets, including the property, are placed in trust for your three children and/or their children.
You could then leave a letter of wishes setting out to the trustees how you want the trust assets to be managed.
A letter of wishes is a non-legally binding document that would accompany your will, and provides guidance and insights into what you want to happen to your estate.
This letter can offer specific instructions or preferences on various matters.
For example, if you have other assets, you might ask that your daughter and her family remain in the house, using the other assets to maintain the house.
After a certain length of time or at some event, such as when your daughter is able to rent another property, the house could be sold and the proceeds of sale distributed to all the beneficiaries, along with your other assets.
You might even decide that, since your daughter has benefited so much, your step-sons and their families would then be due a greater share of the estate.
Alternatively, if you do not have sufficient assets to allow your daughter to remain in the house, you could indicate that you wish the house to be sold to buy a smaller, mortgage-free property that your daughter and her family could live in and maintain.
Again, this could be for a certain length of time or until some event, when the trust assets could be distributed to all or other beneficiaries.
Given that the letter of wishes is not legally binding, you should bear in mind that the trustees’ legal obligation would be to act in the best interests of the beneficiaries and to ensure that they are all treated fairly.
The trustees are also required to pay tax, and have other financial considerations, so you should obtain specific advice to ensure that your trustees will be able to carry out your wishes.
Whatever you decide, changing your will and not splitting the house between the three siblings could cause upset between them, or even be challenged by your step-sons.
Therefore, you should discuss what you are thinking with all three in advance, so that they know what to expect and why.
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