My parents are selling their property for £200k. They are using £180k as a deposit against a house for £250k. I am looking to get a mortgage in my name for the £70k and then pay it off. I will be caring for my dad who has vascular dementia. I also have 3 young sons that will be living with us, which is why we need a bigger house to accommodate us all. The biggest issue we have is the fact that I have 3 siblings. What would be the best way to deal with the new property so that I don't end up owning it outright when my parents pass away as it will need to be shared between us all??
My parents only want the deposit value (£180k) split between the 4 of us due to my paying the mortgage for the rest and caring for them
Right, where are we.
If I may say so respectfully, your parents' assurance that they "only" want their £180K equity in the house shared equally among the four of you - if you stop and think about it for a moment - does nothing to recognise the contribution you will be making to their care. Not one whit. And it isn't a matter of gratitude, it's a matter of practical realities: your freedom to earn an income and progress in your career, your taking on financial commitments to support *them* in *their* home, the actual woman-hours it takes to provide the care - these things do all equate to real, hard cash, substantial amounts of it, which you will be putting in to the household, and in return for what?
I get the impression that the three of you haven't got very far down the road in working out this nice idea, is that fair to say?
I'm not saying it can't be done, or that it can't be shaped into a plan that the whole family is happy with. But don't for heaven's sake do what I did and make a lot of assumptions that will leave you both broke and to be honest a little bit broken.
When was your father diagnosed with vascular dementia? Is this the result of other chronic conditions? How old are your parents? How old are your children? And what region of the country are you living in? - the quality and availability of health and social services vary enormously, is why I ask.
I don't mean to put you off so please do come back to us. Hope to hear more from you about the background, best wishes.
Something else to seriously discuss is what you will do if it isn't working out or if their care becomes more than you can handle, what is Plan B?
Add in the fact that one day your siblings will have their hands out looking for their inheritance and regardless of how well you think you get along it will only take one of them to make your life a living h*ll if you can't cut them a cheque fast enough. This is why I don't like the idea of co-mingling your assets unless it is done very, very carefully, and even then I fear it would be a terrible headache when the time comes to disentangle them.
I'm very interested in your topic - I was in almost exactly your situation except that my children, thank goodness, were already grown and gone so that was one thing less to go wrong! You need to tread very carefully and choose a really, really good solicitor.
1. Buying the house as tenants-in-common. This will be done through a Deed of Trust, which will specify who owns what, who is responsible for what and in what shares, and what is to happen in the event of changes - one or both parents' passing away, for example, although you must also at least consider the possibility that caring for your parents at home could become too much.
2. Your financing - have you already arranged a mortgage in principle? How are lenders reacting?
3. Your parents' will. They can do as they please with their money, and one thing they could consider is deferring your siblings' inheritance of their share of the equity until such time as you wish to sell the house, buy them out, or God forbid pop your clogs.
I'm sorry - I have to go right now but I'll be back later.
Meanwhile though - DON'T DO THIS WITHOUT SORTING OUT LPAs FIRST!!!
Is this right?
1. Your parents are going to contribute £180k as the deposit, and you'll contribute £70k , for a total of £250k which is the listing (?) purchase price? That gives them a 72% interest and you a 28% interest.
How do you plan to handle the closing costs? Same ratio?
2. Is the £180k anticipated from the sale of their house, apparently listed (or is there an offer to purchase) for £200k? If this is this case, I'm assuming that there's only a mortgage for less than £20k to pay off on their house? If there's not a purchase agreement in place, that could change if the sale price doesn't reach the £200K, right?
3. You wrote that you "plan to pay it off." Is this the £70K, or the entire £250K?
4. You don't want to own the house "outright" after the death of both of your parents, so as CM suggests, you need to address the structuring of the title.
If your parents' £180k share is apportioned 4 ways, each sibling would have a 45% share after your last parent dies. I know nothing about UK real estate, but in the US, there might be some way to structure the title to reflect your parents and your respective shares of £180k and £70k as joint tenants with rights of survivorship of the £180k share only to you and your 3 siblings.
But the amounts would probably need to be converted and identified in the conveyance as percentages rather than dollar amounts, since as GeeWhiz suggests, the market value may change.
5. I assume you would also work out with your parents the comparable percentages of who pays property taxes and upkeep?
6. Totally unrelated to the percentages is the fact that your father has vascular dementia. Is he legally able to execute a purchase agreement for the house and mortgage and make a commitment to pay? How old is he?
Those factors may make a difference in whether or not he could commit not only to the sale but to the mortgage.
7. Have your parents drawn up Wills to incorporate the bequests of 1/4 shares each to you and your siblings?
Lastly, I would raise the same concerns in CM's second post as to your caregiving contributions.
If you do go through with this plan, definitely get an experienced residential real estate solicitor for the transaction, and an experienced estate planning or elder law attorney for the inheritance issues.
I do know this, though, it is essential that the person providing most of the care is compensated for it. The best approach is to arrange that in the here-and-now. Dad pays a monthly fee per a caregiver agreement. Putting it off to be inherited when there are other beneficiaries often causes more trouble and hard feelings than you can imagine! (We see that on this forum.)
I don't understand how the £180k is to be split among you. Would you have to sell the house to get that equity?
As CM says hire really good solicitor!
I think it's possible you might be rushing things, you know. I understand the shock of the diagnosis - it was bizarre, but the first time anyone said 'vascular dementia' to me about my mother it almost felt like an insult - and the need to get things under control; but you need to write everything down and have a really good look at it.
How will you service your mortgage? Can you afford to maintain the house as well once your parents are no longer contributing to the costs; or, if it is to be sold, where will you and the children go then?
Don't be so concerned for your parents that you lose sight of your and the children's needs, is all I mean. It's hateful, having to quantify things we do for love and duty; but it's reality. You have bills and pensions and your future to worry about, too.
Um. If you're buying a house for £250K that has room for two older people, you and three children across a wide age range...
Either that house needs a ton of work doing to it, or it's in a rural area.
Have you talked to your siblings about this at all?
Let's say you are the only one paying the taxes, upkeep. Doesn't that need to be reflected in the final price? Shouldn't their share of the upkeep be reduced from the initial price? A new roof can cost a lot...maintains the value..yet you pay for all of it and receive nothing? Also, what about your care for possibility years? Do you do this for free? The road ahead with dementia is going to be very hard...if you get nothing for it you will come to resent this and hate them.
This whole thing doesn't sound fair to you at all.