How to protect my house from a greedy sister?

nightrider1470 · 20 Jan 2020 at 12:50

Me and my family live in a house that is owned by my parents and both me and my wife have poured lots of money into it.

It been common knowledge from my parents that it's our home and always will be.. They gifted another house to my sister with the 7 year gift rule.

Unfortunately they haven't been able to gift this house to us as it has 110k left on the mortgage with 9 years left which we have paid for the last 7 years.

I trust my parents completely!! But I have a sister who is extremely ruthless, when it comes to money! and I know she would 100% screw me if something happened to my parents and she would come after my home.... I haven't spoke to her in years due to how she is as a person.

Could them changing there Will? Protect me from her?

Maybe we could sell the house to us? With us getting a mortgage then giving us the money back, but that seems really complicated and maybe not legal?

Any advice is appreciated!!

Dont want to hire hitman! - just to get that one out the way!

SpeedFreak · 20 Jan 2020 at 13:16

Just a few thoughts

1.Get it in writing in the will.
2.Clarify any responsibility for IHT as part of that process.
3.Get acknowledgement from your parents as to how much of the capital you have contributed to paying off the mortgage to date.

You can buy a property from your parents. My wife and I did just that with our first place, paying a below market price which was reflected as a gift.

Skillmister · 20 Jan 2020 at 13:19

Yes and it would involve a solicitor so may as well get the available options from them rather than the Internet too

tonys · 20 Jan 2020 at 13:20

Get them to see a solicitor to get the will changed sooner rather than later, as when the will goes to probate you will be looking at a long time to go through the process. My mother in law had vascular dementia before she died but luckily had changed her will about 15 years ago to exclude her eldest daughter from getting anything at all because of a family falling out. She had proper executors sort it all out, the house was sold to pay for care, but the daughter who hadn't spoken to the mother in law for near on 16 years tried to get some money out of the estate. Luckily the wife had kept all of the text messages from her sister which helped to show how two faced she was. Also some letters from her to the mother in law were found aswell. It took 8 months for 30% of the funds to be released from the executors and then another 4 months for the rest which was placed into the account exactly 1year to the day she died. Most of the wait was to see if there was any others who might have a claim. I hope you can find a solution to what can be a very tricky problem.

Psycho Sonny · 20 Jan 2020 at 13:49

Get the title deeds transferred to your name.

I don't see why you need to do anything else. it's then in your name.

Wills can be contested. Your sister could take it to court and cost both of you the house in legal fees.

So get the house in your name.

As for mortgage, etc if you are paying it currently then yeah they just gift you the house. you get a mortgage to pay their mortgage off essentially. So a bit like a remortgage but a transfer of title at the same time.

You will need a solicitor.

I would do this ASAP if you are worried.

SeatIbiza · 20 Jan 2020 at 19:01

Psycho Sonny said:
Get the title deeds transferred to your name.

I don't see why you need to do anything else. it's then in your name.

Wills can be contested. Your sister could take it to court and cost both of you the house in legal fees.

So get the house in your name.

As for mortgage, etc if you are paying it currently then yeah they just gift you the house. you get a mortgage to pay their mortgage off essentially. So a bit like a remortgage but a transfer of title at the same time.

You will need a solicitor.

I would do this ASAP if you are worried.

Other than the IHT you are potentially avoiding. This is not good advice. If you have been paying for everything for the last 7 years, it may have notionally been gifted to you by your folks anyway?

Get a lawyer, this sounds complicated with you and your whole family living in your parents (or perhaps your) house...!

Martynt74 · 20 Jan 2020 at 20:09

Yeah and I’m not sure how you transfer the deeds whilst there’s still a mortgage charge on the property.

BUDFORCE · 20 Jan 2020 at 20:25

Marvt74 said:
Yeah and I’m not sure how you transfer the deeds whilst there’s still a mortgage charge on the property.

You can't.

(apologies if that was the point you were trying to make)

Drumroll · 20 Jan 2020 at 20:36

Solicitor. Best way to ensure all is done properly without chance for any nasty surprises.

Psycho Sonny · 20 Jan 2020 at 22:12

Marvt74 said:
Yeah and I’m not sure how you transfer the deeds whilst there’s still a mortgage charge on the property.

If you need to transfer the ownership of a property, such as when getting divorced or if you want to transfer the property to a family member, having a mortgage can make things more complicated. While it is perfectly possible to transfer ownership of a property with a mortgage, the mortgage will either need to be paid off or the new owner will need to pass the lender’s eligibility checks.

SeatIbiza said:
Other than the IHT you are potentially avoiding. This is not good advice. If you have been paying for everything for the last 7 years, it may have notionally been gifted to you by your folks anyway?

Get a lawyer, this sounds complicated with you and your whole family living in your parents (or perhaps your) house...!

So what if you are avoiding it? Everyone does this. In fact my dad just bought a flat and my name is on the title on the deeds.

What is wrong with the advice. They simply sell to him for the exact amount left on the mortgage.

SeatIbiza · 21 Jan 2020 at 08:45

Really? So what if you are avoiding it...LOL, perhaps that is normal in your circle. However, you're potentially breaking the law in quite an obvious and traceable way and HMRC will take a dim view of this when they find out. Unless you can prove the 7 years gifting, which perhaps OP can, then you need to tread carefully.

Indeed, if you sell a property under the market value there are clear tax implications as you are essentially gifting the difference to whomever, so please don't "advise" people that there aren't and that it's "normal". Your dad putting your name on the title deeds on a property just bought is fine, it's like husband and wife buying a property, nothing less and I don't really get what point you are trying to make...care to elaborate?

As above, a solicitor is the only way forwards.

mid_gen · 21 Jan 2020 at 09:08

From what you've said, you haven't been 'paying the mortgage'. You've been paying rent as far as the law is concerned, in the event your parents both die, and won't be entitled to any of that money back, beyond what you would normally inherit.

You need to speak to a solicitor and protect yourself here.

I am in the process of purchasing a property involving some money from my parents, and as much as I trust them implicitly, we are getting everything down in a legal agreement that is approved by both our solicitors. With the amount of money at stake in property, and your livelihood in retirement at stake, you absolutely have to make things legally watertight.

Puzzled · 21 Jan 2020 at 13:12

Something else to consider if is what would happen if your parents require care later on and how that would be paid for.

nightrider1470 · 21 Jan 2020 at 14:23

There is 110k left on the mortgage... Had the house valued today at 300k

Can they sell us the house for 110k, legally?

We will see a solicitor at some point

MassiveJim · 21 Jan 2020 at 14:33

nightrider1470 said:
There is 110k left on the mortgage... Had the house valued today at 300k

Can they sell us the house for 110k, legally?

We will see a solicitor at some point

No way, there is stamp duty to be paid and it will be quote obvious that the property value is higher and that you have avoided paying the duty.

And personally I wouldn't want it on record that I had bought my house for such a low sum vs its real value that potential future buyers would have free access to

Mark M · 21 Jan 2020 at 14:38

Speak to an independent mortgage broker regarding buying at undervalue, Im not an expert but I believe the equity is classed as a gift from your parents to you.

RoyMi6 · 21 Jan 2020 at 14:46

It sounds like you want the transaction to be as water tight as possible so trying to avoid tax and gifting any money as part of the exchange is likely to catch up with you should anything go wrong.

Keep in mind that all house sales are public (https://www.gov.uk/search-house-prices) - so anyone tracing any finances for the purposes taxing gifts (like could be argued the case if you sold below market value - i.e. you were "gifted" the difference) then you sister might argue that she is entitled to that same sum through any inheritance and you have the potential of being charged IHT if their death is within 7 years.

mid_gen · 21 Jan 2020 at 14:55

nightrider1470 said:
There is 110k left on the mortgage... Had the house valued today at 300k

Can they sell us the house for 110k, legally?

We will see a solicitor at some point

They could legally sell you the house for 110k, but the transaction would constitute a 190k gift from them to you as well in the eyes of HMRC.

You need to speak to a solicitor. Not at some point. That is the only way forward if you want to protect yourself.

Psycho Sonny · 21 Jan 2020 at 16:43

MassiveJim said:
No way, there is stamp duty to be paid and it will be quote obvious that the property value is higher and that you have avoided paying the duty.

And personally I wouldn't want it on record that I had bought my house for such a low sum vs its real value that potential future buyers would have free access to

why not it makes zero difference?

i know someone who paid £68K for a house then sold it for £700K.

previous bought price has no bearing on future sales

Psycho Sonny · 21 Jan 2020 at 16:55

SeatIbiza said:
Really? So what if you are avoiding it...LOL, perhaps that is normal in your circle. However, you're potentially breaking the law in quite an obvious and traceable way and HMRC will take a dim view of this when they find out. Unless you can prove the 7 years gifting, which perhaps OP can, then you need to tread carefully.

Indeed, if you sell a property under the market value there are clear tax implications as you are essentially gifting the difference to whomever, so please don't "advise" people that there aren't and that it's "normal". Your dad putting your name on the title deeds on a property just bought is fine, it's like husband and wife buying a property, nothing less and I don't really get what point you are trying to make...care to elaborate?

As above, a solicitor is the only way forwards.

so long as 1 of his parents live 7+ years then it's kosher yes

everyone does this. they give everythign away before they die to avoid inheritance and keep just below the threshold.

£600K threshold or whatever it is and you have £2 million in assets. you give £1.4 million away.

otherwise you pay like 40% tax. only an idiot would hold onto it.