buy property with another estate beneficiary

Background: Hubby will have a share in an estate from his mother. His 2 siblings - sister and brother - also have an equal share of the estate, each. We are all in our 60s. We have our own home. Sister also has her own home. Brother does not own any house. His wife divorced him (they had no children) and he moved back home with mother. He has been living in mother's home after separated from wife more than 5 years ago. He pays no rent, only outgoings when living in mother's house. Hubby feels sorry for brother, so has promised to give him his share of the estate to help buying him a place / roof over his head. Sister has been made fully aware of this.
Hubby said he did not want to give brother the cash, but would buy a place with him as tenants in common (not joint tenants). Brother is not re-married but in a "relationship" with a woman and no one in the family likes her (mother particularly disliked her). They are not living together, but she moves her things into mother's house and always turns up (uninvited) at family events. He said she lives with one of her sons in a house they bought together - but the family suspects she has been living in mother's house.
Questions:
1. Do we need a specific agreement that hubby's portion of the ownership of a property with his brother that if brother dies then the house should be sold and hubby would get his portion? Hubby said he does not care if brother wills his own part to his partner / de facto. Hubby thinks an agreement would not be necessary because the ownership of the property is tenants in common.
2. I think hubby needs an agreement, in the event he pre-decease his brother, his brother should be allowed to stay in the property until he dies, then the house should be sold and hubby's portion can be left to either his estate, or to his sister etc.
What would you do?

 

I'd run a mile. Maybe it's just me, but this has the potential to go hay-wire at any and every turn.

If your hubby does not want to gift his brother the money but rather jointly own a home with him, then this suggests your hubby does not trust his brother to make the right decisions for himself (and maybe that's a perfectly valid conclusion). However, I presume the brother is also in his 60's? Time for him to be standing on his own 2 feet IMO. Where's all the money he's saved by not paying rent all these years?

If hubby wants to have some control then let him gift the money (hubby's share of the inheritance) to his brother but register a caveat on the property title - so hubby gets paid out on his brother's death, and brother cannot sell the house without hubby knowing.

Alternatively, why doesn't the brother stay in the mother's house? He owns 1/3. Hubby can gift or loan his share to the brother. Both brothers could buy the sister out?

 

quote..

Brother is not re-married but in a "relationship" with a woman and no one in the family likes her (mother particularly disliked her). They are not living together, but she moves her things into mother's house and always turns up (uninvited) at family events. He said she lives with one of her sons in a house they bought together - but the family suspects she has been living in mother's house.

Maybe it's time to sit face to face with a legal person who understands the different paths this can lead your husband and brother down,sometimes from experience as I have been the person in charge of 3 estates within our family network and every time there was never a problem within our family,but anyone outside the family it's no-negotiable and those that need to know-know the rest don't need to know anything..

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1. None is needed, but he should they should cover this in their wills.
Keep in mind his spouse can make a claim
2. Could be a life interest or life estate in the will.

 

We are the most well-off in hubby's family and hubby feels a duty to help his brother - even though BIL is almost 60! The reason why hubby does not want to just give his brother the money because he wants his brother to have a roof over his head and not squander the money and become homeless. It is easy to say why does brother not stand on his own 2 feet (which I totally agree) but there are losers in this world. We, like many of you here, have worked hard for what we have - but some people, like BIL, will always be a loser (he is not nasty, just a loser). BIL was unemployed most of his younger days, quit school early, has had health issues - MIL had to put up a lot with him. He now works in a low pay job and has had little money saved for his retirement.

We have discussed your suggestion why can't BIL stay in MIL's house. BIL said he would like to stay in MIL's house after her death, and pay out sister's share (as he would get hubby share for free). One problem with this, I don't think BIL will have enough money to pay sister's portion of the estate. Sister did not think this would be a good idea because MIL's house is a 2 storey house and larger than BIL's needs, and BIL cannot go up and down the stairs easily (I agree with sister). Hubby does not like the idea because there are third parties in the will (the 5 charities) - they may dispute the value of the house, unless it is sold on the market. I think there may be enough cash in the bank accounts and nursing home refundable deposit to pay the 5 charities their share of the estate.

Another idea I have suggested to hubby is to pay 50% of BIL's rent for the rest of his life - but this may be problematic as well ... The main concern of hubby is to provide a place for his brother to live. I did not mention before but his brother has been talking of buying a "big" enough place for his "stuff". Of course sister and I have gone of our rails about this ... beggar cannot be chooser and dream of drinking champagne while on a beer income etc.

 

I agree with you that hubby needs to seek proper legal advice before helping his brother. His sister has no objection to hubby helping their brother. However, we cannot stop brother's "woman" turning up at these meetings. One time she turned up at a meeting with centrelink and the 3 siblings, needless to say hubby and his sister were not happy but their brother said she is "part of the family" and he wanted her to be there. None of us feels the same way, MIL used to tell brother she did not want him to bring his "woman" to nursing home visits, hubby does not talk to her, sister refuses to have anything to do with her. Hubby is non-confrontational and does not like to "talk straight" like me and his sister. Ah, issues in every family ...​

 

Thanks, Terry_w. Good to know the options.

 

Is your BIL’s girlfriend disruptive when she comes to meetings - or is the siblings’ issue with her something else?

 

She interrupted and wanted things to be done differently from the family. They wanted her to keep her nose out of things, but BIL supported her. There has been some fights between BIL and SIL over the involvement of BIL's girlfriend in the family matters - hubby does not fight with anyone!

 

My concerns are the that if hubby helps his ‘loser’ brother with getting his own home, that hubby may soon be disappointed. Losers who come into money or assets later in life (or really, that do not have the character to deal with it properly) are soon separated.

 

Thanks, wylie, for sharing your experience - much appreciated.
I try to not get too involved in hubby's family matters - of course I support him in whatever he decides in helping his less than fortunate brother. I really feel sorry for their mother who had had to put up with BIL - as any parent who would do anything for their children, he lived with her most of his life and I could see the tears from her face from time to time.
I am the listening ear for hubby and he can deal with his share of his mother's estate as he wishes. He wanted me to have some of his mother's jewelry but I said no because I don't want his sister or brother's girlfriend accuse me of being the "gold digger" (pardon the pun). We are thankful that we are the most fortunate in both our families and over the years we have helped both sides of the families financially. But, of course they all want more!
I will ask hubby to get legal advice about the best way to help his brother.

 

Not disagree with what you said, Propertunity.
Hubby tends to be a man without many words and what he decides is that. His sister also has some concerns about their brother so she will talk to him about buying a property which meets his needs and not wants. Dealing with family members is not always easy.

 

If you wouldnt walk into a real estate agents office and buy a property with family why would you want a share of a deceased estate ?

Its often emotionally confused investment. You dont see people buying up BHP shares after Dad dies just because he worked at BHP until he died. Why buy or keep a share of his old house ?? In most cases its not the type of property you would choose to buy and may not even suit investment.

 

My wife's family get very emotionally attached to such things. Her nana moved in to a high care retirement home, but they couldn't sell the family home until she passed away. And when they did, they missed the boat in selling to a developer who was buying up a bunch of houses in the area.

Cheers,
Inertia.

 

A related question on hubby buying a property with his brother, as tenants in common (not joint tenants): what would the CGT implications for hubby be - if brother wanted to sell? if hubby wanted to sell? - BIL would be living there and (hopefully) pay all outgoing expenses and repairs / maintenance (or does hubby have to contribute to the repairs / maintenance?)

 

each would have a separate CGT asset. BIL's share could be exempt if his main residence, same for hubby, but he or yo could not claim another property as the main residence at te same time.

 

Its also likely that hubby would have no deduction for his share of non-operating costs such as interest.

If the BIL paid hubby 50% of the market rent and hubby and BIL shared all costs then he may have a tax issue (neg geared or pos geared ??)

If all expenses are paid by BIL then 50% of these ownership costs will accrue and may be used by hubby (doesnt matter who paid them )when he sells to add to the costbase for his share. Reducing CGT before discount.

 

Thanks, Paul@PFI, for the further clarification.

Hubby's intention has always been a roof over head for his brother. Years ago, their mother also owned a rental villa unit and she initially intended to give that to BIL so he would not be homeless (as I explained, he lived with her most of his life - some mothers do have "them"). BIL always mentioned this to everyone! And, the house would be sold after her death to be divided equally to the other 3 children (hubby, sister and another younger sister). Younger sister died when she was 20, so MIL decided to give deceased daughter's share to 5 charities. MIL then sold the rental villa unit and used it as a refundable deposit at the nursing home. Her will now does not mention the villa unit, only that the estate to be shared among the 3 children and the 5 charities.

Hubby said he would not give his brother the cash because it may end up in the hands of his girlfriend. Thus, he has offered to buy a property with him. BIL is almost 60, has a low paying job, has not always been in good health, and cannot borrow any money. But, he always talks "big" like he "wants" a house big enough for his stuff. Hubby said it is not going to happen ... and he is not going to borrow any money to buy a big house for him.

Hubby is not going to ask BIL to pay for rent, other than outgoing expenses such as rates, water, electricity and insurance. He said he will think about repairs / maintenance issues. Hubby understands that he will not get any "tax" benefit from this - and he will have to pay CGT on his portion when the house is sold. We have our own PPOR.