Rachel Waller, Contentious Wills and Probate Partner at Excello Law, responds to a reader’s question in This is Money:
Reader’s Query: “My daughter, her partner, their child, and a baby due this spring have been living with us for over five years because they cannot afford to rent or buy their own home.
We are concerned about what will happen when one of us dies, as there won’t be enough money to maintain the house.
Our current wills state that our daughter will inherit the house along with her two stepbrothers, who are both in their 50s, while she is in her early 30s.
Is there a way to create an arrangement that would help her, given that she won’t be able to maintain the house or afford to rent immediately after our deaths? My husband is 80, and I’m in my 70s, and this is a major concern for us.”
Rachel’s Advice:
It’s a common dilemma for adult children who remain living in the family home, often caring for elderly parents, to find themselves unable to afford to stay after their parents pass away. Planning ahead for this scenario is prudent, and revisiting your wills with your solicitor—or consulting a new one—is a good starting point.
From your question, I’m assuming you own your home and that it is large enough to accommodate your entire family comfortably. For the sake of this response, I’m also assuming you might have a mortgage and that your estate is structured so that when one of you dies, the other inherits everything.
If your concern is what happens when you both pass away and your daughter’s family cannot afford to maintain the property, there are several options to consider:
Option 1: Leave the Entire Estate to Your Daughter
If you have sufficient assets, you could leave everything to your daughter, using the rest of your estate to pay any inheritance tax and provide an income to maintain the house.
However, this approach would mean your step-sons receive nothing, which could cause tension or conflict within the family.
Another concern is that if your daughter were to marry her partner and subsequently divorce, she could lose the house as part of a divorce settlement.
Option 2: Set Up a Trust
A more flexible solution might be to amend your wills to place your assets, including the property, into a trust for all three children (or their descendants).
You could supplement this with a letter of wishes, which is not legally binding but provides guidance to the trustees on how to manage the trust assets. For example, you could specify that your daughter and her family should be allowed to live in the house, with the other assets used to cover maintenance costs.
You could also outline conditions for selling the property—such as when your daughter is in a position to rent or buy elsewhere—and distributing the proceeds among all beneficiaries.
This approach gives your daughter time to adjust, while ensuring that the step-sons are not left out of the inheritance.
Option 3: Downsize for Affordability
If your estate does not have sufficient assets to allow your daughter to remain in the house, you could instruct the trustees to sell it after your deaths and purchase a smaller, mortgage-free property for your daughter’s family to live in.
This arrangement could also be time-limited, with the proceeds from the eventual sale of the smaller property distributed among all beneficiaries.
Important Considerations for Trustees
Bear in mind that while a letter of wishes expresses your intentions, trustees have a legal obligation to act in the best interests of all beneficiaries. They must also manage tax obligations and other financial matters, which means you should seek tailored legal advice to ensure your plans are workable.
Family Discussions and Transparency
Regardless of the option you choose, revising your will to favor your daughter over the step-sons could cause tension or even legal challenges. To minimize the risk of disputes, it’s important to discuss your intentions openly with all three children. Explain your reasoning so they understand what to expect.
Proper planning and communication now can help avoid misunderstandings and conflicts later, ensuring your wishes are carried out and your family is supported.
Read Rachel’s full article for This is Money here
