Dare I help my daughter and partner to buy a home?

My daughter and her boyfriend want to buy a house and I would like to help them financially. If they split up, how will that affect my daughter’s inheritance?
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© Merrily Harpur

Question: My daughter and her boyfriend want to buy a house and I would like to help them financially but I am worried about the long-term future of their relationship. If they split up, how will that affect my investment and, ultimately, my daughter’s inheritance?

Answer: You could own the property jointly with your daughter and her boyfriend, but if they need a mortgage you would need to be a party to it and jointly liable for it. Also, you might have to pay capital gains tax on your share when the property is sold, though they wouldn’t because it would be their principal private residence.

Alternatively, your daughter and her boyfriend could own the property but hold it on trust for the three of you. Confirm this arrangement by way of a "declaration of trust" covering the share you each get, responsibility for insurance and maintenance, and what happens if one of you wants to sell.

The mortgage lender will need to agree and capital gains tax could still be a problem. Also you need to consider whether you would be happy if your daughter’s boyfriend benefited from your investment if they split up. One of the best ways of protecting all parties is via a cohabitation agreement, covering who brings what to the arrangement, who pays the bills and who gets what if the relationship ends. And all three of you should get independent legal advice to ensure that you are comfortable with the agreement.

 

 

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If you have a question for Fiona McNulty, email legalsolutions@standard.co.uk. We regret that questions cannot be answered individually.

These answers can only be a very brief commentary on the issues raised and should not be relied on as legal advice. No liability is accepted for such reliance. If you have similar issues, you should obtain advice from a solicitor.

 

 


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