Financial dilemma after death of FIL

The advice a friend was given when she was widowed was 'Do nothing for a year'. Use that year to cope with your grief and take your time thinking about what next.

By the end of that year your MiL will know what her income is, whether she can live on it. She may, by then, be finding that a 4 bedroomed detached house (and I assume) garden are really more than she can cope with on her own. In which case it would be sensible to downsize, in the same area so that her social life remains intact. She could then sell the house, buy a smaller property and have some money behind her to add to her savings.

The best advice I would give is wait that year and use it to explore all the options, and gently think things through - and do not rush into anything final.

Seek financial advice from an advisor who specialises in dealing with older people and their particular problems

I think you, your husband and MIL could perhaps get some independent financial advice.

I don't mean next week..... your FIL has only just died.

If she doesn't want the flat she already owns, could she sell the big house and buy a different flat? This would provide her with capital.

I think that she needs to:

* get some financial advice (independent) and the age concern idea sounds good
* get some help if needed (from her sons??) with working out income, outgoings etc
* work out a monthly budget including a few "extras" etc
* work out if there is anything left for saving and if there is , how that will be done

And alongside all of the financial stuff she needs to think carefully about what she really wants to do, what would work best for her in her new future ...staying in the house; moving to a smaller place? a retirement flat? something else? Things she wants to do ...holidays; joining things; hobbies etc...and how this might impact on her financial decisions

This process should not be rushed - both life decisions and financial decisions ...and should take place over a period of time, allowing that as she is bereaved making huge decisions may take longer than normal

Most of all she should be supported in gaining confidence to make her own decisions having perhaps been somewhat deskilled by the way that things worked in her marriage as FIL took on all financial affairs. She will feel so good about herself if encouraged gradually to learn that she is perfectly capable of managing herself, her decisions and her life, I imagine!

Maybe in a couple of months time, when things have settled down and her monthly incomings and outgoings will be clearer, she could sit down with your DH and they could run through exactly what money she has.
Unless she asks for your help I would leave her alone, she has 2 properties, she could sell both and move into something easier and still have some cash left over, but it’s too early to even suggest anything to her.
Unless she is extremely old and doesn’t know what’s going on, she might not take kindly to her family running through her options (especially as they don’t know the full picture) behind her back, so I wouldn’t say too much to her at the moment.i

Maybe age UK can help out here.they do free advise for the elderly.

would she consider having lodger in future, or if she needs help in the house, to off-set a lodger/ home help for mutual benefit.
depends where house is, public transport, sources of jobs locally etc, as likely to attract low-income/student type.
but if she really wants to stay there, think all around the issue.

Not being unkind but, being born in a time where women mostly did not work, my DM lived on basic State Pension alone as there are attached benefits - housing benefit, no council tax, winter fuel allowance etc. If she really has a small income she will get help but while she owns property it is unlikely. She needs time to look at what she has so support her in making no rash decisions but talk about it if she wants to. However, I would think the 4-bedroom house is too big unless she is very emotionally attached and can manage all the upkeep. Maybe she could sell both properties, and get something she wants, without the hassle of being a landlady.

Thanks so much for the bereavement allowance link. I will pass than info on. Very helpful

She hasn’t asked me for advice, but she has told my husband she is worried and doesn’t know how she will manage. She has brought it up with him. However, our finances are joint and so help from one of us is help from both of us.

Re selling the flat, it doesn’t have a huge value. At least as a rental it is both an appreciating asset and pretty much sole source of income. Thanks

Apply as soon as possible or you can lose some if the monthly payments

Bereavement Allowance is a lump sum of £2500 and 18 monthly payments of £100 (as there are no small children).
www.gov.uk/bereavement-support-payment/what-youll-get
This may take the pressure off all of you for a while.
Please don't sacrifice your family's finances.
I wish you and hubs good luck. This is a difficult situation.

Oh sorry if I wasn’t clear - I would never suggest evicting anyone. I was thinking she would be fine in the medium term and when the flat tenant leaves of their own accord, that might provide a good opportunity to move into the flat for a bit while the house is put up for short term rental. Short term rentals are fairly popular for families who need a bridging property between selling and buying- we have done it ourselves. You pay a slight premium to curtail the rental period compared with a long term let but it is worth it to know you are not tied in and free to move on quickly.

Am I missing something ,why can the flat not be sold to give her a good nest egg ?

Your MIL will be in a fog of grief for some time, and definitely shouldn't be considering any big decisions for at least the first year. Do you know if she is eligible for the Bereavement Allowance?

Has your MIL asked for your financial help and advice regarding her future? If she hasn't I wouldn't impose it. Getting on in years doesn't mean people become incompetent and she may have thoughts and plans of her own regarding her future.

It sounds as though you mean well, and I think it's lovely that you want to try and help her - but in all honesty most help is better appreciated when it's sought. Maybe for now just let her know you are there for her should she needs your advice and support. You say they were hard up when your husband was young, then she's probably very adept at managing on very little. I say give her the chance to come to you should she need to.

Apart from anything else, swapping properties is very unfair on the tenant who is currently living there.

Such good advice and lots of things I hadn’t considered. From all your posts, it does seem like my idea for swapping properties would be not so practical and more complicated in practice. FYI she has basically no/minimal state pension as she opted out of NI contributions for a number of years. I know it seems a bit unnecessary living in a 4-bed (though it’s detached it is a small ish town house), but my MIL and FIL worked so hard to buy the house and it is where they shared most of their life together. It is around the corner from my BIL, a safe area with good long term neighbours and within walking distance of shops, which is likely to become necessary as she now has cataracts. We both would feel sad if she was forced to leave through a slight shortfall in income. It sounds like a good plan to let her grieve for a month or two and then sit down to really understand the finances with professional help/advice. You have all helped me to feel that it is not my/our responsibility and that is freeing as I think you can’t help but feel a duty to a vulnerable relative. Thanks all. X

Swapping properties is not a good idea especially as this would mean changing areas.
Leave your mil be for a while. It may turn out alright in the end and she may just be panicking about money. If she doesn't
have much experience with money this is understandable.
It is not wrong to prioritise your children over your mil.
She needs to get sound financial advice.

Thanks welbeck, re IHT. I thought not but I felt the situation was not entirely clear.

i also think the idea of moving into the rental flat etc is not a good one. apart from all the LL's liabilities, and whether there is a market for large rental properties, short term, there is the very real problems and cost of ousting sitting tenants.
far too much stress and uncertainty at that stage of life.

Cabbie, no IHT is due, as was spouse's estate.
this from google:
Couples. People who are married or registered civil partners do not have to pay any Inheritance Tax on money or property left to them by their spouse. The rules for couples mean it is usually best for them to leave everything to each other. Everyone can leave up to £325,000 free of IHT

I cannot imagine why a widowed elderly lady would need a detached four-bedroom house and a flat. If letting the flat is a main source of income, that bit makes sense. It’s not a great idea to migrate between the two properties and rent out the currently empty one - I can’t imagine there’s much of a market for short-term lets of a large house full of someone else’s furniture and knick-knacks, except possibly to students who would probably wreck the place. The legal obligations of a landlord of a large furnished property would be a headache - maintenance, safety certificates, insurance etc.

Surely after a decent interval has elapsed, she should downsize. This will massively reduce her outgoings, and she can use the balance from the sale of the house to generate a little extra income. She may be due something from her husband’s pension, in addition to any pension/s she has in her own right.

I do not think for one moment that you and your husband should even consider underwriting the extravagance of her remaining in her large house for more than a few months. You aren’t being mean, you are being prudent.

Both her children and she would be wise to sit down together with an independent financial advisor to review her financial position and consider options.

This is a muddle but I don’t think you’ll solve it by swapping properties. Letting a property nowadays is complicated. There are legal requirements which are more stringent than living in a property you own. Gas safety checks, electric checked, Legionnaires disease assessment, insulation requirements to name a few. You will have to decide whether to use a letting agent or take the time and effort to keep up to date with changing legal requirements. You will also need Landlords insurance. I don’t think you would end up with much money from a one year let.

Also bear in mind that even if you and the tenant sign a fixed term lease that doesn’t mean you can require them to leave the property when you want to move back in. It could involve going to court to regain possession.

I wish I had some other ideas for you but just wanted to make you aware of some of things letting involved.

She could always take in a lodger or two to help with the finances and companionship.