Sarah Nash, Solicitor and Head of Astle Paterson’s Wills & Probate team, discusses the rise in parents helping their children get on the property ladder and how best to avoid complications in the future.
Sarah said, “According to recent reports, children born after 1982 (‘the millennials’) trying to buy their first home are facing house prices almost six times the average income figure. In comparison, their parents and grandparents grew up with affordably priced housing, free university education and generous pensions.
Seeing how their children and grandchildren are struggling to get on the property ladder, it is very common these days for parents and grandparents to offer to help by providing funding towards the purchase.”
Sarah continued, “If you are intending to help a child or grandchild in this way, it is important for you to obtain advice about the legal and tax implications before going ahead.
Further, family agreements about whether the payment made is to be treated as a loan, gift or investment in the property should be clearly recorded as difficulties can arise at a later date when informal family understandings have not be formally recorded and the parties have fallen out or death or divorce occurs.
In particular, parents should consider how any loan or gift should be dealt with in the event of their deaths. Some parents with more than one child intend that the loan or gift should be taken by the child as part of their equal share of the estate so that other children are not disadvantaged.”
Sarah concluded, “Whatever a parent’s or grandparent’s intention may be, best practice is for their Wills to be absolutely clear about how the lifetime loans and gifts are to be treated in order to avoid their children or grandchildren falling out and disputes arising in the future.”
Astle Paterson’s Conveyancing and Wills & Probate teams can advise and assist you with the preparation of family agreements and Wills.
