With tuition fees and rising property prices, families are increasing giving financial support to their younger generation as is often talked about in the media as the ‘Bank of Gran and Grandad’ and the ‘Bank of Mum and Dad’.
Stockport accountants and business advisors, Hallidays, are finding that they are increasingly supporting both grandparents and parents when considering all the options available and to find the solution that’s right for them and their loved ones.
According to Legal & General Group, in 2017 parents, family and friends put up a massive £6.5 billion to help their loved ones onto the property ladder – a 30% increase on the previous year. That money will support close to 300,000 property purchases.
Already, just over a quarter of home owners say they received help to buy. For the under 35s that rises close to two thirds (62%). Increasingly, it’s the only way for young adults to get on the housing ladder: The proportion of prospective buyers who expect to get help from family or friends for their property purchase in the future has risen significantly, from a third in 2016 to more than four in ten in 2017.
There’s many benefits of sharing wealth between generations. For the parents and grandparents, there’s the pleasure of seeing loved ones achieve their dreams. There’s also the potential reductions to inheritance tax liability.
Any financial gifts need to be carefully thought through, particularly if you’re considering supporting more than one family member. You may wish to include an element of control over how the money is to be used to avoid any misunderstandings and tensions arising!
Krys Mayoh, from Hallidays Wealth Management Team explains:
“At Hallidays, we’re increasingly guiding both grandparents and parents through the options available to them to find the solution that’s right for them and their loved ones. It’s vital that people take a detailed look at their long-term financial incomings and outgoings and test how different options will impact on their own wealth. If there are siblings, you may also want to make the same or a similar offer of financial support for their future too. It’s also important to take a holistic approach and review your will or estate planning to ensure these are always up to date and provide peace of mind for your family.”