THE BANK OF MUM AND DAD

A common issue amongst our clients is how much financial assistance to give to their children and grandchildren. The obvious areas to consider are education/university costs, wedding costs and then potentially the most expensive one; getting them on the property ladder by helping with a deposit. Our view is that the most important issue is to make sure that any gifts don’t jeopardise your own desired lifestyle. We’ve seen this go both ways: parents making large gifts that then created financial difficulties for themselves, and parents desperately wanting to help their offspring but feeling unable to do so because they were over-cautious. We deal with this situation by building a ‘lifetime cashflow forecast’, projecting your money into the future to see if we expect you to have A) too much, in which case you’d be able to gift; B) not enough and therefore gifting wouldn’t be advisable, or C) just about the right amount and maybe able to gift with some planning. We can then model various scenarios of gifting and ‘stress test’ the projections.

How much help is a good thing?

Then there is the emotional side to this. We have come across a variety of issues, for instance: Do you pay all university costs or just accommodation costs and a bit of spending money? Although sometimes not financially advantageous, is it a good thing for your child to use the student loans that are available, taking some personal responsibility? Views vary enormously on this. Even if you intend to pay all of the costs of university, is it better to hold something back until the end of the course as a reward for hard work rather than give everything up front?

Easy, or too easy?

easy? How easy (or not) do you want to make it for your children? How you and your parents dealt with money when you were growing up will often have a bearing on this. If you are the first generation in your family to have reasonable wealth, you may well want your children to appreciate the merits of hard work. Conversely, we meet clients who just want to give their children as much as they can reasonably afford to. Again, it’s a very personal decision. There is no right and wrong course of action but, by clearly showing you the financial implications of gifting and acting as your emotional sounding board, we can help you make these very important decisions. Please get in touch if you’d like to chat any of this through.

Previous ArticleNext Article

Say hello

If you are interested in finding out how Claritas can help you achieve your financial and lifestyle goals, please pick up the phone and give us a call on 0161 636 9200 or email

Tim Walsham

Tim Walsham
Director


tim@claritaswm.co.uk

Krish Rathod

Krish Rathod
Wealth Planner


krishnan@claritaswm.co.uk

Alison Brimage

Alison Brimage
Wealth Planning Manager


alison@claritaswm.co.uk

Anna Walsham

Anna Walsham
Director


anna@claritaswm.co.uk

Debbie Robbins

Debbie Robbins
Wealth Planning Assistant


debbie@claritaswm.co.uk

Alex Dickinson

Alex Dickinson
Wealth Planning Assistant


alex@claritaswm.co.uk

Visit us

182a Heaton Moor Road, Heaton Moor, Stockport, Cheshire, SK4 4DU

The Financial Ombudsman Service (FOS) is an agency for arbitrating of unresolved complaints between regulated firms and their clients. Full details of the FOS can be found on its website www.financial-ombudsman.org.uk. Where your complaint relates to products or services purchased online, or by other electronic means such as by email, you may refer your complaint to the online dispute resolution (ODR) platform at http://ec.europa.eu/odr.