I guess a lot of people with children and indeed grandchildren are faced with the same challenges as some clients of mine.
They are financially well off in capital terms and since retirement have enjoyed retired life and, as well as buying a lovely home for themselves, have enjoyed some exotic holidays as well.
Much of their wealth came from the sale of their successful business.
They used some of their capital to buy a home for their son and later this year will do the same for their daughter.
But they will also need all of their capital to work hard for them in a few years time to generate income.
Wisely, in my view, they have not just given the children the money to buy their homes but have purchased them in their own names and then agreed how the children might participate in the financing of such property.
Effectively the children are having to learn that whilst Bank of Mum and Dad might be less commercial than the High Street versions they are not for free.
The rent/repayments that the children have to make are a good discipline for adult life but also means that the parents still get some income from their capital investments.
Sensibly they have also taken tax advice from an Accountant to make sure the arrangement is tax efficient.
Well done the Bank of Mum and Dad – and no LIBOR scandal either!
Photo credit: Flickr/ell brown
