Posted on 10.10.16 by Tasoula Addison
The ‘Bank of Mum and Dad’ has become a popular notion for parents helping their children financially, from getting on the property ladder to buying a car. A suggestion has been put forward by the Government that this type of support should be replaced by the ‘Bank of Nan and Grandad.’ The UK Minister for Housing has said that parents should disinherit their children in favour of leaving their properties and fortune to their grandchildren, to help younger generations get onto the property ladder.
Gavin Barwell took over the housing and planning brief in Summer 2016. He said that this approach would help to challenge the housing crisis and fight unfairness between generations, after revealing that his own mother had disinherited him to leave her estate and home worth £750,000 to her grandchildren.
He commented, “There is a profound inter-generational unfairness that has been created by this policy over a number of years. “I have got a nice home, I have got three kids and my mother has just disinherited my brother and I in order that she can pass her assets on to her five grandchildren. They will be OK.”
Earlier this year, a report conducted by the Social Market Foundation found that people in their 50’s lose out on an inheritance, as 69% of elderly parents use their money whilst they are alive, including helping relatives financially when they need help, instead of leaving money as an inheritance. The report also found that when it comes to inheritance, 20% of middle aged adults expect to be left an inheritance, but four in ten adults believe their grandchildren to be the most in need of financial help, and in essence the middle generation is passed over.
At Gorvins, when we see elderly clients making a Will, often their children will be in their 50s or 60s, and have built up their own significant assets. Often these children have taxable estates themselves, in which case it’s not uncommon for them to ask their parents to make a Will that gives their share to the grandchildren, who might be in their 20’s or 30’s and trying to get on the housing ladder. It is sometimes seen as an appealing inheritance option because it is a more tax efficient alternative.
Considering these factors, planning for later life is becoming increasingly important. Some adults in their 60’s have to think about multiple generations; their elderly parents, their children and their grandchildren. Making a Will is one of the best ways you can plan and ensure that your wishes are fulfilled. A Will sets out your exact wishes in the event that you are no longer around, you can specify who you want to benefit, how much they should benefit by and what assets should be left to whom. Your Will can also include trusts, which are a means of protecting assets, for example children under 18 or disabled beneficiaries. If you have business assets that qualify for “business property relief,” trusts can also be used to help reduce your eventual tax liability.
If you have any questions or would like to discuss your options, get in touch with our Wills team today. Although cutting a child out of your Will may seem like a daunting and complex procedure, our solicitors have years of experience of dealing with a whole range of complicated family circumstances, and will be able to give you the best advice possible based on your individual circumstances. Give us a call on 0161 930 5151 and let our experts take care of your wishes.