lending children house deposit

I don't treat all my children the same and never have because their circumstances are all different. Financially we have given, or lent to them, as our circumstances allowed and they have had need. Three of our four children are settled in their relationships and careers and are on a sound financial footing, the fourth is at the start of a promising career, but has struggled with mental health problems. One has never received more than a contribution to wedding expenses, another was lent a large sum towards a house purchase (since repaid). A third was lent a small amount towards a house deposit and the fourth has had substantial amounts in a combination of gifts and long-term loans. My children are very accepting of the way we help them according to need and are also generous towards each other with time, talents and money.

Christalbee, there is no limit on how much you can give anybody, but if it is over £2,000 in any year it will be liable for inheritance tax for the next seven years. should you die in that period. I think the amount of inheritance tax due diminishes with each year.

Here is a link to the government site that explains it all. The £325,000 they refer to in the first paragraphs refers to the value your probate estate has to exceed to start paying inheritance tax. www.gov.uk/inheritance-tax/gifts

I would take legal advice. Helped one child with the purchase only to lose the lot in the case of divorce as we thought the relationship solid, all done informally. He lost out big time, ex-wife in a lovely house.

I had some capital/savings from a divorce settlement. I don't have much of an income, just state pension and interest from savings. So I gave my 3 children a total of £30000 each on the understanding that they will pay me back @ £150 each per month.....an interest free loan so to speak. Two of them are paying me back regularly. I have just noticed that one of them has stopped his standing order to me. He has always been the difficult child. I don't know whether I should question him about this....there will be a big row if I do. And yet, it's not fair to the other two, because they are paying me back regularly.

I do understand you PamelaJ.
Of course there is no perfect way of doing things - in the spirit of sharing ideas I'll add that we actually have no intention of waiting 30 years to even up!
That was written in so that if we unexpectedly go under the proverbial bus together, the finances can be formally evened up. In fact we intend to gift the youngest their 'share' this summer, 8 years after the oldest had theirs. Theoretically, in your situation, had you died in those intervening 3 years, and your estate split evenly, there would have been an imbalance'.
We'll leave the clause in our wills, as it means that any other gifts for various reasons can be taken account of.
Of course, we and I'm sure you, expect them to be fair to each other; but occasionally, if anything like benefits, divorces, care costs get involved, then the 'letter' not the 'spirit' of the will is what matters.

And yes, partners can be a very different kettle of fish!

Nanarose- I can’t see how your way of making things fair is fair.
If you give £20,000 to one child in, say 1989, I can’t see that giving your other children the same sum maybe 30 years later is equal. The second £20,000 won’t be worth anything like the first.
We gave my younger D some money to help her buy a flat. We gave our second daughter more 3 years later to put them in the same position.
A lot of posters have stated that they trust their children implicitly. We trust ours too but their partners can be a different matter especially when divorce or separation happens.

We did give our daughter an amount of money towards her first house and our son the same amount towards his wedding. Both received the same amount just for different reasons.
Clearly if you need the money to be repaid on the sale of the house you need to consider the fact it could be years ahead and you may not be around.

Izabella I take your point about being in a position to give money to the offspring.
My mother died 10 years ago leaving me a good, but not huge, inheritance.
Over the ten years I have given it all to my 3 AC.
I now have what's left of my lump sum and savings and have warned them that if need be, they may in the future have to top up my care home fees!

When our daughter needed help in a divorce, to buy her share of the house, she found that the mortgage company would not allow her to have a loan from us (or anyone else) as she was already borrowing as much as they thought she could repay. We gifted her the money, and wrote a formal letter to the mortgage provider stating where we got it from and that it was an unconditional gift.

We already knew at that time that my husband was terminally ill, so I made the gift from my savings, to minimise any chance of inheritance tax being payable. If by any chance I don't last the seven years, she will inherit half of my house and savings, so should have no problem paying any tax due, but now that the IHT threshhold includes an extra amount against the value of the house, it's pretty unlikely that there would be IHT to pay anyway.

Thank you Smiless, Yes you have hit the nail on the head, but howwe have been punished for it! I would post more but I do not want to be identified, as other sites encourage this behaviour and no doubt have a field day showing what an NARC I am!! sunshine

linzyes it's amazing isn't it, how many narcissist parents there are in the world. Strange how so many of us managed to raise our children with love, give them the best start we could in life despite being saddled with this personality defect.

In our case, it wasn't that they wanted what we weren't prepared to give, they'd got all they needed so we were no longer of any use to them.

Oh and of course all that we'd done wasn't done out of our love for our son, just our desire to control him.

Hello, sorry NARC is the abbreviation for this new 'Narcissist' name that most parents are saddled with when offspring decide they need no more contact with you. It is because you are a Narcissist & according to sites on the web there is a high % of who parents fall into this category. I received a letter from my D who has named me as one of this group!! If you look at the 'relationships' forum you will see unfortunately..

From my time in the US a NARC is a law enforcement officer dealing with narcotics, but I doubt that is the meaning here. Shows how abbreviations can get us barking up the wrong tree.

And yes Nanarose things may not turn out positive despite a good education. Three self funded degrees here and hard work for 40 years as an front line healthcare professional - and still aghast at the sums of money discussed on this thread.

NC - no contact? but can’t help with NARC I’m afraid

Can someone enlighten me what a abbreviations NC and Narc stand for (as in Linz17 post)? Thank you.

Leant my DD money for deposit then she and boyfriend split up - she walked away - took me a few yrs to get my money back from him with nothing formal ( by solicitor) written, but I did get it in the end. Good for him!
Leant DS money to buy house and have a solictors document re- repayment ( but think of it more as a gift. ) 2nd DS lives in a flat I bought for him to live in when he came down from UNi...
So tried all ways ...to help them as they needed -happy with outcome overall, just sad DD ended up with no home/step onto the ladder, but she's happier now and married!

I am a Justice Of The Peace and I did lend my son and DIL a large sum of money but we had a binding contract.
You must have a contract signed by both parties and witnessed by a third party. Third party must be someone who will not gain by the monetary loan.
They paid me back in full and in record time.

I agree with Smiless2012. DH & I had provided free childcare for GC for 3 years, which we enjoyed but towards the looming NC & Narc label (happily unaware of at that time) broad hints for gift of 4k holiday and new cars were coming thick & fast.DH & I had had a small windfall, we are both retired and want to remain comfortable & mortgage free. Within 3 weeks we we were NC & I am a NARC!
DH & SIL have a large detached house & all extra mod cons so they were doing well we thought. Money is often at the root of families falling out.

Yes, Izabella, it is.
Our family, for 5 generations now, has benefited from a combination of good luck, hard work, good education (by which I mean good state schools, good libraries and encouragement) and careful saving. Not everyone is so fortunate, one reason I feel so strongly about education. But sometimes, it just doesn't all come together.
One of my nieces made a very bad choice of partner (not at all apparent to us at the time) and he stole the money she had been given. She struggles now - her parents help, and I make sure that I give her 'sensible' vouchers for Xmas and birthdays, but it breaks my heart.

It never ceases to amaze me how many people are in the position of being able to either lend or donate money to family. It must be wonderful to be able to do so.

Any chance your son could manage the deposit himself to avoid any suggestion of fraud when taking out a mortgage if you "help" him with either a loan or a gift to cover some of the other costs of buying a house and moving?

I have 6 children to leave my mobey to so gifting a large amount to one would be out of the question. 3 years ago DD wanted to buy a house with her husband but he had bever had any credit if any sort so had no credit history in order to get a mortgage. I lent then 75% of the cost of the house but my name went in the deeds, a trust deed was drawn up that I wanted the money back in a maximum of two years snd a charge put on the house. 16 months later they were able to get a mortgage. Then I was told it would cost £800 to have my name taken off the deeds and SIL expected me to pay this. On your bike! The house had increased by over £20K in value and he expected me to pay the legal fees. No way. The amount was about 90% if my says so I couldn't afford to lose it. I would have something drawn up about repayment and protect yourselves. One never knows how long their marriage may last and if it came to divorce and nothing was in writing he/she would get half the money you loaned.

You are being as we all are generous with our children to help them when they need it most. However I would suggest that you first ask yourself why you want this money back. Is it to be fair with your other children if you have others? Is it because you feel you might need the cash in the future, since money once gone does not get put back as we get older? Is it that you feel he should pay it back?

Once you establish why you want the money back then you will come up with a solution that you are content with.

Another person posted that you might gift it to him. There may be tax gains in doing that. Another person posted that you might consider it as part of the planned amount you wish to leave him on your death anyway, and if you have other children this amount should be deducted from his share then. This would be fair.

The main thing is make your own mind up. If you make it a loan, and you say you trust your son, then trust him to pay it back. Bearing in mind if he is in a relationship and the mortgage is in two names, that the loan repayment will come out of his share of the profit.

These are all things that need consideration. If you go to a solicitor there will as you realise a cost attached, will that be added to the loan to be repaid, or will your son pay for that now.

A lot depends on how much your loaning, how your loaning it and why your loaning in the first place instead of the other options of gifting. Only you can answer these questions since your tax situation and financial situation will be critical when answering and deciding what is the best course of action.

Good luck with this, I am sure you will come up with the decision that suits you best. I emphasis suits YOU best.

See a lawyer. What if he stays there until he dies then his wife/partner would have the money.

We have a son and a daughter. Some years ago, our DD and her hubby were desperate for some money (unsuccessful business venture). As we had just sold a property we were able to help we gave them £25,000 with no thought of repayment. We have made our wills so that after the death of the last one of us, , our DS is given £25,000 before the remainder of our estate is divided between them. They both know what we have done and are happy.