Given the points raised earlier, more clients are enquiring how they can give their children a leg up in their own financial journey. This may be in the form of helping them buy a bigger home, funding education and/or investing on their behalf for the future. If you are considering assisting your family, there are a number of aspects to consider before handing money over such as:
- Will it be a gift or a loan? Each has their own considerations from an asset protection perspective noting a gift becomes the child’s asset (and maybe be included in their asset pool in the event of family law split or bankruptcy) whereas a loan may protect the capital within the family.
- If it is a loan will repayments be made? Might this impact on the child’s borrowing capacity with a bank? Is interest going to be charged? How much?
- Will the loan be secured or unsecured?
- Is there any impact on your Estate Planning wishes?
If you wish to explore this further to ensure you make a smart decision, please give us a call.