View more on these topics

The legal pitfall for the Bank of Mum and Dad

Eddie-Goldsmith-700.jpg

Parents that want to help their children jointly buy a house should also prepare legally for their offspring splitting up, according to property lawyers Goldsmith Williams.

The law firm says that parents should set up a declaration of trust if their child buys a home jointly with another.

Goldsmith Williams senior partner Eddie Goldsmith says: “We know from dealing with so many cases involving mums and dads that lenders are not happy for any advance to be repayable.

“Whilst mum and dad are gifting this money to their offspring and therefore are not expecting this to be repayable to them in the event of a sale, nevertheless they will be uncomfortable in the partner of their offspring receiving an unexpected and undeserved windfall in the event of a split.”

Goldsmith says that a declaration of trust will ensure any such payment goes back to their child after the mortgage is paid.

He says: “Mum and dad won’t get their money back – it was a gift, so they shouldn’t be expecting it, but at least they can take comfort that whatever they gave will go back to their son and daughter rather than be split with the joint owner who did not contribute to the generous gift.”

Recommended

Piggy-Bank-Savings-UK-700x450.jpg
1

‘Bank of mum and dad’ now a top-10 lender

The Bank of Mum and Dad is now equivalent to one of the UK’s top 10 mortgage lenders and is set lend over £5bn in 2016, according to Legal & General. In research with the Centre for Economics and Business Research, L&G estimates parents will be involved in 25 per cent of mortgage transactions taking place in […]

Family values: All Types of Mortgages in the new age distribution

Founded at the start of the packager revolution, family-run AToM now hopes to lead the new age of distribution The importance of family businesses to the UK economy is remarkable, even in an age when global corporations touch every part of our lives. A report published at the end of last year by the Institute […]

Pike

Richard Pike: Preparing for rate increase can ease the strain for borrowers

With around 400,000 ‘high-risk’ borrowers in the UK, lenders should prepare strategies for when rates finally rise The suggestion by Mark Carney that rate rises in the UK are unlikely before 2017 will have been welcomed by borrowers. We may even follow Japan’s example, where experts have predicted inevitable rate rises ever since they were […]

Thumbnail

Improving health and wellbeing through pensions auto-enrolment

As the auto-enrolment revolution is rolled out to companies with between 50 and 249 people, employers will be grappling with the new rules and requirements. Even though introducing the new regime can be time consuming, many employers are regarding it as an opportunity to review their benefits packages, with employee health and wellbeing regarded as a popular addition.

Newsletter

News and expert analysis straight to your inbox

Sign up