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Bank of ‘Mum and Dad’ generates family tensions – Key

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  • 14/09/2018
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The rise of the Bank of Mum and Dad is stoking family tension, as parents and adult children admit inter-generational financial help is not without its risks, research has found.

Around 25% of under-40s say the financial handouts they have received have caused friction with siblings and three out of four admit to feeling guilty about the cash they have received, analysis from independent equity release adviser Key has showed.

Nearly one in five over-55s have not told all their children exactly how much their siblings have received, while two out of five say they decided how much financial help to give based on how well-off their children are.

According to industry estimates, parents are expected to pay out around £5.8bn this year for housing transactions.

Parents and children need to be clear from the outset if handouts are loans or gifts and urges both sides to seek independent advice if possible to avoid the risk of disputes ending in court, Key warned.

 

The intergenerational divide

Key’s research also found that around two out of three of homeowners aged 55-plus believe their children would be happy for them to give more money to siblings if they need. However, 26% say they are too worried about disputes to discuss money with their children.

Four out of five believe the intergenerational wealth divide needs to be addressed urgently.

Will Hale, CEO at Key, said that it is natural for parents to want to help children and grandchildren.

He added: “In an ideal world, the whole family should be involved in discussions about how much money is being paid out and in general the research shows most would be perfectly happy for siblings to receive more if they need the help more.

“But of course, we don’t live in an ideal world and in extreme cases Bank of Mum and Dad bust-ups can end up in court. We believe advice is key and families should wherever possible seek independent help whether it’s from financial advisers or lawyers.

“Our experience also indicates that the option of face-to-face advice can be important in getting all parties together to help everyone understand and agree on the approach.”

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