Financial advice for every stage of your child’s life – part 2

Your children are your babies no matter how old they are and you’ll always want to support them where you can. This is the second of our two-part series where we look at ways to financially help your children. 
 
Here we look specifically at ways to assist your adult children. If you missed part one, where we looked at helping your younger children, you can catch up here.

Help with university costs
There’s no getting away from it; university is expensive, especially if your children decide to live away from home. Whatever maintenance loan your child may be entitled to is unlikely to cover tuition fees, let alone living costs. 

Be it in the form of a loan or gift, the bank of mum and dad (BOMAD) is likely to take a hit here! Of course, if you look at gifting, you could potentially lessen a future inheritance tax burden.

Help them get on the property ladder
Once again, the BOMAD is likely to be called on here. It’s estimated that 61%^¹ of first-time buyers in 2023 will need a contribution from the BOMAD for the deposit.
 
Support them with childcare
The tiny pitter patter of grandchildren’s feet may make you feel old but, reportedly, helping to look after them keeps you young.^²

Not only that, but it’ll make a huge difference to your children’s finances. Childcare is a massive expensive - to give an example, a London-based family with two children (one under three and one over three) could save over £10,000 a year if grandparents look after the kids for 3 days a week. That rises to over £28,000 if it were 5 days per week!

Work out how much you could save your children by helping out with childcare here.

Keep your will up to date
I said last time just how important it is to have a will in place but it’s worth saying it again! 

If you die without a will, you could end up passing on a major financial headache to your children (at an already awful time). Making a will can ensure that your grown-up children and other beneficiaries receive the inheritance you wish for them rather than the legacy dictated by a standard legal formula. If you don’t yet have a will – or it’s now out of date – we can arrange this through our will writing partners.

Once you have a will in place, the official advice is that you should review it every five years, as well as after any major change in your life - which is why we’ll always ask you at your annual review if there have been any significant changes to your circumstances.

Make sure you have LPAs
Alongside a will, you should set up Lasting Power of Attorneys (LPAs), granting your children the powers to take care of you and your affairs if you become unable to do so yourself.

There are two types of LPA:

• A Property and Financial Affairs LPA allows your loved ones to deal with paying your bills, buying and selling your property and managing your bank accounts and investments.
• A Health and Welfare LPA covers decisions about health and care and even deciding where you are to live. This can only be used if someone is incapable of dealing with such matters themselves.

An LPA might sound like more of a benefit to you than to your children. But, apart from alleviating some of the inevitable stress of supporting an incapacitated parent, having an LPA can save a great deal of money – which, ultimately, will feed into their inheritance. 

Involve them in your financial decisions 
Communicating your plan is equally important. Nearly a third of those aged 35-59^³ have no idea what their parents’ plans are for passing on their wealth. This can make it difficult for them to plan for the future and cause them undue stress and worry. It’s a good idea to hold a family meeting on neutral ground to talk your children through your plans and give them the opportunity to ask any questions. 

At Ginkgo, we encourage clients to let us arrange and host family meetings. Our clients’ adult children often tell us that they’ve been wanting to bring the issue of succession up with their parents but didn’t know how to broach the subject without seeming uncaring – while their parents have been equally reticent for fear of sounding morbid. Once plans are in place and out in the open though, everyone feels more relaxed and confident about the future. So, our advice is, don’t delay – organise a family meeting today!
 
Keep good records
It’s also a really good idea to spend some time recording all your important documents, assets and instructions, and making sure your adult children know where to find this list when the time comes. We’ve devised a My Important Documents checklist that we can help our clients complete. 

This ‘master’ document lists where you keep your will, key contacts, bank account details, assets and even (if you want to include them) funeral wishes. Ginkgo can keep a copy of the completed document for you and make any necessary updates alongside your annual financial review. It’s also a good idea to provide copies to key members of your family or friends – or at least tell them where to find it when they need to.

So, there you have it, the main ways to help your children throughout their life – financially and practically. If you would like to discuss any of the points raised in this or our previous blog, arrange for a family meeting, or get help with completing My Important Documents, then please do get in touch.
 

By Daren Wallbank

Disclaimer

Will writing is not part of the Quilter Financial Planning offering and is offered in our own right. Quilter Financial Planning accept no responsibility for this aspect of our business.
¹https://www.financialreporter.co.uk/bank-of-mum-and-dad-lends-9bn-in-2022.html
²https://www.myweekly.co.uk/2020/02/12/why-looking-after-the-grandchildren-is-good-for-you-and-them/
³https://www.wealthbriefing.com/html/article.php?id=198157

Approver Quilter Financial Services Limited & Quilter Mortgage Planning Limited. 14/11/2023