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Building and protecting your wealth

Financially Assisting Your Children to Leave Home in 2020

One of the benefits of being a successful dental or medical professional is being able to support your family. Nowadays, with the rise of the ‘Boomerang Generation’, parents are finding they’re supporting their children longer than they might have anticipated, well into their 20s and 30s in fact, either leaving the nest much later, or returning after university.

This article does not constitute advice. Professional advice should be taken prior to acting on any part of it. Your home may be repossessed if you do not keep up repayments on your mortgage or any other debt secured on it.

One major stepping stone you could help your children with is getting them onto the property ladder. On top of getting them out of your home and into their own, you could benefit from inheritance tax (IHT) breaks as well.

Don’t leave it until it’s too late — make sure you’re prepared ahead of time. Here are a few ways you could assist your children financially so they can make it on their own.

Set them up with savings

Jump start your children’s savings by setting them up with a Lifetime ISA. You can contribute more than £4,000 each year tax free, and if used for purchasing their first home or as a pension investment, it also benefits from a 25% bonus. LISAs do well long-term because they can hold equity-based funds, but don’t forget that there’s no guarantee with equity investments.

Be generous

Take advantage of your £3,000 annual IHT gift exemption allowance by regularly contributing to a savings account in their name. It’s also possible to gift more than that, but in order for the gift to remain IHT free, you need to stay alive for 7 years after gifting the money.

Tough love time

Help your child save by charging them rent – put that money away to help them in the future. No need to worry about tax implications as long as it’s less than £625pm.

Help purchase a starter home

Take advantage of the low rates on the market and search for a mortgage that allows you to share the responsibility with your children.

Think long-term

Most graduates leave university with debt. Living costs, including rent or a mortgage carve out a huge chunk from their salaries, so there’s often little left to actually save towards the future.

Help them along by starting a pension for them. The money you gift towards it will grow and compound over time, plus it will also benefit from tax relief. Because it’s a pension fund, your children won’t have access until they’re 55, so you know it will be used to fund their retirement.

Provide a bit more than pocket change

It might be tempting to splurge money that previously went on school fees and other expenses for your kids when they no longer need it, but consider passing along the payment to them instead. It’s best to consult with an expert on this to avoid unfavourable tax implications as the rules can be quite tricky.

Get financial advice

More and more children find themselves needing financial support from their parents. While it’s a source of pride to be able to provide for your family, there are ways to help them help themselves. Get the family together to meet with an independent financial adviser to map out a plan for the future with everyone in mind. The experts at DMFS will help set you and your family up for a financially fit future.

Want to build a future for your child?
Investments | Financial Planning | Retirement | Save Tax | Protection |

Dental & Medical Financial Services have been helping doctors and dentists to build and protect their wealth, whilst saving tax for over 25 years.
Call Darren to discuss your options.

Tel: 01403 780 770


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