Latimer Hinks Solicitors is highlighting to its clients the difficulties families can face if they lend or give money without careful planning. A report in The Telegraph revealed that a record number of parents are suing their children.
The research found that comparing this year to 2016, there were three times as many cases of parents pursuing their children over property loans. The disputes occurred when families were unclear as to whether money provided to a child towards a deposit was a loan or a gift.
Further research, conducted by NFU Mutual, found that approximately half of parents with adult children cited that a lack of trust in a child’s spouse would influence whether they would expect to be paid back for funds provided towards a deposit.
Daniel Williams, a solicitor at Latimer Hinks, said: “The ‘Bank of Mum and Dad’ is one of the ten biggest lenders when it comes to property. So often there is no discussion or clarity as to whether the money is provided as a loan or as a gift.
“It becomes even more complex if the family dynamics change and this can so often happen in situations such as divorce, poor health and death, whether the parent’s or the child’s. A parent finding themselves in straitened circumstances may decide that they want to be repaid for what the parent understood as a loan and the child understood as a gift.”
Daniel continues: “There is a clear starting point. Mum and Dad would never want to find themselves in a situation where they are falling out with their own children. If families discuss these issues with a solicitor at the outset before any money changes hands, this can avoid emotional distress and damaged relationships. It therefore makes sense for the person providing the cash to outline his expectations, particularly regarding any repayment, and for this to be documented appropriately. “Parents may wish gifts and loans to be part of their estate planning and clarity and documenting the arrangements is essential.
“Having the arrangements agreed in writing protects all concerned and avoids the prospect of misunderstandings and family disagreements. It is important that you seek professional advice.”