Later Life

Unadvised Bank of Mum and Dad lending causing family disputes

The rise of lending from the Bank of Mum and Dad is stoking family tension between parents, adult children and their siblings, according to research from equity release adviser Key.

Rozi Jones
|
14th September 2018
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"We believe advice is key and families should wherever possible seek independent help whether it’s from financial advisers or lawyers."

The rise of lending from the Bank of Mum and Dad is stoking family tension between parents, adult children and their siblings, according to research from equity release adviser Key.

Its nationwide study found nearly one in five over-55s have not told all their children exactly how much siblings have received while 41% say they decided how much financial help to give based on how well-off their children are.

25% of under-40s say the financial handouts they’ve received have caused friction with siblings and 75% admit to feeling guilty about the cash they’ve received.

Industry estimates show the Bank of Mum and Dad is expected to pay out around £5.8 billion this year for housing transactions alone.

But Key warns that 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.

Will Hale, CEO at Key, said: “It is natural for parents to want to help children and grandchildren, but it is desperately sad if that comes with emotional costs on top of the financial costs.

“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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