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Don’t let your kids push you around

Following a meeting with an Accountant recently, we discussed at length the issue around succession planning, and kids pushing their parents around.

A lot of parents seem to be subject to pressure from their children to get money, get access to trusts etc as they get older. I think that it is important to stand up to your children from day one, and make it very clear that it is your money and not theirs. Yes it is held in trust for them, but if they have relationship break ups, the money will be held for them in trust.

You need to explain very clearly that a trust is a vehicle to hold assets for families, and they can get loans from the trust, but technically they will not be the owner them.

Over the last 6 years, we have seen properties rise rapidly. If you have a family trust, that increase in value has gone into the trust, it has not gone to the children.

There are a lot of elderly people around who are extremely wealthy. If these people have property in their partnership names, they need to manage the process of succession by talking to their Solicitors, and do something about forming trusts. It is not a time to procrastinate, and put it in the "too hard" basket. There are also many farmers who have property near towns and centres which has had a change of zoning. This would have given them a rapid increase in their property value, and this also needs to be sorted out with their Solicitors.

With family trusts, people fear losing control, but in fact with a trust you do not lose control, you actually have better control than you have with your property in your partnership names.

A lot of smart younger people are setting up family trusts from day one, and that is the time to do it. Having to transfer property to trusts subsequent to a purchase or refinancing is ineffective, and very expensive. If your Lawyer will not do it at the first instance, then maybe you need to be asking your Lawyer some questions.

I often go and meet people who have substantial assets, no will, and the property in their own names. It is a recipe for disaster, and family fights. If death duties come back in, it is no use leaving all your property to your partner, as she/he will just have a bigger asset and more death duties to pay.

We are actually in a throwaway society. The younger generation lack long term commitment, look for instant gratification, and live life for now. Parents have to protect their own assets in the changing world.

Relationships are another important issue. When does a relationship start, and when does it finish? A relationship could start with say a member of your family living with someone at university for 2 years, and then when does the relationship break up? Trusts must be set prior to entering into relationships, for both your children and yourselves.

If you do form family trusts, the documentation has to be right. The paper work needs to be done annually. You must keep minutes, and they must be signed by the trustees.

In summary, don't let your kids push you around if you have a lot of assets. You need to stand up for your rights, as it is your money and not theirs. If you put trusts in place, sit down with them and explain the issues and the ramifications, together with what will happen upon your death. Not discussing it will result in a lot of arguments and unhappiness.

If you have not done anything about your succession planning, and you don't know what to do, round up your Accountant and Solicitor in one room and get them to sort out your affairs.


 

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