How to manage the bank of Mum and Dad

2 April, 2018
by: Cripps Pemberton Greenish

The bank of mum and dad is booming with many parents wanting to help their children get a foothold on the property ladder, pay grandchildren’s school fees or simply help out during difficult times. But with people living longer it is important for parents to balance this with their own needs. Phil Youdan of law firm Cripps Pemberton Greenish explains how best to do this.

Recent figures show that parents lent more than £6.5 billion last year to help their children get on the property ladder – a similar figure to the UK’s ninth largest mortgage lender. With rising house values many parents are only too willing to help out but they should think carefully about what kind of support can be given, to whom and at what stage.

With people enjoying active lives in their 70s, 80s and even 90s, sufficient resources need to be retained for their own needs. But if there are enough funds to help, should all the children be treated equally or should support be based on individual needs or the nature of the relationship?

One of the sad facts of people living longer is the increasing number suffering from debilitating physical and mental illnesses. This can create circumstances where lifetime gifts or wills can subsequently be challenged on the grounds of lack of capacity or, at the opposite end, where vulnerable people make a decision or sign documents that do not reflect their wishes.

So, what steps can be taken to protect against these risks and how can a friend or relative challenge actions that do not seem right?

If a parent wishes to help a family member out legal steps should be taken to protect their position. For example, if they are helping to fund the purchase of a property, is this intended as a gift or will they receive an interest in the asset – and if so under what terms? If the gift is being made to one child but not others, is the plan to equalise this during lifetime or on death? And most importantly, does and their will achieve this in the way they intended?

If the plan is to share ownership or occupation of the home, on what basis is this being done and are their rights affected? A failure to consider the consequences can impact not just on the legal position but on family relationships.

Damage can be inflicted when a loved one feels unfairly treated and cannot understand why – so the reasons for making the decision should be recorded to avoid distress and bad feelings.

Using a specialist solicitor will provide much greater confidence that decisions taken will be safe from challenge. For example, someone seeking to assert a lack of understanding or the existence of unwanted influence will find such arguments very difficult to pursue where an experienced solicitor has documented to the contrary – where necessary with the involvement of a medical practitioner.

However, what if someone believes that a friend or relative made decisions during their lifetime or in the terms of their will when they were unable to properly understand those gifts or which do not accord with your understanding of their wishes?

Where these concerns relate to lifetime gifts or other transactions, steps can be taken to protect the relative by, for example, appointing a deputy to manage their finances or to reverse transfers already made.

If the information only comes to light after they have died, a relative or friend can request a copy of the file from the solicitor who prepared the Will and or speak with the witnesses to the Will to understand the circumstances under which it was prepared. If this reveals grounds to seek to set aside the Will, advice can be provided on how to do this and the costs involved.

For more information please contact Philip Youdan on

This article first appeared in Inside Kent.