You may have heard on the news that The “Bank of Mum and Dad” is now a top 10 mortgage lender. Legal & General have carried out research which shows that lending from parents to help their children get on the UK property ladder will reach £5bn in 2016.

Are you thinking of becoming a lender to your children? If you are, what things should you be thinking about? And more importantly are there any pitfalls you should avoid?

Giving away money has consequences for your Estate, as well as for your children. We are often approached by parents who have bought properties in their own names for their children to live in. Many years later they want to sell them, or give them to their children and are faced with a big capital gains or inheritance tax bill. There are also risks in losing control of money that may then pass outside the family as a result of divorce or other unforeseen events. As of 1 April 2016, there are also the new stamp duty rates to take into account.

Fortunately, there are lots of options for you to consider. There are a variety of ways of setting your children up, you should find the route that works for you and is tax efficient. Joint ownership or a trust could provide the safeguards you need. The important thing is to take advice first so that you can structure the gift in the way that best suits you and your family.

If you would like to speak to someone about your plans, call or email Judith Derbyshire, a solicitor and specialist in this field on 01458 850146 or jd@purelyprobate.co.uk