After more than 40 years of advising families, I’ve seen many parents make the mistake of gifting money to their children. It may feel generous to give them a deposit for their first home or provide a loan to help with a purchase, but this can easily backfire. With today’s high divorce rates, these gifts often end up in the hands of an ex-spouse after a separation.
The good news: there are safer ways to support your children financially while still protecting your assets.
1. Use your assets as loan security
Instead of giving money outright, you can use your assets as security so the bank lends directly to your children. This allows them to buy a home without putting your wealth at risk in the event of a divorce.
2. Create a Family Trust
Funds placed in a Family Trust can be used to offset the interest on your children’s mortgage. At the same time, you maintain control over the money and protect it from being included in a divorce settlement.
3. Set up an Education Trust
Another option is to establish an Education Trust. This ensures money is directed towards your grandchildren’s schooling and cannot be lost through family breakdowns.
These are some strategies that are practical ways to help your children while keeping your assets safe. By planning carefully, you can provide meaningful support without exposing your wealth to unnecessary risk.
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Disclaimer
This article serves as general information only and may not account for the unique circumstances of individual readers. For personalised and strategic solutions tailored to your specific situation, we invite you to seek professional advice from Chan & Naylor. Our highly experienced team is dedicated to helping you navigate the complexities of Australian taxation, ensuring that your financial strategies align with the latest regulations. Contact us today to embark on a path of informed and customised tax planning for your property investments.
