Joel & Camilla have recently transitioned to retirement and are finally enjoying the freedom that their previous plans have provided to them. During one of their regular meetings with their financial adviser, Camilla mention’s that their son Levi is struggling financially, and they are really starting to worry about it.
Their adviser asks how their two other children are doing, and while Joel says they are much more stable and sensible when it comes to money, they want to try and do the right thing by the family as a whole.
They ask:
- Is there anything that we are able to do to help Levi in some capacity?
- Are we in a position to help without it having too much of a negative impact on our own situation?
- If we provide assistance to Levi, how could this be fairly reflected towards our other children?
- Are there any Centrelink repercussions that may impact us?
- We’re a little worried about Levi’s marriage, what happens if we gift the money and there’s a divorce? Can we protect the gift for our bloodline?
Live gifting can be rewarding, helping children in the right circumstances can be a benefit to all concerned. However, there are pitfalls and talking through gifting with an adviser today can help avoid problems tomorrow. Families are complex and decisions are often loaded with emotion, being able to talk things through with a professional outside of the family can be highly beneficial.
The value provided by good advice in these circumstances is significant, here are some examples relative to Joel and Camilla’s situation:
- Is the gifting affordable?
- guidelines around how much they can gift without risking their own financial stability.
- considering future funding of aged care if it is needed.
- a sense of the trade-offs they might need to consider (we understand gifting money to Levi will mean we can’t do that big trip to Europe this year)
- Having comfort in the knowing that through good Estate Planning they can equalise the money given to one child without detriment to the others.
- Is gifting the right answer?
- How did Levi get into this position?
- Will Levi be back to square one in five years’ time?
- What if he doesn’t use the money to clear his crippling credit card debt or he simply runs up the credit cards again?
- How can we control the use of the gift if we think that’s necessary?
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