For the past thirty years, Partner at Godfreys Law, Phil Sewell has been helping Christchurch families and couples into first homes, investment homes, and retirement homes.
Later in life, having accumulated some assets, more people are wanting to make sure their family and loved ones are looked after. You might be considering giving some money to your children or family to help them get into the housing market. You may want to reward or acknowledge a family member by giving them a significant asset, or maybe just a lump sum of money.
Personal Risks Around Gifting Assets
Only people who are well-enough placed should be doing that. You may live to be 90 years old and you may need that money later. Another risk we see is that the money given to the children is poorly spent, or in the event of a relationship ending the ex-partner can walk away with half of the money you gave. So there are some real risks involved when gifting assets. Also, later in life if you’re considering moving into a Christchurch rest-home or retirement village, giving away money earlier in life can create big problems.
With family, it’s generally best to loan that money instead of gifting it. That way if the relationship fails, you can recall the loan so the ex-partner doesn’t walk away with half. If the bank won’t allow that because they don’t want other loans in the system, an elegant solution is a simple contracting out agreement. The younger couple agrees that in the event they split up, the money you gave them towards that house deposit belongs to your child, and that way the ex-partner doesn’t walk away with half. It’s a fairly easy solution and will protect both parties.
Protecting Assets In Future
The simple contracting out agreement does require specialist legal advice. Both parties also need independent legal advice for the contracting out agreement to be binding. Even if you want to consider the ‘loaning idea,’ the documenting of the loan is something a lawyer needs to help with. It’s all about getting the details, getting the details right and written up in such a way that they’ll stand up if they are challenged in future.
Our team at Godfreys Law has dealt with issues like contracting out agreements, property conveyancing, and documenting loans for many families over many years. We have many solutions because all families are different and this is definitely not a case of one size fits all. We’ll go through all the options and find what’s best for you.
If you’re looking to gift money or assets and want to make sure you children are taken care of long into the future, come in and chat with the team at Godfreys Law. Simply call 03 366 7469. We’re here to help.
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