Article of Interest on Wills & Estates

HELPING OUT THE KIDS

A modern financial issue is created by the generosity of parents who assist their children during their lifetime, but fail to document “ the arrangement.” Often, generous parents purchase properties for their adult children.

In these situations the child often refers to the house, which is in their parents’ name, as “my house”. The parents may have a different interpretation of the arrangement, or their beneficiaries may. In the event that the parents die, there is only one side of the story.

Charles and Clare had been living in a house they regarded as “their house”. Charles’ father had purchased the house by advancing the deposit and borrowing the balance in his name. Charles and Clare made all the mortgage payments. It had always been the understanding that the house was really theirs. They had been encouraged by the father to improve the property; put an addition on the back of the house; replace the gutters; improve the gardens and paint the exterior.

What everyone failed to do was set out in writing what the agreement was and amend the Will. Charles’ father died unexpectedly. The warfare began.

Charles’ siblings were not really interested in hearing Charles’ interpretation of what the arrangement was. They adopted the position that the house was part of their fathers estate estate. The Will of Charles’ father simply said, “I give the whole of my estate to be divided equally between my children.”( He had meant to fix that up.) Charles and Clare claimed the house but there was little to support their claim.

The moral of this story is to properly document what it is you intend when providing financial assistance to your children. What is clear now may not be clear to your estate after you have passed on.

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