Dear Vanessa,
Currently, my wife and I are fighting over the best way to help our two children financially. I want to buy an investment property that will secure its future, but one of my children, my son, wants the money now to start a business.
The problem is that we don’t have enough to do both. My wife thinks we should give him the money for the business, but he has spent cash in the past and I’m worried this won’t be any different. I feel that property is a safer option, a way to be sure that money will grow.
To complicate matters further, my daughter really wants the investment property and will be disappointed if I give her share to my son as she alone won’t have enough for a deposit. I want to be fair to both of you, but I’m not sure how to resolve this.
How can we find a solution?
Sincerely,
Ross
Send your questions to leading money educator Vanessa Stoykov at thrivingafter50@dailymail.com.au
Noted money educator Vanessa Stoykov (above) suggests Ross have an open conversation with his son and daughter about his financial limits.
Hello Ross,
Thank you for writing to us; This is a situation that many parents can relate to. It is always difficult when you want to support your children’s ambitions, but you also have to think about long-term security and justice.
First, I understand why ownership seems like the safer option. Investing in a tangible asset that is likely to grow over time provides peace of mind, especially when your child has had problems with money management in the past. A well-chosen property can offer stability and future opportunities for your children.
However, if you do go down the real estate route, make sure you get the most competitive loan possible. Here is a free tool I offer to help you evaluate which rate you would be eligible for.
Also, think about the logistics: would the mortgage be in your name or theirs? Perhaps you could consider putting the property into a trust. This can offer a variety of benefits, including better control over how and when property is distributed to your children, potential tax advantages, and the ability to protect the asset if any financial problems arise in the future. I highly recommend seeking financial advice to help you determine if this is the right decision.
I also hear your concern about being fair to your daughter. If she depends on you for a property deposit, giving your child her share now could leave her feeling let down. You may want to have an open conversation with both of you about your financial limits, so that expectations are managed from the beginning. You could also explore co-investing with your daughter to help her achieve her real estate goal while balancing supporting your son’s business ambition.
On the other hand, it is also essential to manage your child’s expectations when it comes to starting a business. Have a deeper conversation with him to find out exactly what he plans to invest in and how well thought out his strategy is. This could give you more confidence to support your business while protecting your investment.
One last consideration: will this be the entirety of your inheritance? If so, it’s worth thinking about the long-term impact. You can consult my course on how to have productive inheritance conversations with your adult children here. I might be able to give you some helpful tips for navigating this important family discussion.
Ultimately, there is no one-size-fits-all answer, but open communication and commitment to both your wife and children are crucial. You can also explore the possibility of co-investing in your child’s business or balancing real estate investment with a smaller contribution to your company.
At the end of the day, your goal is the same: ensure the future success of your children. It’s simply about finding the right path to get there.
Best of luck,
vanessa
