Do people still leave their money to their children?

missile

ukdw wrote: »

Out of interest for a £7,500 mortgage over 25 years - if say the average mortgage rate is about 7% - based on this graph http://www.bankrate.com/finance/mortgage-rates-history-0112.aspx and assuming an average debt of £3,750 - then appx total interest = 3750*.07*25 = £6,562. I suppose it would probably be slightly greater than this as the interest rates were higher when the outstanding sum was larger.
Using the google mortgage rate calculator it says monthly payments of £53, and a total payment of £15,903. - So a net growth in value of about £184k.

Or looking at it another way - using the HL regular savings calculator - if you saved £53 a month for 25 years, with 7% growth then your total saving would be £41,735

Where did that "average" person find £3,750 deposit? I had to borrow my deposit from a (very) friendly bank manager and pay 14.5% interest on my mortgage.

bigadaj

missile wrote: »

Where did that "average" person find £3,750 deposit? I had to borrow my deposit from a (very) friendly bank manager and pay 14.5% interest on my mortgage.

I think they assumed that the debt was on average half the sum, as it amortises over the length of the mortgage, don't believe the deposit is included.

Your bank manager was a bit naughty.

ukdw

missile wrote: »

Where did that "average" person find £3,750 deposit? I had to borrow my deposit from a (very) friendly bank manager and pay 14.5% interest on my mortgage.

The average debt calculation assumes no deposit (i.e. 100% mortgage).
With the debt starting at £7,500, coming down to £3,750 in year 13.
I agree that the numbers are slightly low due to higher interest rates at the start .

zagfles

Sea_Shell wrote: »

That's quite a tricky thing to achieve though...how to write a watertight will to ensure that happens.

Yes, you can leave a property to specific people, but then you run the risk that the property has been sold, or they've had to move, between the date of the will, and death, by which time they might not be in a position to re-write it. Then you could end up with ALL the estate becoming residual estate, relying on a DoV, or goodwill, to redistribute/gift the estate.

Alternatively, for some people, their HOUSING wealth, is the only real assets they have, without any other residual estate to distribute to their children. Any maybe without the house, they'd actually be an insolvent estate!!

Yes it can be a difficult thing to achieve and it won't suit everyone. With the house as main/only asset it can be easier - for instance one suggestion I've made to my parents is they leave say first £200k shared equally between their children and the rest divided euqally between their grandchildren.

That gives a base going to children, approx the value of their house at the point their children were buying houses, and leaves the house price inflation going to the grandkids, who are the ones who will be paying that inflation when they buy a house.

So say the house price had tripled to £600k when they died. The 4 grandkids would get £100k each. The grandkids' first home might now cost £150k rather than £50k had there been no HPI. So they get put in the exact same situation as if there'd been no HPI! They pay £50k for their house, plus the £100k inherited. Had prices not tripled, they'd pay £50k for their house and get no inheritance.

Thrugelmir

zagfles wrote: »

So say the house price had tripled to £600k when they died. The 4 grandkids would get £100k each.

IHT is going to be a major factor.

McKneff

POPPYOSCAR wrote: »

We will not be waiting that long.

Our needs are few so some of our money/assets will be passed over now so we can get the pleasure of seeing them benefit while we are still here.

Exactly what we do

zagfles

Thrugelmir wrote: »

IHT is going to be a major factor.

No it isn't. A married couple have £650k IHT free. If the spouse gets everything on the first death and £600k is passed on the second there's no IHT.

phil1edinburgh

Most parents and their kids do get on where ever they live. Parents and grandparents do more babysitting and provide cheaper and better loans than the banks and building societies. People of my generation post war - worked hard and saved hard and want to leave something to their families so they benefit as will their grand children.

Of course if you have no family and no friends why not give your money to a charity rather than leave it to the State / Tax Office.

PennyForThem_2

If you have no children and no person you wantto leave your house to then I would opt for a charity which will maintain the property as long as it isleft to them in the will. Ideal solution. I know that such charities are out there as I have seen adverts.

However .... why wouldn't I wanttoleave whatever residual wealth I have to my children (equally)? I have already gifted a sum for a deposit. Yes, I could hang on to it. I could spend on art (I like art and buy original paintings) or holidays (yeah on my own and I am not a natural explorer - travel for me has to have a purpose) so why not benefit my children?