gifting a property

Hi all,

Just wondering if anyone on the forum have gifted an ip to any of their children for say a 21st bday, wedding gift etc to give them a good start in their life?

If so how did you go about it, did you give it to them in front of guests at the event or would you give it to them in private?

Would you give them a property to live in or something they could rent out that would start them off investing for the future?

 

You're a lot more generous than me Mine will be lucky if I pay for the tab at their 21st.

Cheers

Jamie

 

My kids are still young but I am going to give them the 10 or 20% deposit when they are 21 years old (start having their own income) and let them do their own due diligence and buy their own IP. Of course, I will give them guidance throughout the whole process. This way they can learn how to invest and manage the IPs.

 

I actually think it mightn't be a good thing to do.
Make the child work for their assets, don't just give it to them. Don't just hand them something on a silver platter. Go 50:50 spilt or something at least so they have some appreciation of the value of the asset.

I know a friend whose sister won the big one at lotto at 21. A couple of years later and she was broke. But in the right hands it could have been a very good start to adult life. Instead, the money was wasted.

A windfall at that age wont be properly appreciated by the majority. If you give them a you pay 50%, I pay 50%, they will realise how many hours of work is needed for it...

 

I only have a son who is 2 at the moment so he better behave between now and then lol if he wants a good present.

 

That's a good point.

 

This sounds like a good idea. And as gockie said we shouldn't really give it to them on a silver platter as it is really teaching them a lesson.

 

Gifting real property will involve stamp duty and CGT if it was not your main residence. Any loan on the property will need to be discharged.

There are also significant risks if the child
1. Dies
2. Divorces
3. Goes bankrupt
4. Becomes incapacitated

If you want to help them a better way may be to loan them money and take security.

 

Thanks for the advice terry. I won't be doing it anytime soon but I just wanted to know if anyone has done it before.

 

I think helping with the deposit would be good but if you are filthy rich by the time your son is 21 , I don't think I would want to present it to him in front of family and friends. Jealously and talk of the town

 

Yes that's what I was thinking. I'm not one to big note in front of people anyway.

 

Depending on asset rules by then my plan is to let them live in what will be theirs when I die, pay me weekly cash so I get the full pension.
However what I have likely wont be good enough for their spoilt little ass's

 

there is a saying for this type thing and it's been around for hundreds of years.

Research generational wealth and you will find statically 90% of all inherited wealth is completely lost by the third generation.

Even worse 2/3 is lost before the end of even the second generation.

You don't even want to bother looking at the statistics for the people that won their wealth in Lotteries and so forth.

 

"Sandshoes to sandshoes in 2 generations" Would that be the one? Sometimes one generation .
"Back into the Bog ''is an Irish saying

 

Just ask Sir Frank, Kerry & James or Dame Murdoch, Rupert & Lachlan, the Fairfaxes or the Hancocks (oops bad example there).

.

 

I personally would set something up for my children and then see what sort of a person they become and decide if it will benefit or harm their growth as a responsible human being. I would also seek to educate through experience from the time they are old enough (say 5-7) about money and how to earn it, create it, and then what to do with it.

Without the education, knowledge and experience the gift of a property will be wasted.

 

I'd be more inclined to gift equity (to be put to investment use) than a direct asset.

 

At 5-7 they're still too young to grasp the concept. As they hit double figures they develop more of an understanding of money etc. But start early - I was visiting building sites at that age, the knowledge stays with you provided you teach/mentor.

 

I think it depends on which concept you are referring to.

There are a lot of building blocks to good money management, many of them can start when a child is as young as 5. The property stuff wouldn't come till double digit years, however without the building blocks the property stuff would not work anyway.

 

Don't be too sure.

I recall quite distinctly that I was negotiating (unsuccessfully) with my parents on money before age 7.

Case in point:

Once, Mum gave both my sister and I $1 to buy something for ourselves as a treat for accompanying her to the supermarket (Jewel for the record). I was 6.

Sister grabbed a cold can of coke. $0.99. Done.
I ran all over the place and eventually came back with 2 x room temp no name drinks ($0.30 ea) and a curly wurly ($0.35). Change to spare!

Sister cried.
Mum said "No, that's not fair".
I pleaded.
Mum said "No".

Game over. Scarred for life.

Probably why I remember so distinctly.

I was also negotiating with my parents around that time to do work around the yard/house for a few bucks to free up their time. Also got "no".

Maybe I was an exception?

I continued to try that one on for size with no luck all the way up until I was working age.

Took some work to un-learn those lessons.