According to a new study, children are twice as likely to be offered financial help by their grandparents as they are by their parents.
The research, carried out by OneFamily, a mutual based in Brighton, shows that 10% of grandparents have given a lump sum to their grandchildren, with the average amount being £15,000. Almost half of the cash gifts have been to help their grandchildren onto the property ladder, according to the study. Paying off debts was the second most popular reason for giving cash to grandchildren, such as student loans.
A quarter of grandparents who made regular cash gifts to their grandchildren did so to help towards the cost of education and training, maybe including professional courses like CeMAP training. According to one financial planner, Patrick Connolly, parents may be facing financial difficulty of their own, while grandparents may have benefited from huge property price increases over the past decades, and have reasonable pensions.
Grandparents may make gifts of cash to their grandchildren, without payment of inheritance tax, provided they abide by specific criteria. Up to £3,000 may be given away during one year, although this may be doubled to £6,000 if nothing has been paid the previous year. A couple may give £12,000 to a grandchild in one year, without having to be concerned about inheritance tax.
Prior to accepting or making a cash gift, it would be advisable to seek financial advice from a qualified professional. Receiving a cash gift from grandparents may make it possible to secure a lower interest rate on a mortgage, saving thousands over the term of the mortgage.
