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The Bank of Mum and Dad – parents lending their children money – continues to be one of the UK’s biggest defacto money lenders, but it looks as though that is starting to change.

In a recent survey carried out by NFU Mutual, nearly half – 48% – of parents said that they did not trust their son or daughter-in-law, and it would prevent them lending their offspring money, including help to buy a home.

20% said they do not trust their child’s partner, saying they were “money-grabbing, secretive and lacking intelligence”, 25% said they wouuld like their son-in-law or daughter-in-law to be excluded from benefiting from any gifts or inheritance altogether.

Sean McCann, chartered financial planner at NFU Mutual, said: ‘Like most lenders, the Bank of Mum and Dad is risk-averse. But just because parents don’t trust their child’s choice of partner, it shouldn’t stop them giving money to help their son or daughter get on in life.

“There are plenty of ways to ring-fence a gift, such as for a mortgage deposit, in case a relationship breaks down. However, it’s much easier to do this before sending a bank transfer than afterward.’

More and more people are looking at ways to protect their money when it is going to be used for property purchase, including declarations of trust covering the deposit, a straight loan for the property or setting up a trust in a Will.

If a loan is made rather than gifting money to a child and their spouse, it is important to set out the circumstances the loan would be repaid and to make sure that this is formally documented, including what should happen if the child and spouse split.

Another option is to structure a will with an embedded trust, known as a will trust. There are a number of options for this but one of the most common is to give the child a ‘life interest’ in property or investments. This gives them the right to live in the property or enjoy the income from the investments for their life, but not ownership of the asset.

If your Will creates a trust then, giving trusteeship to the child, they will go on to manage the trust property.

McCann said: ‘The fear of family money ending up in the hands of someone else – be it the taxman or a child’s untrustworthy partner – is very powerful but quite often some simple financial planning can ensure a gift of money will stay in the family. Whether it’s in your lifetime or afterwards, there are many ways you can make sure gifts will only go to the people you care about.’