It’s not baby boomers who are lucky, it’s their children

Do you feel as though you’re constantly forking out to help your adult children?

parents handing over money to an adult child

Do you feel as though you’re constantly forking out to help your adult children? If so, then you’re not alone. According to a survey of 2000 people by Finder.com.au, an estimated 74 per cent of parents are helping their adult children financially.

Paying university fees, allowing them to live rent free and helping them with home deposits are all ways that parents continue to fund their adult children’s lifestyle. While the majority are happy to sit back and receive what's coming their way, 28 per cent of financial assistance recipients are embarrassed about not being able to stand on their own two feet.

Finder.com.au spokesperson Bessie Hassan said there were several reasons why adult children found themselves in need of a helping hand. These include student loans, high property prices and undertaking unpaid internships to enable them to secure work in their chosen field. While she acknowledged that some parents simply want to help their children, handouts aren’t always the best way to do so. “If you insist on giving money to your child, consider making it a loan, with strict conditions on when and how it is to be paid back,” Ms Hassan said.

However, social researcher Mark McCrindle said adult children shouldn't be embarrassed, rather consider the money as receiving their inheritance early. Noting there had been a social change in recent decades where parents no longer save to leave their children an inheritance, he said, “Now it’s reversed and the giving of money takes place when the children are younger and need it,” he said.

“The cost of living has never been greater, generations have never started working later in life, and they are starting in debt.

“It’s never been harder to get established, and parents are realising that it was easier in their day.”

With Mr McCrindle also stating that baby boomers represent 25 per cent of the population but hold 50 per cent of the nation’s wealth, he believes that they were born the lucky generation. “The baby boomers were born at a lucky time and have had 50 years of an economic miracle, free degrees and tripling house prices,” he said.

“It’s not the young ones sponging – it’s intergenerational wealth recycling.”

Read more at Finder.com.au
Read more at Heraldsun.com.au

Opinion: It’s not baby boomers who are lucky

Parents want to give their children a head start. That’s only natural. But should they be expected, whether they can afford it or not, to fund their lifestyles once they’re old enough to stand on their own two feet? I think not.

I tend to agree with Ms Hassan, if an adult child needs a bit of financial assistance, give it as a low-interest loan. Handouts, or clearing your child’s debt may give you the feel-good factor, but in the long run you’re only setting them up for a fall. Learning to stand on your own two feet financially and budget is as important as anything you’re taught at university.

And it’s too simplistic of Mark McCrindle to say that baby boomers had it lucky. The generation that is now our current retirees and pre retirees may have, according to Mr McCrindle, on average $1.2 million in wealth, but that $1.2 million is often tied up in the property that they worked all their lives to pay off. That $1.2 million has been diligently saved using the lessons they learned from their parents – work hard and save hard. If baby boomers wanted to buy a car in their late teens they saved hard and more often than not it was bought third or fourth hand, it certainly wasn’t a brand new luxury model.

When the time came to buy a home, they often worked two or even three jobs to save the deposit and in order to pay the mortgage, nights out were few and far between and overseas holidays were only for the dreamers. Today’s baby boomers may well be wealthy on paper, but with limited years of superannuation savings, that ‘wealth’ has to fund many years in retirement, and more than likely, expensive aged care

The reality for a growing number of baby boomers is that they retire with a debt to repay. According to an ING report last year, of its customers aged between 65 and 80, the average mortgage debt was $158,500. And with a seven per cent increase in debt held by those aged 35 to 55, it’s increasingly likely that their mortgage will not be paid off before they retire.

Whether or not a parent chooses to fund their adult child’s lifestyle by paying their tertiary debts, helping them with a house deposit, or simply giving them cash handouts is entirely up to them. But those lucky adult children should definitely see it as an incredibly generous act by loving parents and not a case of getting what is due to them anyway.

Do you agree? Do you think adult children expect too much from their parents? Should they be made to stand on their own two feet? Or, if parents can afford it, should they give children their ‘inheritance’ when they need it? 

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    COMMENTS

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    Oldman Roo
    3rd Oct 2016
    10:17am
    I could not think of any good reason to encourage the young to save and work hard . You have probably guessed it , I am a part Pensioner and wish I had never made that foolish mistake .Under the Pension reform one needs at least 1,2 Million in actual funds [ not including assets like the bed you sleep in and the chair you sit on ] to have an income equal to the person on full Pension . So you either gamble with your future or play it safe , enjoy life , and plan for the full Pension . Not what I believe in but what common sense dictates .
    Old Geezer
    3rd Oct 2016
    10:40am
    You must have some lazy investments because I make more than the pension on less than $400,000.
    Anonymous
    3rd Oct 2016
    11:18am
    I tend to agree with you insofar that the government has made it a disincentive to be prudent and save during your working life for your "golden" years, as you will only be penalised and end up subsidising the deadbeats because of your forethought and honesty. This foolish and inept government is stealing from the Age Pensioners who have been conscientious enough to forego "wants" during their working lives in order to have financial security in retirement because of their our financial ineptness. These politicians have become corrupt dictators with their truly unfair, one-sided legislation which takes from the retired who have budgeted and saved and gives to those who sucked the monetary life out of society with their idle, slovenly, self-indulgent, selfish, parasitic way of life. Most of the politicians are similar to these deadbeat leeches of society, the only difference is that the politicians live the same life from a government paid-for office. Absolutely pathetic and is "senior abuse" and not TOO dissimilar than crimes against humanity - at least against the conscientious ones who have some self respect.
    Old Geezer
    3rd Oct 2016
    11:48am
    You are making mountains out of molehills as very few people if any that need the pension will be effected by the change in the asset test. These people effected should not have been given the OAP in the first place as they simply did not need it. Sure it was nice to have while it lasted but good things must always come to an end.

    The change in the asset test will not effect people's future savings because they who save will always save and those that don't will not.
    Nan Norma
    3rd Oct 2016
    11:52am
    Old Geezer. Please tell me what these investments are. Mine are making nothing.
    Oldman Roo
    3rd Oct 2016
    11:57am
    Old Geezer , I am used to your Liberal diatribe but I would like you to , for once , convince me and let me into the secret of earning more than the Pension on 400 000 Dollars and still being able to sleep at night . No financial Adviser has been able to offer this to me so here is your chance .
    Anonymous
    3rd Oct 2016
    12:05pm
    Old Geezer, you are blowing steam out your bum with the above comments, just as you always do. You are not living in the real world, old boy.
    Old Geezer
    3rd Oct 2016
    12:09pm
    I worked it out years ago that having money in the bank is not a good investment as you rarely make a profit after tax and inflation. So I now invest in things that make me money instead.
    Oldman Roo
    3rd Oct 2016
    12:24pm
    Old geezer , You are , as usual , avoiding the fraud in your earlier statement . You should be kicked off this forum .
    Old Geezer
    3rd Oct 2016
    12:50pm
    Nothing untrue in what I said in my previous statement. I have already made nearly as much as I would get in the OAP this year already.
    Anonymous
    3rd Oct 2016
    1:04pm
    If you ever see a flying pig - jump onto this site - that will be the day OG gives you SPECIFIC DETAILS about his AMAZING investments - instead of sad, useless rhetoric.
    Old Geezer
    3rd Oct 2016
    1:27pm
    Reasons I'd love to be able to tell everyone what I invest in but the law says I can't as I do not have licence to do so. There is nothing amazing about my investments.

    I can however give examples of my past investments. Investment No 1 bought at $15.75 sold at $21.46. 36% return over 7 months. Investment No 2 bought at $4.08 sold $4.64 13% in 2 weeks. Investment 3 0.37 sold at 0.48 23% in 3 weeks.
    Anonymous
    3rd Oct 2016
    1:31pm
    NOPE - as usual - not true OG.

    The law says you can't give financial advice.

    The law does NOT say you can't tell people what you are SPECIFICALLY doing - AND what you are telling people is of a GENERAL nature ONLY.
    Rodent
    3rd Oct 2016
    1:32pm
    Dear old Geezer

    Love your work? So very few people will be affected by the Asset Test changes, and they should not have been paid any way, so YOU say, because YOU say they didn't need it any way.
    What a sweeping, broad brush unintelligent ,ill informed comment to make.

    Try telling that to SOME of these people

    91,378 people will lose their part Pension completely
    235,756 people will lose SOME part of the existing Age Pension
    particolor
    3rd Oct 2016
    1:39pm
    AH HUH !! I always thought that The Geyser got more than the Pension !! :-) Always telling us to Shut Up and Stop Whinging :-) :-) Maybe someone has their hand on his Tap Handle to turn it off if we don't stop Complaining ?? :-) :-)
    Old Geezer
    3rd Oct 2016
    1:44pm
    326,000 out of over 5 million on welfare is only 6.5% so not many people effected at all. If you are one of these people then you may whinge but you don't need the OAP even though it was nice to have.
    Old Geezer
    3rd Oct 2016
    1:54pm
    Reasons I can't by law tell you where to invest and by telling you where I am invested as the same thing.

    I read lots of financial material and get ideas of where I think things are going. I then look at lots of financial charts in areas that I think might make good investments. I look for patterns in those charts and they tell me where the smart money is going.
    particolor
    3rd Oct 2016
    2:11pm
    He's getting 27and a half % Interest somewhere ??? And only Extortion Establishments get that :-) :-) :-)
    Anonymous
    3rd Oct 2016
    2:41pm
    DRUG RUNNER makes the most sense - that would be the ONLY reason the law would stop OG telling us.
    Old Geezer
    3rd Oct 2016
    3:04pm
    5.5% return on $400k is $22,000
    8% return on $400k is $32,000

    These returns are the approx. same as OAP per year which are not that hard to achieve.

    27.5% return on $400k is $110,000
    Anonymous
    3rd Oct 2016
    3:09pm
    Your ROE is pretty lousy for a drug runner.
    MICK
    3rd Oct 2016
    3:14pm
    Geezer: more than the pension on $400,000? You must be running a brothel.
    Please pass on some of your tips Geezer. I am all ears and happy to tread your path if it has merit. I very much doubt that though as the return is way above anything other than gambling.
    Old Geezer
    3rd Oct 2016
    3:23pm
    Mick I just posted the return for both a single pension and couple pension which are very achievable unless you park your money in the bank so they can make the sort of returns you can yourself.
    Old Geezer
    3rd Oct 2016
    3:27pm
    I would be very disappointed if I only got the ROE needed to get the same as the OAP.
    Old Geezer
    3rd Oct 2016
    3:29pm
    Mick I don't do tips as I invest in things that have a high probability of making money. Tips don't. If you want tips hotcopper.com.au is full of them.
    particolor
    3rd Oct 2016
    3:48pm
    After Micks 3 Pence worth I'm thinking that ROE stands for Right Of Entry :-) :-)
    Anonymous
    3rd Oct 2016
    3:53pm
    Normally ROE would mean Return on Equity.

    For OG it means Ridiculously Over-inflated Ego
    Old Geezer
    3rd Oct 2016
    4:01pm
    Reasons where do I get one of them?
    Anonymous
    3rd Oct 2016
    4:02pm
    STILL more steam, Geez, but it's getting a lot more pong to it. I think you may have missed your morning medication, old boy.
    Old Geezer
    3rd Oct 2016
    4:04pm
    Don't take any of those poisons as they are just mind over matter or sugar pills.
    Rae
    3rd Oct 2016
    4:05pm
    MICK $400 000 invested in REITs made $120 000 last year.

    $400 000 invested in unhedged international shares made nearly $120 000 the year before when the dollar dropped.

    It can be done just by trading shares or CDS, CDO, ETFs commodities or currencies.

    Hell of a game though.

    As close to gambling as the stop loss you set allows i suppose.
    particolor
    3rd Oct 2016
    4:17pm
    How are you Queensland Nickel Shares traveling Geeze ?? :-)
    Old Geezer
    3rd Oct 2016
    4:26pm
    Ha ha unfortunately no Qld nickel. I don't even know the ASX code for them or even if they are listed. Too risky even for me as they have been in trouble since before Clive took them over or acquired them.
    Old Geezer
    3rd Oct 2016
    4:33pm
    Yes Rae many a few dollars out of REITs and utilities. Their divies aren't half bad either.

    Used to day trade CFDs years ago when they for free to trade. A couple of our higher priced stocks didn't have to move much to make a pretty penny. Brokerage killed off that though.
    MICK
    3rd Oct 2016
    4:51pm
    Rae: Out of my comfort zone but you clearly are at the cutting edge. I wish! I did buy one REIT less than a year ago. Whilst it has done very well I certainly did not see the ROR you mention.
    Geezer: If you are unable to share information then I suggest you are bull**itting. Given some of your posts I would have to err on the side of assuming that.

    Investing is pretty tough. I'm pretty conservative....other than with my politics. Risk is understandable but then you have to be able to sleep well at night. Especially in a market where the end game appears to be at the door with governments printing truckloads of money and never getting a handle on their debts.
    Old Geezer
    3rd Oct 2016
    5:38pm
    Mick it never ceases to amaze me why people worry about money. Too little too much etc. Money to me is like any other tool it is necessary to get a good job done. Worrying about money certainly doesn't effect my sleep at night.
    MICK
    3rd Oct 2016
    7:13pm
    Sounds like a side step to me Geezer. Politicians do this all the time.
    Anonymous
    4th Oct 2016
    7:46am
    Not a bad return on some of your shares Old Geeezer and of course can be done but it can go the other way quite easily as I have found out. Seems like you have a good go at it but Have a few jealous people on this forum.
    Old Geezer
    4th Oct 2016
    8:58pm
    Robbo I can count on my fingers the number of ten baggers and better I have made in stocks and name them all but I can't tell you the name of any share I lost money on. This is because I dismiss the losses quickly and move on to the next opportunity. Losses are part of the game the same as profits.
    Onemore
    3rd Oct 2016
    10:35am
    They are going to get it as an inheritance in the end so I help them along now as they actually need it, doing a placement for a degree i.e. working for nothing full time,I cant get my head around that one.
    Old Geezer
    3rd Oct 2016
    3:05pm
    I don't plan on leaving anything behind myself but not sure I have enough years left to achieve that plan.
    Anonymous
    3rd Oct 2016
    4:04pm
    Geez, you have been leaving it FROM your behind.
    MICK
    3rd Oct 2016
    7:55pm
    What a type Geezer. So did you or your wife ever get an inheritance of any sort?
    You may be better named 'Ebeneezer' methinks. The only reason I can think of to cut your children out is bad partners. If that is the case with you then a trust sounds like the way to go.
    Why do you not want to leave the next generation a razoo??????
    Old Geezer
    3rd Oct 2016
    10:42am
    I gave all my kids a house deposit as a wedding gift.
    particolor
    3rd Oct 2016
    3:50pm
    Goodness !! And I only gave mine a Toaster and a Jug !! :-(
    Anonymous
    3rd Oct 2016
    4:07pm
    That was a bit shinsey of you, Geez, with ALL that money you are making you should have BOUGHT them a MANSION. You are truly living on a dream world, old boy.
    Old Geezer
    3rd Oct 2016
    4:55pm
    Oh I wish it was a dream world as it would be a lot more spectacular than what it really is. Maybe they do have a mansion.
    MICK
    3rd Oct 2016
    7:57pm
    You have just moved up 2 rungs on the ladder of my esteem Geezer. Did not expect you had the empathy to give anyone anything.
    So why do you intend leaving your kids nothing more?
    Old Geezer
    3rd Oct 2016
    8:01pm
    Because I intend to spend the lot before I die.
    Anonymous
    3rd Oct 2016
    8:12pm
    Then why OG do you spruik that you have a testamentary trust - an expensive and pointless exercise if you have no assets.
    Old Geezer
    3rd Oct 2016
    8:46pm
    Just making sure I don't leave the kids a tax problem.
    Anonymous
    3rd Oct 2016
    9:16pm
    You won't be leaving any money - you do realise your kids won't have a tax problem - don't you?
    MICK
    5th Oct 2016
    9:33pm
    Yeah..some pretty conflicting claims. I have my doubts too.
    justsay'n
    3rd Oct 2016
    10:43am
    I agree with Debbie McTaggart's comments. All of my children travelled extensively in their early to late 20's, lived the high life living around beaches in the Eastetn suburbs . They are now settled on their 30's with a family and mortgage. Al good, except that at the same age we were over 10 yrs plus in front of them in paying our mortgage down. We both worked,till in our 60,s, Mu husband two jobs in the beginning of starting our family. I also worked part time when they were babes. We got by with 2nd hand furniture for a good number of years We did not travel in our youth, we did not live the city/beach life or go clubbing. A night out in the Baby Boomer era was dinner at a friends house with a bottle of wine. We only dined out when it was a special occasion. We bought oir first brand new car when we were in our 40's.
    We learn't how to save. We did not go on overseas holidays with children. Most holidays we went camping. We bought a caravan. Driving to Queensland was a grand holiday.. Totally different times and more simple life expectations. As the saying goes " You can't have it both ways"
    What makes me angry is that now when Baby Boomers are finally retired, own our homes and have a nest egg, We are accused of being leaners and having a sense of entitlement. And by taking an overdress holiday we are ripping of the next generation of tax payers. I loved raising my children and educating them into getting good jobs. I enjoyed seeing my children have the opportunity to travel the world and enjoy their youth. I am happy they are now settled and buying their own homes, new cars and lovely furniture. We still help in little ways where we can. However their debts are definately not our responsibility. It's our turn to splash out a bit on holidays and going out to dinner. When our time comes we are happy to leave them whatever is left.
    Sundays
    3rd Oct 2016
    11:05am
    My sentiments exactly justsay'n! Very similar experiences. I think our expectations were a lot lower.
    MICK
    3rd Oct 2016
    8:02pm
    Much the same thoughts. Many of our cohort have done something for our children and we should not take attacks lying down as we never lived the lifestyle our children have tried to live since day one.
    My wife and I have reached a stage in life where we can take an overseas trip once a year but then genY would never do what we did to get to this place. We will not be 'spending the kid's inheritance' but we will not be saving to increase assets either.
    Politicians and genYs who think our generation is recalcitrant can shove their ill advised views. Neither have done the hard yards and have no idea about the sacrifices which have led to the present.
    Gammer
    4th Oct 2016
    1:30am
    Very much agree with all you have said. My kids, now in their early forties, both bought their first small home (on their own, as singles) in their very early twenties having started work immediately after graduating from high school. My daughter gained her uni degree, mostly as an external student, whilst raising her children; my son is very well qualified in a specialist field as a result of 'on the job training' and experience thus he has no huge debt for a university education. Neither has indulged in massive amounts of travelling to exotic locations and generally have had good but modest motor vehicles. They have very much emulated the path that most of us 'baby boomers' took.... as a result they have never looked to me or their father to assist them financially and, through upgrading over the years, now live in very nice, rather larger homes; they still generally take fairly modest family holidays, too. As a widow, I can't afford to offer much financial help anyway but I do like to book tickets for a theatre trip or somesuch as a treat for them; to their credit they always insist that I am a member of the party, too!! I am very proud of their hardworking, do it myself, attitude to their lives.
    Drewbie
    3rd Oct 2016
    10:57am
    G'day all;

    Having read this article, including social researcher Mark McCrindle's comments & the accompanying responding opinion piece; as a " late Baby Boomer, born 1961 " I must wholeheartedly agree that Mark is ' substantially & inherently incorrect " in his assessment of current trends regarding this article's issue.

    How can I say that? Read on. Particularly during my schooling years as a young boy, then teenager, then later as a young working Aussie, the crucial importance of earning a wage/salary and saving a substantial portion of aforementioned every week for one's future prosperity, just wasn't taught!! But then again, I never thought to ask to be taught such a valuable life lesson during my formative years.

    My late Dad, consistently encouraged me to build a great work ethic and save at least a third of my income, whenever I did have employment. I managed the former pretty well and failed big time at the latter; admittedly I was also a little too obnoxious to request his assistance, which he would've most happily provided.

    I learned ' the hard way ' and ever since have doggedly taught my 3 children the vital lessons of maintaining a good work ethic both during & after school hrs + even more so, " the value of (not) spending all your income when you get paid ". Subsequently my daughters, respectively 15 & 13 yrs, both have part-time jobs & are diligently squirreling away a significant portion of their earnings and my 8 yr old son has 2 big round money tins that now take much effort to lift and hold. So at least I can be a proud dad in some areas.

    A very wise philosopher once wrote something many centuries ago that still rings true, even in today's modern age & I quote: " Teach your child the right paths while they are young, and when they are fully grown, they will not depart from them ".

    Cheers everybody.
    Sundays
    3rd Oct 2016
    11:10am
    I have explained to my grandchildren the value in saving 10% of their wage when they start working. It may work, but fell on deaf ears with their parents who did not start saving until their thirties.
    Anonymous
    3rd Oct 2016
    12:39pm
    I could not agree more Drewbie regarding bringing up one's offspring in a well-rounded way. You definitely have to start when they are at least no more than 6-7 and keep talking to and working with them on improving their ethics, financial ideas and progress throughout their lives. especially if you intend to transfer assets and have them survive time.

    I think we have a problem in that Australia has not seen a recession for ~25 years - and our own parents who knew about the depression and what goes with it - are not around to remind us.

    Boomers have experienced an unusually long period of economic expansion and got used to (and expect) a higher lifestyle and entitlements than their own parents.

    No expansion lasts for ever - not even Australia's supposed economic exceptionalism. It will be interesting to see how this all eventually plays out for the Boomers and their kids.
    Old Geezer
    3rd Oct 2016
    1:36pm
    When my kids started work I acted as their bank. They would give me over 50% (negotiated an amount) and I then put it into an account for them. If they wanted money instead of just getting it they had to convince me that the expenditure was necessary. Within a few months they saw the benefit of saving and how major problems became mere inconveniences. Those kids today are wealthier than I will ever be.
    particolor
    3rd Oct 2016
    4:28pm
    If I had asked my Kids for half their wages they would have Buried me long Ago :-) :-) :-)
    Anonymous
    3rd Oct 2016
    5:50pm
    Yes - it is interesting, is in not Particolor - I have mates that give their kids money all the time - not sure about their kids ability or willingness to reciprocate should the need arise.

    The catch-cry always seems to be their kids will get it anyway. I just find that to be trite - wealth transfer is dribbled across and disappeared - as opposed to in a useful and sustainable way.

    Each to their own I guess.
    ex PS
    3rd Oct 2016
    5:56pm
    Both my brother and myself left school at 15 and started work in low paid positions. My parents took our pay packets, as board and paid our travel and clothing cost as well as giving us an allowance.
    After twelve months we were given cash in an envelope for our birthdays that was equivalent to the money we had given up as "board". It taught us two things, one was how to live to our budget, the other was the power of saving regularly, neither of us ever looked back.
    These days not only do the children refuse to leave home, they won't help out around the house and don't expect to have to pay board, it is no wonder they are so entitled.
    particolor
    3rd Oct 2016
    6:04pm
    You've got 2 Future Politicians there :-) :-) :-)
    MICK
    3rd Oct 2016
    8:11pm
    Our children picked up our work ethic and one, unfortunately, is a working machine. Never wanted to see that but both made poor partner choices so are compelled to work hard. Whilst both my children were great savers their partners were and are not, so now they are tied to high pressure jobs to feed partners who have no respect for money they did not earn.
    Congratulations go to those of you who were more successful. I failed by not teaching my kids enough about people which is probably the most important lesson they should have learnt. Next life!
    Anonymous
    3rd Oct 2016
    8:25pm
    MICK - I don't believe it is ever too late. We constantly keep working with our own kids with ideas that they can subtely use with their partners. Often it is just a matter of reinforcing money management ideas our own kids have gotten a bit slack with.
    Gammer
    4th Oct 2016
    1:41am
    Well done, Drewbie, I do so agree with how you have mentored your children as I did much the same with my own. Being honest and open with our children, allowing them to learn from our experiences, certainly helps to give them a realistic view of what life actually entails and encourages the strong work ethic needed to achieve, thus they can be proud of their own progress and independence and enjoy enhanced self-worth.

    3rd Oct 2016
    11:25am
    If you train your kids to fend for themselves and teach them to manage money from very early in life - they won't have ANY expectations about asking for money later in life. They will be too well trained (or too embarrassed/not game enough to ask).

    Economic out-patient care to your adult children teaches them absolutely nothing - except to spend at a higher level than they normally could. It teaches them little about money - except how to spend it.

    Loaning money to kids at a lower, but reasonable interest rate is a win-win. But the loan definitely should be executed as a legal document so it has some chance of recovery if there are spouses involved and potential family law cases later.

    We would help our kids if it looked like they were in dire straights - but they have been trained to stand on their own two feet in terns of financial decisions and making their way in the world financially.

    It would be a cold day in hell for them to need to come and ask.
    ex PS
    3rd Oct 2016
    5:39pm
    I agree,help your kids by all means , but don't just give them stuff with no strings attached. A gift is a gift so you can't expect to have a say in how that gift is used.
    We have helped our son out on a couple of occasions, he has never asked, he has too much pride in himself for that, we loaned him money and he insisted on paying us back with interest at at the deeming rate.
    The last time we offered to help him out he came back with a proposal for the exact amount he needed, a schedule of payments and a proposed interest rate.
    He retains his self respect and we can boast with pride at the independent person who we helped to develop.
    MICK
    3rd Oct 2016
    8:13pm
    But the partners may ask for a rental property they do not own. It defies belief that genYs can be so brazen in their irrational self indulgence.
    Anonymous
    3rd Oct 2016
    8:32pm
    MICK - you definitely need a testamentary trust to isolate your assets from their partners.
    ex PS
    4th Oct 2016
    11:48am
    It is hard and it may be that my son went through the same thing that your offspring did MICK. But I believe that if you trust your son/daughter you have to have faith in the choices they make in their personal life.
    I went through a divorce and ended up paying much more than I thought fair, but that was from government interference not from any action taken by my ex-spouse. Luckily I got it right the second time round and rebuilt my life with her help to an extent where I calculate I am at least twice as well off as I would have been.
    I would leave it up to people like Reasons to advise on how to protect assets as in my mind if you start a relationship by worrying about protecting your own property maybe you made the wrong choice of partners.
    Having said that, I guess my son would probably have benefited from advice from someone like Reasons before starting a business and investing most of his money and time based on a personal relationship.
    Believer
    3rd Oct 2016
    11:26am
    When your adult kids with kids start thinking your behind the times with your old car and is running perfectly, then that is the time to stop helping them out.
    Anonymous
    3rd Oct 2016
    11:50am
    Amen to that!
    particolor
    3rd Oct 2016
    4:49pm
    My Old Bomb is 31 :-) Nothing wrong with it :-) the Kids have probably hat 6 each in that time :-) :-)
    MICK
    3rd Oct 2016
    8:15pm
    Careful there! I built (as in I BUILT) a house near the beach. The kids then said we were millionaires and the expectations started coming.
    Be careful what you wish for Believer.
    sanity
    3rd Oct 2016
    11:36am
    I bought shares in CBA, for my children - then aged 14,17,20 - when launched, dividend reinvested at my tax cost. Starting with 400, they reached around 900 in total before my oldest married and used 400 shares as a deposit on their home. 2nd did similar about 4 years later. 3rd did same but had a busted relationship and now holds NIL because he squandered on being sorry for himself (wouldn't take advice of any kind).
    Now - oldest has over 1000, 2nd around 600 and 3rd still NIL.
    However, none of them seek my advice or will openly accept it. Even though I have managed business with very substantial T/O - I'm seen as yesterday.
    With all that is discussed/printed about being financially secure, younger people just don't have the temerity to take it on board and act. Too busy having a good time.
    My attitude is - I've done my best for them. They have a home I "saved the deposit for them". I have a substantial range of assets, am self funded in retirement - but they will just have to wait for me to pass through. No more handouts!

    Being married twice - my now wife's children are a piece of work. One works at a menial job - her choice but she will not extend herself to improve. The other has 3 children, one is autistic (mildly), drawing a disabled pension of whatever kind. We have purchased her a car and paid bills - all with no real response. Has no intention of lifting her game. Says she is quite happy with "the money I'm on"! But still wants handouts.

    Enough is enough. Go travel your own path to whatever you aspire to. These Grandchildren will probably never know life in a home where somebody actually works for their survival.

    Sad - yes. But they're still our kids. Try as we may - they now have to learn how to cope and survive. Yet we still love them. Love them - but you don't have to like them!
    Nan Norma
    3rd Oct 2016
    12:09pm
    sanity, Love that bit "Love them but don't have to like them" As parents I'm sure we all feel like that at some time but are not supposed to say it. Its strange that you can teach all your children the same and all will do well - except one. Is it a matter of maturity or what?
    sanity
    3rd Oct 2016
    12:20pm
    Norma, Yes, he refused to finish school, left year 10. Has a good job now (without being sensational). He is always "talking" about doing extra study. Unfortunately, he is a "wisher" that things will be better. Seems to always find the wrong woman. All I do now is listen to his words and attempt to place a reasonable path around them. The classic line of "can't see the forest for the trees" fits him quite well.
    MICK
    3rd Oct 2016
    8:18pm
    Life's a bugger sanity! I thought mine were trouble but yours make me feel better about my own.
    I can relate to much of what you did and now will not do. Sounds like me. They do need to stand on their own two feet but still think that the mum and dad bank is open when the going gets tough.
    Bull
    3rd Oct 2016
    11:53am
    I have 4 children over 50 and all done well on their own and wealthier than me. I know of a person who keeps giving to his girls what they want and so far drop out, within a few months, of things they enroll for.

    3rd Oct 2016
    12:34pm
    Baby boomers are more fortunate than their children and grandchildren. There were more opportunities and choices available to them in a less corrupt society. They had more freedom with less competition compared to now. Those that took advantage of those times are extremely wealthy and should not be complaining.
    Old Geezer
    3rd Oct 2016
    12:52pm
    I actually think things are much easier to succeed today than they have even been.
    MICK
    3rd Oct 2016
    8:23pm
    No true jackie. Interest rates are at levels we never saw. Houses are expensive but that is a funcyion of low rates. The current crop do not need to save a 50% deposit.....and would be totally incapable of doing that anyway. And finally goods are cheaper because of technology and Chinese labour rates.
    The only place I would agree with on is jobs. Coalition governments are intent on turning the nation into part time workers as Australians will not accept decreasing wages and conditions. So job insecurity and availability is definitely much worse than when we were at genY's stage of life.
    Rodent
    3rd Oct 2016
    12:55pm
    REPOSTED ONLY as Information for any body that may be interested.

    Re Posted as Information ONLY

    For those of you that have some difficulty getting an overview of the Asset Test Changes as at Jan 2017, compared to now( note comments in article) this link may help

    http://www.catholicsuper.com.au/assets-test/
    Old Geezer
    3rd Oct 2016
    1:04pm
    Just shows that the government is doing the right thing with these new asset limits. The money is going where it is needed not where it is just nice to have.
    Rosret
    3rd Oct 2016
    1:38pm
    Only the poor and mean rich parents say you need to make your own way in this world. Wealth grows upon wealth and if you are going to restart every generation then the cave down the road is waiting for your children. Although its probably heritage listed by now.
    ...and seriously - I would love to help out any one of my children should they fall on hard times. The housing prices in Sydney are 12.1 times the average income. Even the lottery isn't offering wins that big.
    MICK
    3rd Oct 2016
    8:29pm
    A bit unfair Rosret and not exactly accurate.
    Children 'start' every generation only to learn to save, make investments and manage money. In the end most parents leave their lifetime's work to their children.......so they really never start again. Of course the very well to do buy or partly buy houses for their children......which their partners get half of if divorce occurs.
    The multiple you have mentioned is very high but then that is because interest rates are very low. Watch what happens to ALL assets when a correction comes. Not pretty.
    And just to add icing to this cake remember that the current crop pay zero deposit whilst boomers paid pretty close to 50%.
    Methinks you need to give this a bit more thought Rosret. Cheers.
    Anonymous
    3rd Oct 2016
    9:01pm
    Rosret - some of us are neither poor nor mean - but intend to make our kids highly independent and wealthy in their own right as early as possible. There are a number of people posting to this topic that would fit that profile.

    Some, not all, intend to pass their own wealth across generations and work with their kids and partners to ensure this has the highest chance of success.

    The best chance of that successful wealth transfer happening is for their kids to be really competent money managers. Handing out money puts that success at unacceptable risk levels - and at complete odds with the required outcome of success in their own right in their own lifetimes.

    Joint business partnerships with your kids is of course different and highly beneficial for learning.
    Charlie
    3rd Oct 2016
    1:41pm
    Both my parents worked 2 jobs. I got some cash handouts through life, the biggest being help with buying mt first car.

    That was about it. If they had money when they died I didn't see any of it. It was all very straight forward. In those days kids wanted to be away from home as soon as they could.

    If you lived at home parents expected to have control in every part of your life.
    particolor
    3rd Oct 2016
    1:46pm
    I come from a Wealth Family. And I got very little assistance Money Wise from them, only advise :-) I made it this far :-) And now my advice comes from the Government ! "Shut Up ! that's all your getting" :-) :-) :-)
    TMac
    3rd Oct 2016
    2:12pm
    My father would always say that he only owed his children 4 things and then it was up to each of us to make our own way in life;

    A roof over our head,
    Three square meals a day,
    A good education and;
    All the love in the world.

    Always be there for your kids and guide them but I don't think you are doing them any favours by propping them up as they need to learn from life's experiences and challenges.
    particolor
    3rd Oct 2016
    2:35pm
    Yep ! Got through with advice alone :-) Times were Tough and Times were Tolerable !!But we made it :-) But if I was sent back again I would like to Miss Frazer's 70s :-) :-) :-) He nearly sent me to the Poor House :-(
    PS...:-)
    Rae
    3rd Oct 2016
    4:22pm
    Not wrong particolor.

    Or the recession we had to have and those 24% interest rates.

    Actually the last 40 years has been a real bitch off and on hasn't it.

    I hope the young ones today don't go through that inflation, bank failures, mortgage busts, recessions, high interest rates etc
    particolor
    3rd Oct 2016
    4:33pm
    But remember What is down now will Rise !! And look out :-( At the prices of Housing now I think we will need more Park Benches for the Displaced :-( :-(
    Rae
    3rd Oct 2016
    4:39pm
    Things that go up that far tend to come down very hard, fast and much farther. Some people will get caught out and learn the hard way. I did.
    MICK
    3rd Oct 2016
    8:32pm
    parti: you mean you don't live in a caravan after all? Sounds like you had a hard upbringing.

    Rae: ain't that the truth. The question is WHEN does one sell one's assets? Especially the overpriced house? Damned if you do and damned if you don't.
    Anonymous
    4th Oct 2016
    7:50am
    The trouble with that Mick is if you sell one house you either have to buy another one (probably also overpriced) or go somewhere else.
    MICK
    5th Oct 2016
    9:41pm
    It's no different in the share market robbo. At some time you have to take some profit off of the table and buy into a growth asset so that the cycle begins all over again. Houses are no different other than the house you live in (my problem). If you sell that then you rent for a while or move somewhere else. In Australia's case overseas would appear to be a sensible move. But who wants to leave one of the greatest locations on the planet to call home.
    Renny
    3rd Oct 2016
    2:06pm
    Again. Don't let facts get in the way of your ideology Oldman. My husband gets part pension and I'm self funded on a small super pension. I'm not yet 66 but I would get a small part pension based on current arrangements. Even without that we are better off than people I know on just the aged pension. These people, mostly women, struggle whether or not they are home owners. I suggest you learn how to research and to read accurately. You won't get truth from LNP propaganda.
    Rae
    4th Oct 2016
    7:50am
    Very true Renny. Women just slightly older than us had a very bad deal indeed being forced to resign from well paid jobs once married and with children.

    The young do not understand this.

    History is barely taught and not related to current events well at all.

    If anything a knowledge of history, human nature and how it repeats would be a fine thing to teach the young.
    Renny
    3rd Oct 2016
    2:11pm
    As for your kids. By all means go guarantor on a loan if you're sure you can trust them. But really, handing them everything on a platter is making them lazy and quite useless. I came from a poor background and didn't buy my first home until my mid thirties. We've done fine and we appreciate it. Too many young people expect too much too easy. This myth that you should own a home before you're thirty is new and a load of cobblers. And parents keeping them on the teat? Seriously let them go and let them learn.
    Renny
    3rd Oct 2016
    2:11pm
    As for your kids. By all means go guarantor on a loan if you're sure you can trust them. But really, handing them everything on a platter is making them lazy and quite useless. I came from a poor background and didn't buy my first home until my mid thirties. We've done fine and we appreciate it. Too many young people expect too much too easy. This myth that you should own a home before you're thirty is new and a load of cobblers. And parents keeping them on the teat? Seriously let them go and let them learn.
    Old Geezer
    3rd Oct 2016
    3:08pm
    No way I would go guarantor for anyone even my kids.
    MICK
    3rd Oct 2016
    8:35pm
    I concur Geezer. Did that once....and then the partners got into the act. Never again. Ended up that the num and dad's bank loss for years was actually a disservice. That was the end of that kindness.
    Circum
    4th Oct 2016
    4:07pm
    Going guarantor is a big risk and could change the colour of your hair from dark to grey.Separation between married/defacto couples can throw a spanner in the works and leave you with a nice bill.
    Denny
    3rd Oct 2016
    2:20pm
    We started out our married life with a tiny 3 bedroom house, secondhand furniture, bare concrete floors etc whereas many young ones today want everything now. Centrelink don't allow you to gift over a certain amount anyway. It is hard for the students with these university fees and no guarantee of work at the end of all that study. Our daughter is working in a well paid job and so is her husband so they are OK (better off than us income wise) and we helped her financially after she left school. They are investing in rental property because of the fear of no pension when they retire.
    particolor
    3rd Oct 2016
    2:24pm
    And NO Pensioner will be an Occupant of the Rental property's now either ! :-(
    particolor
    3rd Oct 2016
    2:25pm
    OH ! I forgot, OG might be interested :-) :-) :-)
    Old Geezer
    3rd Oct 2016
    3:09pm
    Nope not interested in real estate too many leeches before the investor gets the scraps.
    particolor
    3rd Oct 2016
    4:44pm
    But the Tax will go when Mr Howweird introduces the GST !! :-) :- )
    Circum
    4th Oct 2016
    4:18pm
    Our first lounge suite cost $7 secondhand but it was sooooo comfy.Lasted over 5 years.Plus it was GST free
    PlanB
    3rd Oct 2016
    2:32pm
    I taught my Son how to save -- always to save part of his wage -- even part of any money he was given as a child -- he did very well -- always paid cash for every thing he bought except his 3 homes -- (not owning 3 at once) but even then he paid it all of very quickly -- and he is not on a huge wage either I always made him pay board and part of the Phone bill -- when he was at home and was working -- he never ever asked me for any help -- and in fact has offered me money for my Husband Funeral --- which I refused but thanked him for the wonderful generous thought. he has always been responsible and I am sure its because he learned the hard way --- these days IF I can afford to I always give him a very decent birthday present. I might add he was always given proper food / clothes had his education seen to / and was always taken on great holidays and had other things that a child should have like -- push bike and such
    Pamiea
    3rd Oct 2016
    3:11pm
    The young of today expect to have everything that we have worked all our lives for. Is there any wonder that a marriage of today on average lasts for 8 years. Learn to strive for things. I always laybyed stuff and I don't use credit cards. I go without until I can pay cash. Credit cards and instant gratification are a recipe for disaster. As a pensioner the Govt wont allow you to give away too much without accounting to Centrelink and possibly being penalised.
    fish head
    3rd Oct 2016
    6:17pm
    Agree totally.Everyone must learn to live within their means. Forking out to children is not aiding this lesson at all.One of the most important lessons in life is if you can't pay for it you can't buy it. This lesson is why so many people are helplessly mired in debt. Cards have made acquisition all too easy. It's hard to see your child struggle BUT the sooner they learn to "cut their coat to suit their pocket" the more successful they will become.As for "expectations of an inheritance" why? Did they do anything to earn it? Most of the baby boomer generation have worked hard and saved for whatever extras they have and how they choose to disperse it.
    Anonymous
    3rd Oct 2016
    8:19pm
    fish head - alternatively you can look at the amount of time and effort it takes to accumulate wealth and train your offspring to be prepared to competently manage the wealth transfer so it hopefully grows and makes future generations even wealthier.
    MICK
    3rd Oct 2016
    3:11pm
    Thanks Debbie. At last a recognition that boomers are not parasitic leeches.

    My wife and I allowed our son to live in the house we moved out of because he loved the location so much. Eventually we guarantored a loan for a half of the place and then gave him an interest free (mum and dad) loan for the second half a few years later. The result was that we were considerably out of pocket over time.....but it was our son.
    Our kindness ended badly when our son got himself a partner, a genY nightmare who considered that we should gift the house to our son. That was just the beginning.
    Our attempt to get our son to stand on his own feet whilst helping him in this and many other ways now sees us alienated. GenY in action.
    Old Geezer
    3rd Oct 2016
    3:19pm
    One of my kids got into a similar situation where she gave him an ultra matron. So he packed his bags and came home. She couldn't do anything because I owned the house. She got all the contents and nothing more.
    Anonymous
    3rd Oct 2016
    4:16pm
    An Ultra Matron?

    If that is an elderly dominatrix - I would pack up and leave also.
    Old Geezer
    3rd Oct 2016
    4:29pm
    My auto correct has done it again. It's too smart even for me these days. One of the very few problems with Windows 10.
    Rae
    3rd Oct 2016
    4:35pm
    Well done OG. My kids too are all well off but will contact me the moment something goes wrong. So no news is good news. We all travel a lot and that makes it easy.

    It is a joy to know they trust you enough to seek shelter from a storm with you.

    I have a testamentary trust will in place and family corporation to keep hands off that which doesn't belong to them.

    The word you were looking for is ultimatum from ultimate meaning last or final.
    Old Geezer
    3rd Oct 2016
    4:49pm
    I typed ultimatum but system decided otherwise.

    Yes I try to get away at least one a month sometimes more. I just take my tech with me and the only place I have trouble is the high seas.

    Is you testamentary trust will voluntary or mandatory?
    Rae
    3rd Oct 2016
    6:20pm
    Voluntary. I trust them and so far they all work well together.

    They all are far better off than I am too. All still working at good jobs with nice homes etc. All the homes worth more than my little cabin.
    Anonymous
    3rd Oct 2016
    6:42pm
    And - pray tell OG - what are voluntary or mandatory testamentary trusts?

    I know how discretionary testamentary trusts, lineal descendants discretionary testamentary trusts and capital protected testamentary trusts work.

    Did you just make names up to suck people in?

    I am very happy for you to enlighten us.
    Old Geezer
    3rd Oct 2016
    6:47pm
    The first solicitor I saw about setting up a testimonial trust told me that I couldn't have a voluntary one. I found out later that was because they wanted to get control of it make money out of it.

    I then asked my usual solicitor and he said I can't see why not. So I have it set up now that they can set one up and they will all control it. Awesome way to save a lot of tax as the income can be distributed to the lowest tax paying family members.
    Old Geezer
    3rd Oct 2016
    6:56pm
    Reason put simply you can have testimony trusts that have to be set up after your death and you can also have provision for your family to set them up after your death if they wish to do so.
    Anonymous
    3rd Oct 2016
    7:04pm
    OG - you have fluked some of your theory about how TESTAMENTARY trusts work (not testimonial).
    Old Geezer
    3rd Oct 2016
    7:07pm
    I'll have to work out how to turn off this ************ spell checker thing!
    It's driving me nuts they way it changes things.
    Anonymous
    3rd Oct 2016
    7:11pm
    OG - are you saying some testamentary trusts are in FULL operation/effect BEFORE you die...

    ...and some testamentary trusts ONLY come into effect AFTER you die?
    particolor
    3rd Oct 2016
    7:13pm
    Hillary is good with Spells the Witch !! Google her :-) :-)
    Old Geezer
    3rd Oct 2016
    7:21pm
    All testamentary trusts come into effect after you die. Your will can state that three has to be one set up or that one (or more) can be set up if your heirs wish to. It is used mainly as tax planning and to keep money away from family members who have mental problems etc.
    Anonymous
    3rd Oct 2016
    8:03pm
    OG - with regard to your comment...
    "Awesome way to save a lot of tax as the income can be distributed to the lowest tax paying family members."

    Nearly every trust can do that - not just testamentary - so that is boring.

    So pray tell - what is the DIFFERENT tax benefit that only testamentary trusts provide - that all the other trusts don't?
    Old Geezer
    3rd Oct 2016
    8:51pm
    It also stops partners getting and spending my kids money.
    Anonymous
    3rd Oct 2016
    9:03pm
    NOPE - all trusts can do that.

    Come on OG - this is a basic one - anyone with a testamentary trust knows it.
    Anonymous
    3rd Oct 2016
    9:43pm
    It's your homework for tonight OG - Google and see if you can find what it is.

    BUT - you should know it off the top - being the great advocate for testamentary trusts that you are.

    I would tell you OG - except you were quite adamant that it is against the law to tell others anecdotally useful investing stuff.
    MICK
    3rd Oct 2016
    10:04pm
    Ok combined wisdom of the ages: let's pool the information as many of us need to protect that we have sacrificed so much for from genY stupidity. If they are going to blow it then no point saving it for them.
    SO WHAT ARE THE BENEFITS AND OPERATIONAL PLUSES FOR TRUSTS AND WHICH ONE DOES ONE USE...AND HOW?
    Anonymous
    3rd Oct 2016
    11:31pm
    If you want to protect your assets from your children's partners and others, you use a testamentary trust (TT). These types of trusts are only brought into being on a person's death. They are also a means for transitioning wealth between generations. Trusts only last around 80 years in most Australian states - but are perpetual in South Australia.

    Think of TTs as a way of building a high fence around your bequeathed assets - and so long as your beneficiaries don't move those assets out of the fenced area - it makes it very difficult for non-beneficiaries like your children's partners to get access to those fenced-off bequests.

    They are also used to protect children who might have a substance abuse problem from themselves regarding your bequeathed assets - or for setting up a long-term vehicle for looking after someone with a disability.

    All of your assets - EXCEPT any company assets you own - will automatically go into the TT on your death. If you want to trap your own home into it you could - possibly to reduce the amount deemed for charging against aged care facilities - you could look into changing your home into tenants in common with a higher percentage ownership in one person's name. This area is complex and requires specific situation analysis by your own advisor.

    You have to educate your children and your own partner how the TT works - so they don't move money into harm's way and know about the various tax benefits that can be leveraged though a TT.

    There are a number of ways that a TT can be implemented. If you have a few kids, the TT can be setup so each one of them has their own TT - or you can make it a single TT and have all of them administer it. The latter (I think) means you need to have done significant work with your kids as they must be able to work well together if the single TT is to survive.

    I believe there are benefits in having a single TT as they have more assets under single management and collectively can learn from each other about good investing tactics compared to what would possibly happen on their own. It also makes it harder for their significant others, including partners, trying to weasel the assets out for unwanted consumption.

    We are training our children to look after themselves during our lifetimes and not consider they will get anything on our deaths - but instead think of the long-term transfer of our assets to their own kids (grandkids). The aim is to have the bank of mum and dad that they can grow and use for commercial purposes at attractive commercial rates. In other words they can go to this facility instead of a bank and borrow from it at more attractive rates with the aim that the capital is always protected and grown over time by multiple generations.

    So MICK, you asked about how to protect your assets from Gen Y - that is one way of doing it - but if you spend the time with Gen Y - I think you can develop some interesting outcomes.

    Arguably better than drip feeding them over the years and seeing much of it disappear we think. It takes effort to accumulate assets - why blow them if you can generationally transfer them instead in a substantial way.
    Rae
    4th Oct 2016
    8:07am
    Another advantage of a testamentary trust is to protect heirs that may be receiving Social Security while another may be a very high income earner and need tax protection.

    It could be decades before this happens and the kids will be in the late 60s.

    There are some disadvantages.

    You always need to check with a trusted accountant/ advisor and a solicitor before doing any thing with major implications.
    Anonymous
    4th Oct 2016
    8:55am
    MICK - if it was not obvious - a testamentary trust is your actual last will and testament and replaces any other you previously had.

    TTs work the same a will at a basic level - you are basically willing everything to your partner as per a normal will (if that is what you want to do) and/or bequeathing assets to you others as you see fit.

    When one partner dies the first TT is established and ~50% of your combined assets are immediately ensconced into the TT. The TT is normally setup to have your partner control the TT, but any heirs are also included in the structure should you need a power of attorney replacement due to the remaining partner being incapable.

    There are a heap of things that your kids can then do with the TT - including some useful tax stuff that OG will tell us about once he has done his homework.

    It's just bad luck someone has to be dead to have fun with a TT.
    MICK
    4th Oct 2016
    2:34pm
    Reasons: thanks so much for your detailed response. A few questions,

    1. How does one prevent children from moving assets out of the trust structure? Partners can be very persuasive and the trust will be worthless without tying up at least some of the assets for grandchildren and beyond.
    2. Capital gains tax and (property) stamp duty? Do these apply to testamentary trusts?
    3. The family home is the main asset and I need to stop the children cashing it in other than for producing future income. At any rate who would ever sell my location at any price, so this becomes a tough one.
    4. Never thought about my wife and this needs to be thought out. Leaving the ability to negative a predetermined outcome to a partner who may lose cognitive function sounds dangerous as all the planning will amount to nothing if the other half decides it is a good thing to release the assets to the children....who will then live the high life or pass on to their stupid partners who have no idea about what it took to accumulate and the value of capital.
    5. Can one elect the Public Trustee to act in the interests of the children and grandchildren with a strict charter outlining the spirit under which he/she is to act?
    This is getting complex. Do you have a great link to do some more research? Thanks.

    Rae: thanks also.
    My position at this time is to get all the pieces in place, know what I want and then see a an expert in this area (solicitor?) to run the plan by and get refinements and then put into place.

    My dear wife takes the position that 'we'll be dead anyway so why worry about the kids and/or rule from the grave'. I sometimes can see the illogical logic in that sort of statement, but then better to leave your descendants something more than good wishes. Just me I guess.
    Anonymous
    5th Oct 2016
    1:32am
    MICK – this was hard - let me first frame my response to what is a really complex set of questions...

    My partner and I work well as a team and have done so for a great many years with a common goal to leave our kids smarter than ourselves on many fronts - including financially. Our kids grew up with constant conversations and reinforcement of good ethics and money management behaviours – and that has not stopped as adults.

    We have included our kids in all conversations as we learnt about and setup our TT and keep working with them as our ideas improve or change. TTs take a fair bit of work to understand and establish IF you really want to comprehend them - and never stops once you start. Your partner and kids have to fully understand how to handle the legal, tax and assets aspects to be successful. That does not mean your kids need to know what level of assets you are leaving them – we firmly believe they need to stay hungry and lean so they make their own way in life. There is no guarantee there will be anything left – and we keep reinforcing this to our kids so they expect nothing. They know the intention is something very different – but a good dose of reality does not go astray.

    You definitely need to find a good lawyer who specialises in doing TTs. It should cost around $1200 - $1500 to get it done. Make sure you get a fixed price and get it clear what they are providing you with. If you have an SMSF you need to ensure your trust deed’s binding nominations are legally in sync with the TT.

    We have had the same thoughts about how you try and stop your kids moving the money out due to partner pressure. We do spend a significant bit of time with our kids (alone) discussing partners spending and giving them strategies in being able to (slowly) change their spending behaviours. The difficulty is you have worked with your own kids since 6 or 7 – but you are restarting with their adult partners who have little or no financial background. We are considering eventually bringing the partners in on what we are doing – but there is theoretically plenty of time before we do that.

    We believe it took a fair bit of effort to get our assets together and if our kids knew how to manage money and were over the idea of consumption earlier in their lives we would have a fair chance of transitioning our assets to future generations. It's basically what the Rothschild's etc did centuries ago. You are just doing it at a simpler level - but regardless are potentially setting up a similar dynasty - who knows - we will be dead - but it is worth a try we believe if you can setup a different way of thing in future family generations.

    We are training our kids to think of the TT as them owning a small bank that requires managing the same as normal bank business. It can loan money, invest, support someone going through uni if it is beneficial and other aspects, but anything it does has a profit objective so it grows its assets, protects its capital, has risk management strategies in place and has a legal hold over any asset it lends money to.

    To that end we have setup our TT as a single TT effectively – where all of our kids are trustees and decisions can only be carried if there is a majority – which works well when you have odd numbers. We have started framing rules around the permitted use of any money. The plan is that the majority will be able to override the minority if there was a decision to move money for consumption, not investing. We are working on empowering our kids so they function well as trustees of the TT and manage its outcomes. You have no idea once you are dead if they will play nicely together or not – you can only judge by what you observe while you are alive. Most ‘experts’ we talk to say it won’t work due to family politics. Most ‘experts’ we talk to have also never educated and worked with their kids in depth on finance matters. We stay open to changing tactics as time goes by if required.

    You would NOT use or trust the Pubic Trustees to do anything except reduce your assets to nothing – and quicker than your kids could dream of – they are a blight on the bum of humanity.

    I am not sure what you are indicating about your home, but the comment I can make is that after 2 years if the family home has not been sold it becomes liable for capital gains tax. You possibly need to be careful about attempting to dictate an asset’s survivability, it may be a tactical error if the environment turns toxic at some point or there are much better investment options.

    You can’t avoid death and some taxes – if something has a capital gain or a tax that needs to be paid – it will need to be done so usually before it is placed in a TT. Once in the TT, that is a whole new ball game.

    An excellent book to read is ‘Family Fortunes - How to Build Family Wealth and Hold On to It for 100 Years’ by Bill Bonner. Your partner needs to read the book as well and concur if you are going to be successful.

    To get you head around TTs you just need to Google and follow the leads – there are heaps of sites that deal with the subject – keep to Australia. Here is a link that gives a graphic of how single and multiple beneficiary TT works…

    https://www.slatergordon.com.au/estate-planning-probate/testamentary-trust-wills

    I hope that helps – if interested you really need to start reading and reading and doing more reading – discussing it with your partner to bring your partner along and get buy-in. I would strongly advocate you get your kids on board and monitor their responses once you have got your plan worked out if you want to increase your chance of success. Then if you are happy you can go to a lawyer to get the TT done.
    MICK
    5th Oct 2016
    7:53am
    Reasons: thank you so much for the time and effort you have gone to in clarifying your thoughts.
    My wife and I have already made the decision to use a trust structure. Whilst you have clearly done a much better job than us in educating your children we have led by example but nor formally taken the kids into the foal. Our mistake...as was the a proper education about people in general, not that this may have changed what genY thinks anyway.
    I'll do as you suggest and read more than I previously have now that the type of trust is clear.
    I still hold the question about tax on real estate going into the trust (stamp duty?) and taken out (capital gains tax) but will pursue that in due course. Whilst owning real estate as an individual is the preferred option due to (currently) zero tax on capital gains this needs to be weighed up against partners, one of whom will always be a consumer rather than a saver.
    What did Kerry Packer say? "Life wasn't meant to be easy"? He needed to say more about death and estates I might think and ultimately there may be a mix of trusts and family companies to make all of this work. You are right about seeking some expert advice to nut out the right path. And thanks for the perspective about the public trustee, something I have heard about in the past and now definitely to be avoided. I think that using a solicitor and my 2 children will produce the same result to give a majority vote (in theory).
    Standing back life is so complex at times and people are for the most part their own worst enemy. I should perhaps take the armour off and not worry.....but want so much to leave something of value after the kids have struggled so much. They do deserve it even though they are genY incomprehensibles and even though they are crippled by partners with western suburbs behaviour and values. Indeed life wasn't meant to be easy.
    Thanks again for your thoughts.
    Anonymous
    5th Oct 2016
    9:03pm
    MICK - on the tax front all your assets are treated the same as a normal will initially. You need to pass probate on all assets as per normal. All taxes are treated and paid the same as if the TT does not exist initially. The assets are then passed to the TT.

    Your family home would pass to the TT tax free on the death of both partners - or remaining partner - assuming it is owned as joint tennancy (the most common way). However you need to realise that you have 2 years to sell it or it starts accumulating capital gains tax on any amount gained since the DATE of DEATH of the final partner.

    There are all sorts of things you can do to lock up assets inside a TT - including the age that your kids get access - but you have to consider the possibility of legal challenges by your kids - possibly initiate by others. Outlaws are just as likely to be implicitly involved if they see an asset that could be converted to conspicuous consumption.

    You need to consider the implications of locking up the asset as things might change. What if kids or your grandkids eventually become really good investors or business operators and the asset could be better deployed? I assume you want your home to be passed down through the ages? A house won't generate a great return in terms of cash-flow. If it was converted to cash and handled properly it can be used to do many things like the main capital sources for houses for your grandkids -bat attractive interest rates - instead of using a bank, as one simple example.

    You just have to work through all the issues. You need to be really clear about what you think you want your kids to do with the house. If it is for capital gains - when do they sell it? - if it is for renting - what is the purpose of the income? - who pays to fix it? what is one wants to live in it? etc.

    You just have to be really clear about what your end goal is for your house - or is it the end goal for the value in your house so it can be used differently. You have to think BIG and not get shaken out of those ideas by either your own self-doubts or more likely by others. Finding like-minded people helps - but they are rare.

    Just go for it MICK - it is worth the effort.
    MICK
    5th Oct 2016
    9:46pm
    Pretty spot on Reasons. When you live in heaven you cannot contemplate liquidating such an asset. And then there is the best garden in the district by a country mile.
    I will have to ponder this a bit more as you have brought me back to the intention of what I want to do. But it ain't that simple.
    Cheers.
    KSS
    3rd Oct 2016
    3:23pm
    When I was very young I used to get sixpence a week pocket money. However, I had to save tuppence (to but presents for family at birthday and Christmas), give tuppence to church, one penny for Brownies, ans I could blow the last penny on anything I wanted. You could buy a big bag of lollies in those days or a comic/magazine, but I would have to save for more expensive things!

    What this did was teach the value of money in general, the fact that savings mount up, instilled a sense of giving and also self reliance.

    Seems to me that today's kids are not taught these things. Australia has had 25 years of growth and today's kids do not know what it is like to save for what you want. The Mum and Dad bank is constantly open and the kids think it their right to be supported well into adulthood. However, it is the parents who have trained their kids to think that way and so must shoulder some of the responsibility. Add to that that kids today are just not prepared to start low and work for improvements. The baby boomers on this site would have more than one story about using packing cases for furniture, getting second, third or fourth hand bits and pieces to furnish their first home which would have been a tiny dog box well away from where they grew up. Over the years they/we worked hard, saved, spent holidays in caravan parks (if there was a holiday at all) and gradually worked our way to today's 'wealth'. Now the kids expect to start where their parents finished, in fully furnished homes with the latest car in the garage and foreign holidays every year.

    Perhaps expectations need to be lowered and we need to go back to the old lessons of working for what you want and that there are consequences for the choices we all make. It means kids standing on their own two feet and parents taking a step back. Be the safety net, the back up plan for when or if there is a real need NOT the first port of call when their lifestyle choices exceed the kids income.
    MICK
    3rd Oct 2016
    9:36pm
    Respectfully, my kids were taught. When they grew up they then had the media selling the good life and their friends blowing all their money. Then came the partners who did not ever have a razoo. Damage done!
    The current crop live in dreamworld and have had 'things' bestowed on them since they were born and expect the never ending honeymoon to last forever. No understanding of hard times and believe these cannot occur.
    Welcome to life.
    KSS
    4th Oct 2016
    7:30am
    Mick they should still face the consequences of their decisions and they should NOT be handed excuses to mitigate their own stupidity. "Keeping-up-with-the-Jones's" is never (and never was) an excuse for spending more than you have. The lesson must be learned - no matter how difficult - if responsible adults are to emerge.

    Continually being an apologist for an irresponsible child does no-one any favours, least of all the parents who continue to foot the bill.
    MICK
    4th Oct 2016
    2:42pm
    My kids are doing it tough and guess who the villain is? Their partners are difficult in one case and crippling in the other. Both kids work ridiculous hours and do not have a life outside of work.
    They are learning the lessons with the exception of their partners. That one is likely to come when they realise their stupidity. Who am I to say?

    3rd Oct 2016
    5:22pm
    There are many answers to this article and, if I may be so bold, all of them are correct. What an individual does for their children is a most personal subject and not one where others should be giving advice. Yes, there is a small number of cases where uncaring offspring will bleed parents dry, over capitalise with parents as guarantor causing the parents to sell up to repay an outstanding balance when a property is sold but I don't consider this to be the norm.

    One of our children had difficulty getting an apprenticeship in the chosen trade but went to TAFE to complete the first 2 years of the trade. During this time, unemployment benefits weren't paid because of part time study and Austudy wasn't allowed because there were not enough hours being put in. During that time we gave an allowance to help. An apprenticeship was obtained at age 19 with a wage that didn't allow for too many luxuries so until year 3, we didn't charge any board. Did we do the right thing? I would always say yes and I don't know of any circumstance where that decision would be any different.
    Rae
    3rd Oct 2016
    6:23pm
    Well said
    CindyLou
    3rd Oct 2016
    9:11pm
    Ditto
    Cooky
    3rd Oct 2016
    6:17pm
    Fast Eddie 3rd Oct. . I agree wholeheartedly with you. We worked and saved, why cant our Kids Work and Save also. I;m doing an O.seas trip with mine
    Old Geezer
    3rd Oct 2016
    6:49pm
    Why not have the family enjoy your wealth. I'm paying for a cruise for all of us later this year.
    MICK
    4th Oct 2016
    2:39pm
    Can I come. Sort of like family.....
    Old Geezer
    5th Oct 2016
    2:08pm
    Sorry only booked suites not the penthouse.
    MICK
    5th Oct 2016
    5:19pm
    A tent?
    Old Geezer
    5th Oct 2016
    5:27pm
    Your welcome to it up on the top deck.
    Jan
    3rd Oct 2016
    6:44pm
    I find it interesting that we say the young have it so much harder than us baby boomers. We worked while studying, held down two jobs at a time just to pay the mortgage. We lived frugally, rarely eating out and certainly not partying as we could not afford it. We bought little ordinary homes a long way from our preferred suburbs in Sydney because we would not afford the good suburbs. I have spoken to a few 30 somethings lately who spend up to $300 a night partying! What! And say they are saving for a home deposit? You can't do both. Some spend everything they have on travel, then of course cannot afford a mortgage until they have saved and lived frugally. I think we are doing them a disservice saying it was so much easier for our generation. It wasn't. Bailing them out does not teach them how to live to a budget.
    CindyLou
    3rd Oct 2016
    9:03pm
    It appears that some of our contributors are into share trading etc. (not saying who!!). This can be highly risky, as well there is capital gains tax, especially if investment held for less than 12 months, brokerage costs, and to the best of my knowledge buying and selling (trading) places an individual into a trader category with our friends at ATO.

    And, further no one can get into 'trouble' by generally saying what they do to get such returns, it's only general chit chat not specific advice. So, let's just be real.
    CindyLou
    3rd Oct 2016
    9:05pm
    Back to this topic, I've helped my adult kids as its more appropriate now than 20 years plus from now when I'm pushing up daisies.
    Old Geezer
    3rd Oct 2016
    9:29pm
    It is more risky in medium to long term to have money in term deposits than in shares and other growth investments. You have no growth so inflation and tax will erode your capital giving you less spending power for same amount of money.

    Capital gains tax is another source of income and taxed the same if the asset is held less than 12 months. Best part is if you have losses you can offset them against your gains.

    It is actually quite difficult to get classified by the ATO as a share trader. You have to demonstrate you are in the business of trading on a daily basis not just investing.
    CindyLou
    3rd Oct 2016
    9:52pm
    Yep capital gains can be offset against losses (Babcock and brown...painfiul etc) but they are still a loss.
    Shares and other growth investments are better than term deposits - cant disagree with that, dividends and franking credits can achieve good returns 6 - 8%
    But
    There are risks, blue chip being safer but to make spectacular results (trading) most probably requires a good skills set that not all folk possess.
    McGroger
    3rd Oct 2016
    10:45pm
    He must be really, really good at this stuff. A friend of mine, working in finance at a university, with an MB & SC never travelled as well as the Swiss Cheezer.
    CindyLou
    3rd Oct 2016
    11:46pm
    Still off th topic of this discussion, but...
    My understanding of capital gains tax is basically, if the asset is sold within twelve months of purchase for a profit, the profit (less costs etc) is added to an individuals taxable income and tax is paid etc.
    However, my understanding of this situation is that if the asset is owned for MORE than twelve months, then sold, then only 50% of the gain is added to the individuals income for taxation purposes.
    And
    There are exceptions to this, ie assets within SMSF etc.

    So basically it not as easy to make the big $ as some folk allude to - got to have the personality to make decisions based on facts not emotions, ie when stock market falling badly, some folk often freak out and sell...certainly understandable. Again, not something g that is suitable for all people.
    McGroger
    4th Oct 2016
    7:36am
    "MB & SC" = Motor Bike & Side Car.
    MICK
    4th Oct 2016
    2:38pm
    Buy a house in a good or upcoming area Geezer. Can't go wrong in acreage or quarter acre block near a main population area either.
    Shares? A tough game as the big end always gets the good oil and first bite and mums and dads are fed lies from the media to get them in as the big end wants out. I have made some money and lost a lot too. In the end real estate is the place I have done well.
    CindyLou
    4th Oct 2016
    5:14pm
    Trouble with property is there are high costs going in and the you can't sell some of the property whereas other asset classes such as shares are easier to manage, can sell some, buy more and when you sell you have the $ in about 3 working days.
    MICK
    4th Oct 2016
    11:16pm
    True...but you can lose 100% of your investment in the share market. Property has its downside but is you have an asset which cannot evaporate at a moment's notice.
    Rodent
    4th Oct 2016
    8:09am
    Enjoying the Interchange between PG and Reasons.
    OG it may not be the spell checker, it may be you that is making spelling and grammar errors, I know this because I do it too!! its probably because we are in a rush and don't check what we have written
    Rodent
    4th Oct 2016
    8:10am
    See I did it again, I meant OG not PG
    Circum
    4th Oct 2016
    5:13pm
    Mick.In an earlier discussion with Reasons you asked about using the Public Trustee as a solution.My experience with the public trustee (they do vary from state to state) is that they are and act like a fund manager.Their main objective is to maximize income commission and fees.Not many people know that over 80% of a clients funds can and in my mothers case was invested in high growth funds at age 86.My reply,when complaining to the South Australian ombudsman was.."they can do what they want".To summarize the public trustee is like a bank manager except that the bank manager allows you to decide what you want.
    Also all tasks other than fund management are outsourced.You need to know that as it can add up to big bickies.Be careful and do your own research
    CindyLou
    4th Oct 2016
    10:55pm
    I'd run a mile AWAY from Public Trustee unless you want to loose money !!!
    MICK
    4th Oct 2016
    11:20pm
    Yeah Circum. Sounds a lot like what the Land and Environment Courts say about local councils when they ignore their own rules.
    I was of the understanding that the Public Trustee could be instructed on how to administer your estate. I'll have to research that one.
    The method in my madness was simply that a local solicitor may be riskier than a government organisation with a clear direction.
    mike
    5th Oct 2016
    11:56am
    I apologise to all Australians in that I am partly to blame for the mess we are in now. I am ashamed to admit I voted for those Bastard Liberals for the last 40 years only to see Hockey turn on the disabled and part pensioners who worked and saved all their lives whilst the Bastard was filling his back pockets with such things as the shonky travel allowance. I now only support the Christian Democrat party, Nick Xenophone and Pauline Hanson.
    Old Geezer
    5th Oct 2016
    5:23pm
    Thank goodness you did.
    MICK
    5th Oct 2016
    9:30pm
    You have to watch out for both the major parties but especially for the rich man's party: the Liberal Party. If you only now realise you were nobbled then I can but say that you are not alone.
    The rich and their massive propaganda machine which controls and/or owns most media outlets groom their party, run repeated propaganda which is never stopped by those who have the power to act and get their party in for long periods of time.
    I always say that you have to follow the money trail to see who is pulling the strings. With the current batch it is about tax cuts for the wealthy and new taxes for workers. Pretty obvious for anybody who wants to see. Sadly this bunch were voted in (just) by Australians who are mentally challenged and too basic to see that they are being farmed.
    Some of your new candidates may not be the flavour of the month but anything is better than Turnbull Inc. and his vested interests who believe they own the nation.
    ex PS
    7th Oct 2016
    2:28pm
    mike, you did what 80% of the people in our age bracket do. That is to vote for those who we traditionally voted for. Unlike the 80% you have had an epiphany and have managed to figure out that the so called major parties think they know that people of our age have no inclination to change voting patterns. This is why they ignore our needs and concentrate on procuring votes from the undecided. The only way we will be listened to is to become a block of undecided voters. Once they realise who we are and what we expect of them we will start to get what we deserve.
    David
    7th Oct 2016
    11:48am
    I agree that Gen X/Y have got it good.
    How can they stand on their own 2 feet if you do everything for them?
    My wife and I have 4 kids. Apart from not being able to give each of them as much as a 1 or 2 child couple could, I think it does them good to save and go without (great life skills).
    Our kids have all bought their own cars by themselves. The only contribution I made was checking them out mechanically.
    One of my daughters has even purchased a block of land at the age of 22 without the need for me to go guarantor (which I’d never do). She has saved over 20% of the deposit for the land and the building contract without any financial assistance from me.
    Now I better go off SKIing (spending the kid’s inheritance).
    john
    7th Oct 2016
    5:03pm
    Parents are probably not doing their kids any favours, but in the world today and the unemployment horrible , and the job market casualised with no long term jobs available unless you are a Lawyer or a doctor , or a tradesman if your lucky enough to get an apprenticeship, and that is no guarantee either. So lots of kids wind up at uni dooing anything they can maybe a part time job or spending hours doing job interviews with no hope of actually getting a job , that is a racket, too.
    So yes you help your kids because today you don't walk out of high school and end up in a job 10 minutes later as was in my day. And this is the beginning of the ruination of lots of capitalist nations , where the middle to upper middle class who actually pay the bills for society , well their kids are going to have nothing, or very few will.
    Its a depressing outlook , but thats what technology does, and we knew it was coming but not one government has done any thing about the massive change this will bring like now , but worse and wores into the future.
    Then we see Coles supermarkets and other killing off jobs of kids on registers , but have started complaining about people who just walk out the self serve dept , and pay nothing, well you greedy stupid idiots, hire some human beings.
    john
    7th Oct 2016
    5:10pm
    Old geezer the 400k, will soon run out, unless your a genius, so let us in on the secret. Perhaps you only draw down a couple of hundred a week, and everything else is paid up. That is not the reality of most. The life of paying bills you can just afford makes most people always struggle a little , it is not fair to people who work all their life.
    But that doesn't change the fact that we are talking about helping our children out and legitimately sometimes there is no other choice. If parents say no I haven't got it or no you are getting nothing , well I guess whats out on the street if you look you'll the homeless kids. Do you have any responsibilities , , obligations .
    I'm 65 I have tons still.!


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