Putting the pile of cash to work

[BigNick]

Feeling pretty good this week. DD and her boyfriend just moved into their first owned home, in the (pricey) south-east of England.

They paid about $600,000, of which we put in one-third. We looked at different ways to structure this (for example, as an interest-free loan, or as a three-way purchase), but in the end we gifted the money to DD as an advance on her inheritance, so she owns two-thirds of the house and DBF has one-third.

They have equal shares in the mortgage. She earns a little more than him, but he recently got a promotion and can easily afford his share. He is from quite a humble background and is not used to this kind of thing, so we've been helping a bit with plan B. In particular, we have told him that if they split up, we will buy his share out at fair market value.

Part of me feels bad that people in their early 30s with good professional jobs need help from "The Bank of Mom and Dad" to buy property these days, because our generation is hoarding much of the wealth, but part of me is pleased that I did the planning for many years to make this possible.

 

[target2019]

Feeling pretty good this week. DD and her boyfriend just moved into their first owned home, in the (pricey) south-east of England.

They paid about $600,000, of which we put in one-third. We looked at different ways to structure this (for example, as an interest-free loan, or as a three-way purchase), but in the end we gifted the money to DD as an advance on her inheritance, so she owns two-thirds of the house and DBF has one-third.

They have equal shares in the mortgage. She earns a little more than him, but he recently got a promotion and can easily afford his share. He is from quite a humble background and is not used to this kind of thing, so we've been helping a bit with plan B. In particular, we have told him that if they split up, we will buy his share out at fair market value.

Part of me feels bad that people in their early 30s with good professional jobs need help from "The Bank of Mom and Dad" to buy property these days, because our generation is hoarding much of the wealth, but part of me is pleased that I did the planning for many years to make this possible.

What you are doing is ok according to the author of Die With Zero (good book to read). You're helping to fund a shared experience that is enjoyable. We just shared a portion of our wealth with 140 wedding guests. No regrets whatsoever.

 

[Bigdawg]

Part of me feels bad that people in their early 30s with good professional jobs need help from "The Bank of Mom and Dad" to buy property these days, because our generation is hoarding much of the wealth, but part of me is pleased that I did the planning for many years to make this possible.

What are you talking about?

 

[BigNick]

What are you talking about?

This. It's written from a UK perspective, but I think there are degrees of the same problem in the US.

 

[COcheesehead]

This. It's written from a UK perspective, but I think there are degrees of the same problem in the US.

I was taxed to death when I was working. I saved ‘til it hurt. I invested wisely and somehow I stole the younger generations wealth?

 

[REWahoo]

This. It's written from a UK perspective, but I think there are degrees of the same problem in the US.

More insight on the book here: https://www.theguardian.com/books/2010/feb/07/the-pinch-david-willetts

The Pinch sets out to show how the baby boomers – those, like Willetts, who were born between 1945 and 1965 – have "stolen their children's future" through their cultural, demographic and political dominance.

 

[youbet]

More insight on the book here: https://www.theguardian.com/books/2010/feb/07/the-pinch-david-willetts

Let’s hear it for the Boomers! Hip Hip Hooray!

 

[lucky penny]

Feeling pretty good this week. DD and her boyfriend just moved into their first owned home, in the (pricey) south-east of England.

They paid about $600,000, of which we put in one-third. We looked at different ways to structure this (for example, as an interest-free loan, or as a three-way purchase), but in the end we gifted the money to DD as an advance on her inheritance, so she owns two-thirds of the house and DBF has one-third.

They have equal shares in the mortgage. She earns a little more than him, but he recently got a promotion and can easily afford his share. He is from quite a humble background and is not used to this kind of thing, so we've been helping a bit with plan B. In particular, we have told him that if they split up, we will buy his share out at fair market value.

Part of me feels bad that people in their early 30s with good professional jobs need help from "The Bank of Mom and Dad" to buy property these days, because our generation is hoarding much of the wealth, but part of me is pleased that I did the planning for many years to make this possible.

+1

Hope this thread can focus on the "pleased that I did the planning to make this possible" part & not on the word "hoarding".

 

[Jerry1]

+1

Hope this thread can focus on the "pleased that I did the planning to make this possible" part & not on the word "hoarding".

And how cool it is that he could get his daughter into a nice home. It was on a completely different level, but we got our daughter into a home and it’s been great. It gave the grandkids a stable environment (versus an apartment) and it’s given my daughter security and comfort knowing she owned her house (no mortgage in my case).

 

[Sunset]

I will say OP is incredibly generous, and I hope it all works out and everyone lives happily ever after.

However, I wonder how OP will feel if the boyfriend later marries daughter and a few years later runs off with another woman.
Laws are different, but what I'm familiar with is the $200,000 is now fully shared and part of the matrimonial home. So it gets divided up equally.
Then he asks for his $100,000 plus appreciation and equity of the rest of the house.

Seems it will muck up the divorce calculations.

I would have loaned it out at an effective 0% (charge low interest, and then give nice present every year to wipe out the interest).

 

[BigNick]

I will say OP is incredibly generous, and I hope it all works out and everyone lives happily ever after.

However, I wonder how OP will feel if the boyfriend later marries daughter and a few years later runs off with another woman.
Laws are different, but what I'm familiar with is the $200,000 is now fully shared and part of the matrimonial home. So it gets divided up equally.
Then he asks for his $100,000 plus appreciation and equity of the rest of the house.

Seems it will muck up the divorce calculations.

I would have loaned it out at an effective 0% (charge low interest, and then give nice present every year to wipe out the interest).

We have already thought of this. The money was gifted to our daughter, who now owns 2/3 of the house. Even if they get married, that situation will remain constant (we think it's the default under UK law, and even if it isn't, she's much too pragmatic and/or savvy about money to sign it away, so she would get a clause in the contract).