When Helping One Child Changes What Feels Fair

5 days ago

4 min read

Families have always helped one another, but the scale of that help has changed considerably in recent years.

With house prices beyond the reach of many younger adults, childcare costs placing pressure on working families and relationships sometimes ending with significant financial consequences, parents are increasingly stepping in to help their adult children financially.

Perhaps one daughter receives £40,000 towards the deposit on her first home. A son goes through a difficult divorce several years later and receives £20,000 to help him start again. Another child, apparently doing rather well, receives nothing because they simply haven't needed any help.

At the time, none of this necessarily feels like estate planning. It feels like parenting.

Years later, however, Mum and Dad sit down to review their Wills and a surprisingly difficult question emerges. Should the financial help they've already given be taken into account when they eventually divide their estate?

There isn't a universally correct answer.

What Did You Mean When You Gave the Money?

This is often the most useful place to begin. When money was given to a child, what did the parents actually intend it to be?

For some families, the answer is very clear. It was a gift, freely given because their child needed help at that particular moment. There was never any expectation that it would be repaid or deducted from a future inheritance.

Other parents see things differently. They may be perfectly happy to help one child with a £50,000 house deposit, but regard that money as an early part of the child's eventual inheritance. Their intention is that the other children should ultimately receive an equivalent amount.

Neither approach is inherently fairer than the other. The difficulty arises when nobody records which approach was intended.

Twenty years later, recollections can be remarkably different. One sibling remembers Dad saying, "Of course it's a gift." Another remembers him saying, "We'll sort it all out eventually." The recipient remembers only being told not to worry about paying it back.

What began as an act of generosity can unexpectedly become a source of disagreement.

Equal and Fair Aren't Always the Same Thing

Parents often tell me that they want to treat their children equally. It's a perfectly understandable instinct, but life rarely treats children equally.

One child may have a successful career and substantial income. Another may have a disability or caring responsibilities that restrict their ability to work. One may buy a home in their twenties, while another struggles with rent well into their forties. One may need considerable parental support, while another remains fiercely independent.

Trying to equalise every pound spent throughout a lifetime would be both impractical and, frankly, rather exhausting.

Fairness becomes much harder to define when families need different things at different times.

For some parents, fairness means leaving precisely the same amount to every child regardless of what happened during their lifetime. For others, it means looking at the overall financial support each child has received and adjusting their estate accordingly.

The important thing isn't which definition you choose. It's that you've actually thought about the question.

The Bank of Mum and Dad Needs Records Too

One practical difficulty with lifetime gifts is that families tend to rely on memory. A substantial transfer may be clearly visible on a bank statement today, but twenty years later the account may have been closed and the circumstances surrounding the payment forgotten.

Keeping a simple record of significant gifts can therefore be extremely useful. Record the amount, the date, who received it and, crucially, whether you intended it to be an outright gift, a loan or something you wanted taken into account when your estate was eventually divided.

This isn't about keeping a running account of every birthday present or family holiday. It's about recording significant financial arrangements that could otherwise create uncertainty later.

If money is genuinely being lent rather than given, the position deserves even greater clarity. A casual family loan can become surprisingly complicated if either the parent or child dies before it has been repaid.

Think Before You Try to Balance the Scales

There can also be unintended consequences when parents try to correct perceived inequalities through their Wills.

Imagine that one child received £50,000 towards a house purchase fifteen years ago. Mum and Dad decide that the other child should therefore receive the first £50,000 from their estate before everything else is divided equally.

That may perfectly reflect their wishes today. But what happens if their estate is significantly smaller by the time they die because of care costs, investment losses or simply enjoying their retirement? What once looked like a modest adjustment could eventually produce a very different division from the one they imagined.

This is why lifetime gifts and Will planning are best considered together rather than as completely separate decisions.

Sometimes the Conversation Matters Most

As with so many aspects of estate planning, much of the potential difficulty can be removed through communication.

That doesn't necessarily mean telling your children exactly how much they're going to inherit. Nor does it mean inviting them to negotiate the contents of your Will. Your decisions remain yours.

But if you've made a significant lifetime gift and intend that to influence your eventual estate, explaining that intention can prevent very different expectations developing between siblings.

Parents naturally want to help their children when they need it. Few of us would want to withhold help today simply because doing so makes the arithmetic of tomorrow's inheritance easier.

The answer isn't to stop being generous.

It's to make sure generosity is accompanied by clarity.

Because families will rarely remember every pound that changed hands, but they may remember for a very long time whether they felt they were treated fairly.