What my mother told me recently stunned me.
We were talking about the property price crash, the huge and unsustainable debt burden faced by ordinary hard working people, negative equity, and so on.
She told me that when she and my father had their first house built in the late 50’s/early 60’s they paid the builder by cheque.
He built the house; they paid him.
I envied the simplicity of this arrangement…not to mention the avoidance of debt.
My parents were not wealthy; they were just hard working small business owners. They saved and scrimped and worked until they had the price of the house.
It was a world away from the last 10-15 years in Ireland; years of easy money and borrowing not just for the house but for furniture, stamp duty, legal fees and foreign holidays too.
I have come across quite a few people recently of my mother’s generation with a big problem: they may have escaped, not entirely unscathed, the financial crisis/property meltdown of the last few years.
And because they are “of an age”, they own their homes debt free. But they are worried about passing it on to a son or daughter.
Because the son or daughter is facing serious problems with debt.
And is considering bankruptcy or entering into a personal insolvency arrangement with their creditors.
The parent is worried sick that the asset which they wish to pass on to their loved one will be at the mercy of the son’s/daughter’s creditors.
Or official assignee in bankruptcy.
So they are being advised to put the property in trust for the child.
This is good advice…provided it is done properly and a proper will trust is set up.
I am not talking about some nutty arrangement describing itself as a trust like the “Kilkenny Trust”.
Setting up an effective trust-one which will withstand attack from creditors-requires professional legal advice.
And the tax implications of trusts and when assets vest in beneficiaries necessitate sound taxation advice.
You can learn more about the legal aspects of will trusts here.
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