Home Truths

Home Truths…

“We want the house to go to the children.”

Problem is … it makes NO logical sense.

In this week’s newsletter, we explore what – “We want the house to go to the children.” – really means.

It’s very common for clients to tell us (when we’re doing some retirement planning or estate planning) that they want the house to go to the children – that’s an entirely natural reaction.

The house is something we see as a family asset that should be passed down through the generations.

We’ve got to remember that for a lot of us, we’re only the second or third generation in our family history that’s owned property.

I mean, for the rest of history, property ownership just wasn’t on the cards for the working classes.

Now, it’s common for most of us to own property, and it’s likely our children will go on to own property too (you’ll probably be helping them get on the ladder).

But many of us still have memories of the rent man.

Prior to the property ownership boom that started around the early eighties, most of us were renting.

The rent man used to come round on a Friday and you’d live in FEAR of the knock on the door.

And that’s why passing the house down through the generations is an emotional thing for us.

We want to ensure our next generation is safe. It’s a perfectly natural and emotional need for that to happen.

The problem is… it makes NO logical sense.

I mean, think this through.

In our heads we’re thinking we WANT the house to go to the children.

But let’s say you’ve got two kids… they’re in their mid-thirties. They’ve got their own families.

On your death, what do you expect to happen? 

Are they going to:

• Get the removal vans round?
• Load up their belongings from their current houses?
• Relocate back up to the North-East?
• All move back into the family home, back into the bedroom they had as teenagers, with the Star Trek wallpaper still on the wall?

Is that going to happen? 

No, it’s not, obviously.

But for us, sometimes there’s a sense that EMOTIONALLY, that’s what’s going on in our heads.

When in fact, you’re NOT really leaving your children the house.

The house will be sold and instead you’re leaving the equity in the house – the money that’s in the house.

And that’s fine.

That’s going to be just as much help to your children as the house.

Probably more so.

But if we change our own language and accept, we’re not leaving the house to the children… we’re leaving the equity to the children, we can start to detach ourselves emotionally and approach it more logically.

You wouldn’t say, “Oh, I’m leaving the ISA to the children” because you most likely see this as cash with no emotional attachment – unlike your family home.

So, it’s really important to try and disconnect that and have a think… 

What do you mean when you say the house goes to the children?

Well, what you really mean is the equity goes to the children, the money goes to the children.

So, you’ll think about it in a different way, because maybe you want to give them it a bit earlier so we can see them enjoy the money and enjoy how it helps them with their own lives.

Surely that’s better than us waiting to die for them to inherit a house that they don’t really want and then they have to sell the house that you were so emotional about giving them.

That’s not really a good place to be if we think it through… is it?

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Joslin Rhodes Pension & Retirement Planning – Real Advice, For Real People