Bank of Mum and Dad in the North West grows to lend a helping hand

The Bank of Mum and Dad in the North West has expanded during the Covid pandemic to help their offspring as they face mounting financial concerns. According to new research from Rathbone Investment Management, parents in the region are preparing to lend to their children in the coming years. Over half (52%) of parents in the North West plan to financially gift to their children and/or grandchildren in the coming years.

Many individuals also plan to look beyond helping their children or grandchildren financially with nearly half (39%) of investors have prepared to lend to their partner/spouse. Furthermore, a fifth (19%) have planned to financially support other members in their family and, 13% wish to help a friend.

Indeed, the lockdown and social restrictions have resulted in many losing income or ability to save and becoming more reliant on family members and the bank of Mum and Dad to support. Unemployment levels reached new highs of 5% indicating that we are far from out of the woods. 

For many, the start of the pandemic, prompted a desire to get their financial affairs in order. Indeed, the first lockdown saw a surge in will writing as individuals made the most of their spare time to sort their finances.  Which? research found there was a surge in the number of people making wills during the first lockdown – an 682% increase in April compared to the previous year.

As part of this many investors put plans in place in order to have their affairs in order and keep their inheritance tax bill low for loved ones. 50% of investors in the North West have already made a will in order to reduce their inheritance tax bill. While, 30% of individuals in the region have made a financial gift in order to reduce their inheritance tax bill.

These uncertain times have also incentivised 35% of individuals to invest in a pension to build towards a secure retirement and a third have taken out life insurance to reassure themselves and their loved ones.

Talking to an investment manager, who understands your circumstances and plans to gift is important. This way they can ensure that your investments are managed with this end goal in mind. An investment manager can also ensure that once children or grandchildren have been gifted money that the potential of this money is maximised.

Richard Dawson, Regional Director at Rathbone Investment Management said, “As we continue to face new challenges, with many concerned over their financial health, it’s no surprise the bank of Mum and Dad has stepped up to offer support to their loved ones. With many of us looking to get our finances in order, it’s important to map out how much you can afford to gift whilst bearing in mind your own later life. The value of gifting assets during your lifetime can help to avoid any unexpectedly large inheritance tax bills. However, be aware of giving too much away too quickly. The younger generation have more time to accumulate wealth, so it’s important that you plan well to ensure you have enough money to see you comfortably through retirement too.

“I’d always advise that people review their financial plans and investments regularly, particularly on important milestones as circumstances can quickly change. Small actions like reviewing or drafting a will can make a big difference and now, while in our third national lockdown, is a good opportunity to get your house in order.”