Your personal financial details are exactly that: personal. But, when it comes to borrowing in later life, is there a case for involving the family in your decision-making? In this blog, we explore the pros and cons.
Later life borrowing can unlock a more financially secure and enjoyable future. But it can also be contentious, especially when it comes to family members. At Advice Guru, just like many other specialist advisers in this market, we always encourage clients to include family members (especially children if they have any) in the meetings and discussions. But why is this and what are the advantages versus the potential downsides of doing so?
Advantages
Many later life borrowing products are designed to last for the rest of your life, and will be repaid when you die (or move into long-term care). At this point, other members of your family will need to deal with your estate, so it makes sense to ensure they are aware of the debt that will need to be repaid as the sooner this is done the sooner interest stops accumulating – especially as this will generally mean putting your home up for sale. Bringing any executors or trustees of your estate into the conversation will help them understand the terms and conditions of repaying the loan, and avoid confusion or any potential problems later on.
No-one should expect to receive an inheritance, but if you have had conversations with children and other family members in the past that implied your home would be passed on to them once you pass away, then it’s worth resetting expectations so that there are no shocks later on. Many of the complaints made to the Ombudsman about later life borrowing products come from the children of clients who had no idea their parents had a loan secured against the family home.
Your family know you best and can be very helpful in a meeting with an adviser as they can help raise questions and point out things that you might not think of. This can be particularly helpful if you are vulnerable or potentially vulnerable in some way.
Disadvantages
Assuming you are happy to involve your family members in your personal financial discussions, you will have to accept that they may have a different opinion about your plans and may even object. This can cause friction and problems within families. That’s where your adviser can help as often objections and concerns stem from misunderstandings about how later life borrowing products work, their potential benefits and risks.
It may not always be easy or convenient to involve your family in meetings, especially if they do not live near you (they may even be in a different country). If that’s the case, speak to your adviser about the possibility of conducting meetings online rather than face-to-face.
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