According to the Guardian the average property price in the UK fell by 0.4% month on month in May 2025. The drop was significantly higher than the 0.1% downturn in prices that had been predicted by economists and means the average property price slid to £296,648.
As a result, the annual rate of property growth has slowed to 2.5%. While this may not be welcomed by homeowners, it might be better news for the many First Time Buyers (FTBs) who have been struggling to get on to the property ladder.
One reason FTBs may find it so difficult to buy a home is the size of the deposit that many mortgage providers insist on. To help them deal with this, some parents and grandparents gift money to younger members of their family to help them to get onto the property ladder.
If your child has a partner, a significant portion of your gift may be lost
If you gift money to a child or grandchild so that they can buy a home with their partner, it’s important to consider the long-term implications.
For example, if they then go on to get married and the marriage fails, the ex-spouse could receive half of your gift as part of the divorce settlement.
Furthermore, if your child or grandchild were to die and the partner inherits the home, you could stand to lose all of your gift. As you can see from both of these scenarios, helping a family member buy a property with a partner could result in you losing all, or a significant portion, of it.
There is good news though, as you may be able to protect your gift by placing it into a trust, which is something we will look at next.
A trust could protect the money you give to your family member
Placing your gift into a trust means that it doesn’t go directly to your child or grandchild, which in turn, means they never actually own it. Instead, your gift belongs to the trust, which is a legal entity.
As a result, when your child or grandchild wants to use the money as a deposit, it has to be taken as a loan from the trust that must be paid back when the property is sold. Because it is a loan, the gift never becomes an asset that is owned by your child or grandchild, which means:
- it is not classed as a belonging that must be split as part of the divorce settlement
- as the gift is returned to the trust, your child or grandchild can use it again to buy another property
- the gift must be returned to the trust if your child or grandchild passes away.
A trust can be used to protect your wealth for future generations
While a trust can help to protect a gift that you have made, they can also be an essential part of an intergenerational wealth plan. This is because they can:
- ensure your estate goes to the people you would want it to
- speed up the process of passing your assets to loved ones
- provide greater control on how your assets are used by the beneficiary
- help to reduce your estate’s exposure to Inheritance Tax
- safeguard against ‘sideways disinheritance’. This is where future generations are deprived of their rightful inheritance because a surviving spouse remarries.
Watch our insightful webinar
'The truth about trusts: tips to protect and direct your wealth that are not just the reserve of the super-rich' was broadcast on Wednesday 9 July at 6pm to help viewers understand how trusts can:
- provide greater control of your wealth
- pass your wealth to loved ones more efficiently
- offer potential tax benefits.
For the informative webinar, former BBC presenter Mark Foster was joined by AFH’s Chief Advice Officer, Austin Broad and Malcolm Noblett, AFH’s trusts and estates expert.
Webinar agenda
- What is a trust and who can benefit from them
- How ‘sideways disinheritance’ works and why trusts can prevent it
- The different types of trusts and how they could be taxed
- When might a trust be excellent value for money.
To watch the webinar, follow the link.
Get in touch
As one of the UK’s largest independent financial advice companies, we understand how trusts and financial planning are intertwined. That’s why every one of our professional advisers are qualified estate planners with a deep working knowledge of trusts and how to use them.
Just call us on 0333 010 0008 to arrange a no obligation initial meeting with one of our independent financial advisers.
27 June 2025