Inevitably, for a range of reasons such as family size, health concerns, proximity to loved ones, we all seek to downsize our home and/or section later in life. Normally this isn’t an issue, but adult children with an eye on their inheritance can pressure you into staying put in the more valuable property. Against your own desires, they don’t want you freeing up a portion of capital that you could spend, thereby reducing the eventual estate when you pass.
2. Retirement Villages
Again, this is about descendants protecting their inheritance. Most retirement villages do not offer freehold titles which can be freely bought and sold like traditional housing. Instead, they offer a ‘License to Occupy’ whereby you pay a lower ingoing price, but there are regular service fees charged, and a portion of any capital gain stays with the village. Your descendants can see ‘their’ inheritance evaporating before their eyes. The conversation with them often isn’t so blunt – rather encouraging you to stay independent and highlighting the negative aspects of a retirement village lifestyle. Many retirees are dissuaded by (not so) well-meaning family members who are placing their own aspirations above your needs and desires.
3. Reverse Mortgages
A relatively recent phenomenon whereby instead of making regular mortgage payments, the interest gets added to the total and is paid back when you either sell, or after you pass. These aren’t suitable for everyone, the interest rates are higher than normal mortgages, and the total debt can compound quite quickly. However, they are an option for retirees who have property assets but limited cashflow. Again, the issue here is typically the adult children who see the reduction in inheritance and will try to dissuade their retired family members from entertaining the idea – even though it may be ideal for their specific situation.
4. Undue influence
Many retirees over time can become quite isolated from the community and have a more intermittent relationship with their adult children. There may be one child who is in closer proximity while the remainder (if any) are in other towns, other countries, or simply estranged or disinterested. This gives the child who is closest considerable influence. They can withhold visits from grandchildren, refuse to repay loan advances, gaslight to instill self-doubt and a subsequent loss of confidence, and encourage changes to the will which might favour them.
I’m sure there are others, and nobody likes to believe their children would act in such a way. Sadly, these behaviours are more common than most people realise, and in modern society many appear to have developed champagne tastes on beer budgets. I only ask that you be on guard, and ensure your own solicitor is involved when making financial decisions.
Scott Morison, Registered Valuer