The Bank of Mum and Dad (BOMAD) - open 24hrs

  • Insight

21 August 2017

The average cost of a wedding is now said to be £25,000.  Even if both parties are in full time jobs, it is a small fortune by any standards.

If the happy couple are also saving for a house deposit or, having already done that, they are paying a hefty mortgage, then some of the burden might be taken up by funds from the Bank of Mum and Dad. Here are a few suggestions for both the ‘bank’ and its ‘customers’!

Is it a gift or a loan?

Be clear and preferably document it at the time.  If there is an expectation of repayment or payment of interest, set that out as well.  In family settings it is very common for one person to get the wrong end of the stick or for everyone to only politely discuss “helping out” but without being really very clear and it is far better for everyone if the position is transparent at the outset, both for the lender, borrower, and other potential customers of BOMAD, other brothers and sisters for example.

If it is a gift, who is the recipient?

Is the gift to BOMAD’s child alone or is it to the happy couple? Again, being clear is far better. Generally BOMAD will want to benefit ‘their own’. That is not being mean to the other party, just that blood is usually thicker…. Passing a cheque made payable to your own child might be evidence enough, but if he or she deposits it into the couple’s joint account, the gift might become shared unexpectedly. Again, better to be clear.  It is highly unlikely that anyone could be offended and by parents giving a gift and helping out their own child, but if the gift is to the couple then again better openly done in that way rather than assumptions being made that can lead to difficulties in the years ahead if there is ever a dispute or disagreement about the terms of the arrangement.

When and how will the loan be repaid?

If it is a loan, try to be clear about when and in what circumstances the loan becomes repayable. If monthly payments are expected then the frequency and the amount should be clear to everyone involved in the transaction. It may be that the loan is only repayable in certain circumstances. If the funds are being made available for the purchase of a property, it might only be on sale that repayment is required or, sadly, if the couple separate.

Tax advice

Whether to lend or gift is a decision to be taken by BOMAD based on current circumstances and tax advice should be taken. Making gifts can be helpful for the purposes of estate planning but, as always, such matters should be discussed with tax experts.

BOMAD may be open 24 hours a day, seven days a week, but in order to avoid any difficulties later, it is best to have clarity about who and what the money is for and if or when it is ever to be repaid. Our Family & Relationships team can offer advice.

For further information on all family & relationship matters, contact