Ideas to multiply wealth from one property please .

[jasonp3]

There is a property in my family ear marked to go to several grand children .

Since property in major cities in good suburbs is so expensive and hard to buy, I wonder if instead of selling a property and dividing the proceeds amongst several grandchildren and that is then the first and last time that the family benefits from this property , if there is instead a way to let that property be the beginning of building larger wealth that could benefit grandchildren more and benefit maybe even the next generation .

I'm interested to hear what others say but some ideas I hAd were

Sell it but use proceeds to build a block of flats somewhere that could be sold for greater value
Or hold that property build an upstairs and let 2 families at a time live there to save for deposits for homes .

It's a huge opportunity when there's a property in a good suburb in a major city and rather than use this once to sell and divide amongst grandchildren , I am looking for ideas to maximise benefits and wealth that could maybe benefit more than one generation and might be the first springboard to building greater wealth rather than dispersing it and that's the end of it .
I'd appreciate ideas please .

 

[The Y-man]

I understand the sentiment, but I see a whole stack of issues (as well as options).

For starters: what's to stop them deciding to sell up and blow the money on one big party anyway? Who will make the decision (after you move on)?

Is there anyone "financially savvy" in the next gen and/or beyond or will you train up an apprentice?


My initial thoughts on reading your post was that income was going to be more distributable than capital gain (and perhaps less tempting to "sell out"). In that line of thought you might perhaps give thought to selling up and putting the money into a CPT?

The Y-man

 

[willair]

Sell it but use proceeds to build a block of flats somewhere that could be sold for greater value

You are still going to have the same problem down the track,and depending on how many grandchildren and as time goes by and everyone goes their unpredictable different ways, sometimes it's better to finish it by auction ..imho..

 

[Mr. Fabulous]

if there is instead a way to let that property be the beginning of building larger wealth that could benefit grandchildren more and benefit maybe even the next generation .

I have spent a great deal of time thinking about this in relation to my own situation. My conclusion: good luck with that.

 

[jasonp3]

Yes i hear that there are problems.

I still think if i could give them some ideas that i'd have more chance of it possibly happening than otherwise.



If as a team they could somehow go into property investing for 5 or ten years they could end up with alot more wealth for themselves and their kids then if they just divide it and try to buy themselves homes or units.



to invest these days some people have to pair up or invest with others. I wish they could do this and accumulate some big time wealth. d.

I still think if i could give them some ideas that i'd have more chance of it possibly happening than otherwise.

 

[westminster]

On one hand dividing it up and they all use their part to help buy their own house/unit is not so bad. It will provide them the ability to buy something better and more likely to acheive CG than if they were to use their own smaller deposit. Those seperate dwellings will also grow and it will be CGT free when they sell and they can use the equity in that to invest if they wish. It is likely they will pass those down to their children. It also is the least complicated way to keep everyone happy.

On the other hand it seems they may have one blue chip opportunity if they choose to share it and see what they can do with the money together. I think they only way I can see them going for it, is if the block was developable and they all end up with a dwelling each at the end of a development.

 

[wylie]

Is the property still in the ownership of the grandparents? Are they wanting to earmark one property to be split between grandchildren? How many grandchildren and what ages?

My parents wanted to make provision in their wills to leave money for their grandchildren (oldest aged about 15 at the time). Their will was complicated by a rogue son (two normal children, one problem child).

Leaving aside the set up to cater for the rogue and his child, my good brother and I have eight children between us. I have three, he has five. My parents wanted to leave their estate (apart from the provision for the rogue) between my brother and myself. Because he has more children, his children likely would get less due to him having more of them to divide his future estate between, so my mother wanted to offset that a little by ensuring each grandchild was given an inheritance once then turned 25, separate from what else was left.

She trusted the two good children (my brother and I) to do the right thing, so left this out of the will to keep it more manageable.

Pretty much, one house was earmarked to be divided between our eight children so they each would get a certain amount as they turn 25. The remainder was to be split between my brother and I and of course, we each will provide for our own children when we die.

It is not part of the will, so we could have ignored this letter of intent but that also means we have more control over when they get the funds than if it was part of the will. It happens that the amount they get (calculated on values at time of passing) is $70K which is will mean one house divided by the eight grandchildren.

My mother wanted each grandchild to be able to access this windfall when they turn 25 to try to stop them spending it on cars or holidays. She was happy that they have early access for education or to buy a property. Of course, we all thought she would be around for most of them to reach 25, but that didn't happen.

My oldest son (25) has used his to get into his third property just recently. My middle son (22) used his as a deposit a few months ago to get into his first house. One of my brother's sons has just used his (20) to get his first townhouse.

My brother and I control this so none of our children can decide to buy a car (at least until they turn 25) with their money. If any of our kids turns out to be too wild, we may hold onto their money rather than let them spend it on stupid things.

There was utmost trust between my parents and the two of us. Without such trust, this could have turned out less than ideal. It is working well, but with five more to go, there could be hiccups down the track.

If there is one house to be earmarked, depending on the number of grandchildren, and when they will be allowed to access the funds, this type of scenario could work. We have not yet sold one house to fund anything, however, as the remainder reach 25 or buy a house, we will eventually have to sell a house to continue to fund them. Meanwhile, the house earmarked is growing in value and providing us with rent.

 

[jasonp3]

Thank you that is similar in that there is one property earmarked to go to several grandchildren.

All are good yet, nevertheless i beleive that when they show a suitable house then the money should be given directly to the bank for deposit and not as you say be used for anything else. Thats how i would like it but i wont necesarily have a final say and thats probably what will happen that it will be deposits for each ones home

I just wonder if they would benefit more to use it to build mroe wealth and get into property investing and building wealth rather than just for each ot buy one home.

 

[Vixs]

Thank you that is similar in that there is one property earmarked to go to several grandchildren.

All are good yet, nevertheless i beleive that when they show a suitable house then the money should be given directly to the bank for deposit and not as you say be used for anything else. Thats how i would like it but i wont necesarily have a final say and thats probably what will happen that it will be deposits for each ones home

I just wonder if they would benefit more to use it to build mroe wealth and get into property investing and building wealth rather than just for each ot buy one home.

Everyone involved is going to have a different path in life, different timeline, different needs and different motivations.

While it might seem ideal, the odds of it lining up in everyone's interests at the same time to not just take their share and do with it what is appropriate to them are slim.

 

[wylie]

I just wonder if they would benefit more to use it to build mroe wealth and get into property investing and building wealth rather than just for each ot buy one home.

I cannot see how you can do much with one house to create more wealth without borrowing to make it happen. Is that an option? How old are the grandchildren? Who would drive the project?