Family Office Services
FIVE SMART WAYS TO HELP YOUR CHILDREN BUY A HOME
When our adult children are ready to buy a home, it’s rarely as simple as it was when we bought our first home. Should we help and if so what are the implications? Here are five common strategies for families with significant resources to consider, along with key opportunities and potential obstacles associated with each.
Have them Get a Mortgage on Their Own
Opportunities:
- Builds credit and financial independence
- Encourages ownership mindset and financial responsibility
- Keeps the purchase outside of existing family wealth structures
Obstacles:
- It may be frustrating if they know family resources are discussed, but not accessible. They may wonder “What is the family wealth for, if not for safe housing?”
- Limited borrowing capacity may restrict housing options and you might prefer to have your family members live in a safe neighborhood or in a good school district.
- Feels inefficient to some affluent parents who could buy the home outright to gain financial advantages upon purchase
Buy the Home in the Name of the Adult Child’s Trust with Support of the Trustee
Opportunities:
- Protects the asset from creditors or future divorce.
- Allows the home to be stewarded as part of a broader wealth strategy.
- Helps beneficiaries get used to operating within trust structures.
Obstacles:
- Trust language must allow for real estate purchases – some do not.
- Can reduce the young adult’s sense of ownership if the trustee holds control. This can be especially true for the married-in spouse who may feel uncomfortable living in a home owned by their spouse’s trust and might find it awkward to invest their own money into a home that they aren’t building equity in themselves.
- May involve complex tax and maintenance approaches (property taxes, insurance, etc.).
Provide a Distribution from a Trust for a Down Payment and Have Them Secure a Mortgage for the Rest
Opportunities:
- Offers a helpful leg up without fully removing personal responsibility.
- Keeps some ‘skin in the game’ via the mortgage.
- Easier to justify to other beneficiaries as a one-time support.
Obstacles:
- May prompt questions about fairness: Will other siblings get the same? What if they live in different areas of the country where the cost of a house of similar size would differ?
- The trustee may be hesitant to make a large one time distribution if the trust language emphasizes long-term wealth preservation.
- Depending on the trust, distributions may be taxable.
Make a Loan to the Child from a Family Entity Such as a Family Investment Partnership
Opportunities:
- Offers flexibility: terms, interest rate, and repayment schedule can reflect family values.
- Keeps money “in the family” rather than paying interest to banks.
- Models financial discipline and sets expectations.
Obstacles:
- Must follow IRS guidelines (e.g., minimum interest rates) to avoid gift tax consequences.
- Repayment can create family tension if the child struggles to make payments.
- Blurs the line between parent and lender roles.
Make an Outright Gift to Buy the Home
Opportunities:
- The young adult carries no debt and avoids complexities of trustee oversight.
- May allow the family to capture real estate appreciation outside the estate.
- Can be used as a values-teaching moment if paired with thoughtful conversations.
Obstacles:
- Reduces future estate tax exemption.
- May encourage entitlement or reduced sense of ownership/responsibility. It’s essential to ensure they are able to handle the ongoing costs of homeownership.
- Can trigger resentment from other heirs if not handled transparently.
Final Thoughts
No one-size-fits-all answer exists for affluent families who are considering how to support their young adult family members’ first home purchase. Each option reflects a different philosophy of stewardship, empowerment, and legacy. The best approach often blends tax and financial strategy with clear communication and shared family wealth stewardship values.
Want to deepen the conversation? We help families think through these decisions not just financially—but relationally. Reach out to start that conversation.
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