Should we give properties to our children?

Still remember my old blog post “A letter to my new born baby“? I thought I just wrote that yesterday?

Five years on, when her little hand reaches for mine; when she holds me tight and plants a big kiss on my lips; when she looks me in the eyes and says ‘Mommy I love you’, I realize I must have done something really right in my last life.

Wherever I travel, I buy her stickers printed with her favorite cartoon characters. We often review our proud collection together, recalling when, where and how much we got them.

With fellow property investors, we review a different collection – our portfolio of properties acquired over the years – recalling when, where and how much we got them.

Sometimes we talk about buying properties for our children. One would have bought a bachelor pad for the son. Another plans to set aside two houses for each of the two kids. Some are waiting for the lifting of Additional Buyer Stamp Duty to buy something suitable. A few are saving for the deposit.

When I ask people why we have to help our kids to buy properties, the three most common reasons are:

1. Property prices have climbed faster than inflation. Their children might not be able to afford one in the future.

2. We love our kids and give them only the best, including food, clothes, housing and education. Why not properties?

3. When we pass on one day, it’s good to leave something behind so that they will remember us.

If we can afford, why not?

For me, I am hesitant to give any property to my children for three simple reasons:

1. Hopefully they inherit that property investment gene from me. If not, so be it.

2. We can lead a happy life even without having the very best. Things we treasure most almost always have nothing to do with money.

3. It is far more important to impart values and wisdom to the next generation. What I want to leave behind is a legacy – not a physical property, but my vision and beliefs.

I hope they remember me for who I am. Who cares about an old property? The one that has an outstanding loan and desperately need a major renovation?

You might worry about not buying any property for your children even though you can afford it. If you die without leaving anything for them, they might blame you one day.

But wait, by that time you have already died. So that’s not a problem anymore, isn’t it?

In my book No B.S. Guide to Property Investment, I have touched on the legal implications for you and your children if you are buying properties for the next generation.

One of my favorite Taiwanese writers Liu Yong (刘墉) has just published his latest book to share his advice for the elderly.

He has been staying in the US for some time now. He says if you tell a lawyer that you want to put your property under your child’s name, the lawyer will ask you to add one special clause – you no longer own the property but you always have the right to stay there.

One day your child will get married. You have no guarantee that you can get along with your son or daughter-in-law. With that special clause, at least you won’t end up in an old folk’s home.

Another advice: if you want to share your wealth with your children, do it early and timely. Our life expectancy is getting longer. By the time we pass on, our next generation are most likely in their 60s. They no longer need that wealth in their retirement years. But they wish they had that when they were struggling to pay bills while supporting a young family.

Another dilemma: You tell your children to study hard, get a good job and they will be able to enjoy what they have later in life. Don’t be surprised that they will ask you why. If you have already bought them a nice place to ensure that they will have a good life, why do they need to study hard and get a job?

Lastly, you might want to take some hints from the book The Millionaire Next Door to understand how the millionaires manage to raise successful adult children.

1. Never tell children that their parents are wealthy.

2. No matter how wealthy you are, teach your children discipline and frugality.

3. Assure that your children won’t realize you’re affluent until after they have established a mature, disciplined, and adult lifestyle and profession.

4. Minimize discussions of the items that each child and grandchild will inherit or receive as gifts.

5. Never give cash or other significant gifts to your adult children as part of a negotiation strategy.

6. Stay out of your adult children’s family matters.

7. Don’t try to compete with your children.

8. Always remember that your children are individuals.

9. Emphasize your children’s achievements, no matter how small, not their or your symbols of success.

10. Tell your children that there are a lot of things more valuable than money.

Really, you don’t have to leave your children a legacy. They are your legacy!