MIL has let it be known today that she has written her will and my DC will both receive a very tidy sum of money upon her death...which I obviously hope won't be for many, many years yet. We all love MIL and I want to make that clear incase I get called crass...
I'm possibly over-thinking but I am worried in case they fritter it when the time comes.
They're only kids at the moment and MIL is a fit 73 years so it should be a very long time before they need to consider this...but should I plant seeds now? Not of MIL dying of course but of future investments and how to manage large sums?
I had no financial knowledge at all as a young woman and wasted a lot of the money I earned. I also watched a friend spend thousands on nights out and clothes.
How can I help my DC begin to learn about the importance of using or investing smartly?
How much money? If it’s less than around £500k then it’s incredible leg up but they’re probably best just using it as a house deposit. If it’s a lot more than that (like not needing to work money) then they’ll need investment advice when the time comes.
I don’t think either scenario means I would do any particularly different now.
Be aware that it could all get eaten up by care fees, or she could change her mind. I have one friend who was led to believe she’d get a big inheritance, and made her career choices etc on that basis - she was very disappointed when the money didn’t materialise, best that they not expect the money really.
if they are 10 or so now they could inherit between 18 and 21 which is high risk.
best bet is for will to be written to secure it until 25 with adult trustees. if they are kids dont waste time discussing, if they are older make it clear that no one can make plans for inheritance due to the aforementioned care home fees.
financial education is good. true inflatjon ( 10% a year or more), what stuff costs, brands are for fools, beauty products lie, the truth of the energy switch model, no one needs that many clothes and that fun does not need to cost.
If it's a big enough sum- make it clear t was for buying a house. Encourage them to put it in high interest account that ideally needs notice to access and stress how lucky they are to have a house deposit account.
While it obviously is entirely theirs to spend as they wish, if you keep referring to it as the house deposit money, it is more likely they will view it as already allocated.
If the joint amount is enough to buy a house now, or buy half a house, I'd be tempted to see if you could buy a buy to let for them with the money. (Not sure legally where you would stand with your dcs having a mortgage, even one on a buy to let, worth investigating though). When they are ready to settle down they can sell the rental and split the profits, but if it's tied up like that, target are less likely to dip in £2k for that amazing holiday, or a car, or just living beyond their means for 3/4 years until it's gone on day to day stuff...
I believe MIL has put it in trust or something...she has money set aside for care should she need it. I can't remember what was said fully.
Coffee that's my thought....I did consider just telling them when the time comes "this is to buy property and that's what MIL wanted" although MIL has said no such thing. Referring to it as "your house deposit money from MIL" is a good one!
my DM said the same when our kids were teens, i gave her short thrift ad told her if you leave it to the kids how would you feel if DS bought a motorbike/car and died on it, how would you feel if they didnt go to uni or work hard at school because they had x amount in the bank? She understood and left them 2.5k each in their late teens but left me the rest knowing we would invest wisely for the benefit of ALL our family.
There are loads of things she can do - set it up in a trust with conditions applied (for university fees, a house purchase etc), set an age limit etc.
Personally I wouldn’t tell them anything about it at all to prepare them for two reasons. Firstly, there may not be as much as she hoped. I have a friend who has had the “big inheritance” dangled since we were teens (now in our 40s!). The grandma lived in a care home for 25 years with full time care and this has basically taken all the money (she died at 103!)
Secondly, I would never tell children that they have money coming - i can’t help but assume it would change their behaviour and make them graft less. My two children may inherit from my parents (I’m an only child) but I will never mention it until it happens.
What happens if you have another child, will they get anything? What if your MIL capriciously writes them out of the will? Just thinking of MN threads I have read in past, problems with wills! Nice problem to have, though.
I know of someone whose children were only late teens when she died. She left them each a substantial sum but stipulated in her will that it was to be used only, or very largely, for a house purchase. Of course this could not be enforced, but they did respect her wishes.
I dare say that if she'd thought they were likely to blow the lot, she'd have left it in trust - though trusts can be expensive.
I'd have it left in trust until they were 25, with a proviso that some could come out early for educational costs (eg postgraduate degrees) or a housing deposit, if they wanted to settle down quite early.