Inheritance to grandchildren bypassing children

Yeah… it’s perfectly possible to have happy, functional, communicative family relationships and for in-laws to understand they have no business suggesting what people do with their own money. The two are not mutually exclusive.

Not all families are so uncommunicative.

Respectfully, I gave an opinion, not decreed it as law. There is a reason that without a will an inheritance is equally split between the next in line (usually the children) and it is the common sense approach.

My thoughts on passing it to the next generation rather than the one after that have little to do with the money and what would be done with it, after all, if every person skipped a generation, everyone would still get an inheritance just from a different stage of the process.

My mum has been told by both me and my sibling to spend the lot enjoying herself, and she has been. The only thing I asked her is that she leave us the house, but that is for sentimental reasons, and I did tell her that if she wanted or needed the money (so had considered selling her home) that I would just buy it from her so she had the money but lived in it. If anything is left to my sibling and I then we will choose how much and when our children receive it, so that we can help support their life goals in the right way. I’ve seen people in their late teens and 20s be given huge sums of money and it impact their lives for the worse long term, so handling these things together is better.

But, I say this as someone who has every intention on financing their child’s house deposit via personal assets, so it’s not like they will miss out on a help in life.

What I do worry about is that the generations who plan to skip their children with inheritance giving because they ‘dont need it’, may not fully understand the difference in pensions across the generations. Their children may look financially sound, but could be struggling.

anyway, personal preference, not law, and also not being awful when it comes to money. Thanks

I never get the argument that it's unfair if grandchildren inherit over children, more specifically the argument that's its somehow more unfair if the number of grandchildren is un-equal between the sides of the family, it's irrelevant, the money isn't being combined together for each of the families then one sides gets to gloat or have a prize for having more, it's presumably going equally to 5 different individual people, with their own free will and own needs/goals in their lives.

The most sensible reply on this post.

if they want to leave it to The Dogs Trust or the local church then that’s up to the person writing their will.

No one should expect an inheritance .

You are not unreasonable, being bypassed isn't a nice feeling. For good or bad generally speaking many kids anticipate that the second of their parents to die will leave whatever is left, if anything, to them in equal shares. It is human nature to be put out if that doesn't happen.

Even more so if siblings have different numbers of kids and the split is per grandchild.

The grandkids getting it too soon is problematic and can put them off ensuring they set themselves up by working to support themselves.

@QuintadosMalvados

In the absence of tax avoidance, who the blazes does this? Mind boggling.

Firstly, tax planning is rapidly becoming more important and relevant given the freeze in thresholds for many years and the recent IHT changes to both pension pots and business assets.

Secondly, generational wealth planning is more relevant than ever these days because the incidence of "blended families", marriage break ups, divorces, unmarried couples having children, etc. Grandparents (and parents) want their estate to go to who they want it to go to, usually blood relatives, rather than spouses/children of a new relationship (and step children) following a divorce or death of their flesh and blood. Unfortunately, lots of people don't consider making or re-making their wills after a divorce or marriage and/or don't make wills when they enter into a new relationship or co-habiting with a new partner and their family creating a blended family.

Go back a couple of generations and elderly parents were worried about leaving money to their grandchildren in case they spunked the lot of wine (wo)men and song. These days, they're worried their inheritance could end up with the non blood related spouse of their son/daughter who in turn leaves it to their biological children and not the grandchildren of the elderly person.

And also delays the IHT by a couple of generations. If the grandparents' estate added to the parent's estate exceeds the IHT threshold, grandchild will receive the net amount after IHT. But if grandparents estate goes straight to grandchild, it would be received net of a much lower IHT liability (or more likely none), and likewise grandchild will receive net of a much lower IHT liability (or more likely none) from the parent when they die. So the grandchild ends up with two larger net estates rather than one smaller one (due to IHT on the double-counted grandparents estate). Of course, the grandchild(ren) will have a large estate on which IHT would be due when they die, but they likewise could leave to their grandchildren. IHT planning is ALL about the long term and intergenerational wealth transfers.

Spoke to a man a while back who thought parents should sell their homes and give the proceeds to their children asap so their kids could have a lovely life. Person was a man - his mother looked after his kids 2 days a week -so he didn't think she'd get dementia because she still had a job looking after his kids and even if she did - she wouldn't need nursing care because it didn't last more than 2 years and even if it did - the social provided homes his mum could be dumped in. And his mum didn't need to have any money anyway because she had nothing to spend it on and he had never heard of any one travelling the world - why would an older person want to do that when they could be so useful to their kids. He had no clue about elderly care - too young to know anyone with elderly parents who needed their kids to look after them - but he was definitely quite vocal about all the things his mother should still be doing to make his life better.

Can I just say - kids or grandkids who expect parents to give up everything for them are shitty and selfish. Older people have a right to a nice life, they have a right to nice holidays, they have a right to use their money to pay for good quality care in their advanced years. What is going on? Every week on here there are posts about how older people don't deserve to live life in comfort because the younger generation is much more deserving! I'm a big fan of assisted dying - at least the the grabbiness of the current generation you could go out with the bang. These threads depress me - I know I should stop reading them.🙄

Lots do it. If there are step grandchildren for example and they want to ensure it’s not passed to them.

Interestingly, the culture in various European countries agrees with you - by law you have to leave a percentage of your estate to your children there.

I don't know why people keep saying anybody can leave anything to who they want as if it's a revelation? I mean that's bleedin' obvious, so why say it?

I'm not in this position but in all honesty I would view grandchildren who watched their parents struggle caring for a parent with dementia for sometimes years and happily took the money when that grandparent died knowing that parent couldn't even get a holiday as thanks as very shitty human beings.
They should find some way of giving some to them. It's just the right thing to do.

I would also view the aging parent who let their child struggle taking care of them day in day out with not even a f-ing penny left to them when they die for a nice holiday as completely shitty humans , too.
No matter how much wealth those children had!

In the absence of tax avoidance, who the blazes does this? Mind boggling.

Agree, give money away while you are alive. It reduces the IHT liability.

People hoard money and then whine about IHT. There's an easy solution. Give some of it away in plenty of time - if you are that rich there will still be enough for care fees if you need it.

Yes it's their money to piss away. But now they are mid twenties - so only a few years later, they can't get a deposit for a house. £75,000 I presume would have been a solid deposit. I'm not sure they regret that. Can only think from my prospective that I'd wish some of it was held back so I could put it towards to owning a property.

There would be a point if the 70 year old didn't have a good pension - or are you thinking they are nearly dead so it doesn't matter they are live out their end of days in an old shit hole? People of working age can improve their circumstances by working - a 70 year old can't.

I went to Uni in the 90's - I remember them as difficult and grim - we were definitely not living in the land of milk and honey, both dh and I had severe belt tightening times but in the end we made a nice life for ourselves post 30 - but it's bollocks to suggest life was easy. My kids have never known hardship - I've plenty of stories to tell them - but they rather believe we've never had to struggle.

It's a common way to avoid a lot of inheritance tax. If the money goes through you first then it will eventually be taxed twice to reach the same people. Families with money often do this if the parents are comfortably off. It also takes the pressure off parents to help out their young adult children so they hold onto more of their own money. They may well have been advised to do this.

Not your money, so you get no say.

True, but that is more about preventing the need to pay IHT a second time if the beneficiary dies shortly afterwards.

An example; a widowed grandmother dies at the age of 90 and leaves a really large estate worth £1.5 million to her only daughter who is divorced and is aged 65.

Assuming grandmother could make use of her late husband's allowances then there would be £200k inheritance tax (IHT) to pay and the daughter would receive £1.3 million.

Suppose the daughter already owns a house and she is worth £500k before the inheritance. With the inheritance, she now has assets worth £1.8 million in total.

Unfortunately, the daughter becomes ill and dies seven years later at the age of 72. The daughter leaves her estate to her own children.

Having already paid out £200k on IHT, seven years earlier, there is now IHT to be paid out again which, this time, will be £520k.

.

If grandmother's estate had passed directly to the grandchildren then there would still be the initial £200k in IHT to pay but there would not be a further bill when the daughter died as her estate at death would only be £500k.

.

There would also be less IHT to pay if grandmother left a lot less. Suppose grandmother left an estate worth £500k to the daughter. This time there is no IHT to pay on grandmother's estate.

When the daughter passes away, her estate before the inheritance was worth £500k and, assuming she leaves her home to her children, there would be no IHT to pay. However, with the £500k inheritance that means that her estate now has to pay IHT.

.

Of course, the daughter may well "spend, spend, spend" and have a great time blowing the lot before she dies. In which case, no need to worry about IHT.

The daughter might also think about giving her own children some of the money but, apart from some specific circumstances, if a person dies within seven years of giving a gift then that gift is counted as still belonging to the estate for IHT purposes when IHT is calculated.

SOME grandparents. Personally the 90s brought repeat redundancies and unstable temp jobs for the breadwinner a disabled child who could not be cared for outside the home to enable me to work.
14 year career gap resulted. No pension from those years means I currently live partly off the dividends from my inheritance.
DS1 will get his Dad's spare pension and what remains when I go. Has already had something towards a house from family money.

Or, as the DIL, she could realise she has no business suggesting to her PIL what they should do with their own money.

Yes but how many family really fully know each other's circumstances?

We're in our late 40s but - still have a £200k mortgage (didn't get on the property ladder when prices were cheap), have 8 more years uni costs to pay for and don't have much tucked away in savings.

My parents have no idea though and probably assume we have loads in savings and have nearly cleared our mortgage.

That’s assuming none of it’s spent, used on care or given away in the interim.

It avoids IHT effectively being paid on the same money twice - firstly when it is passed to the children and then again when the children pass the remainder to the grandchildren.

It puzzled me too so I didn't respond😁