Inheritance to grandchildren bypassing children

How does that make sense? The IHT has to be paid whoever inherits it.

Requirement to pay IHT is dependent on the amount left, not who inherits. Any estate above the threshold has to pay it.

I'm well aware that IHT is dependent on the amount left but it IS paid by those who inherit if the amount is £375K+ or £500K if the deceased's home is left to family member(s). If the estate is large enough for IHT then it does make some sense to bypass the (adult) children and leave it to the grandchildren.

We paid DCs’ accommodation costs through university (seven years in one case), gave them the deposit on a house and paid towards the wedding costs. Our house was the worst decorated house in the street, while we did so. DS paid off his student loan in his early thirties. It’s quite possible DD will never be able to work again, so won’t ever have to pay off her student loan. DS and DDIL’s OH both earn 6 figures.

We look after DGC, on the days DDIL is working.

What more should we do for DS?

Your first post said you don't need the money, and implied it should have been left to the next generation.

Your second post goes into reasons why you need it and why you can't just pass the money on as suggested by another poster.

Am I missing something?

Depends how old everyone is - no point 95yr old grandad leaving money to children in their 70’s really. It’d make much more sense to help grandchildren or even great grandchildren.
Or even more sense to gift while everyone is younger and able to make the most use of it!

My grandparents were pretty well off; my grandfather left 50/50 to my father and his brother. My grandmother left 50/50 into two trusts for each set of grandkids, they got 1/3 of the trust each when they hit 25, we got 1/4 at the same age. It wasn't huge but it paid for my masters and a decent deposit. I'm very fortunate but think it was very well, and fairly, planned. My cousins got much more from their mother's side than we got from ours too, but I still think the pot per family is the fairest way.

Inheritance should go to whoever the person leaving it wants it to go to. Fixed it for you

Given the fact that IF care of the elderly parent is required it will probably be their children doing the drudgery of the care, taking on the responsibilities of that care, possibly losing out financially, but definitely losing out in terms of time and opportunities to socialise, not to mention the stress of caring, unless there's a good reason like avoidance of tax, I find it very unfair to leave it to the grandkids who'll probably only be visiting granny when suits.

I do think people are missing the IHT point. Leaving money to the grandchildren (or great grandchildren) is an excellent part of long term IHT planning. This is because if left to the parent, who may already be financially sound with their own house, pension pots, investments, etc., may push their estate over the IHT threshold when they die. If the grandparents leave directly to the grandchildren, it doesn't form part of the parent's estate so kicks the IHT can down the road for a generation at least.

Says who? The person leaving the inheritance gets to decide where the money goes, and it has nothing to do with anyone else.

Personally, if my ds already has a decent house, and has cleared any student debt, I intend to leave anything I have to my future grandchildren. They can use it to pay their own university fees - helping my ds - or they can put it towards a house deposit. And if there is any IHT due, it will only be one lot, rather than two.

Things are harder for young people today than a generation or two ago. Back in the 80s/90s, housing costs were a much smaller proportion compared to wages. We've had a couple of decades where housing costs have risen faster than wages.

Grandparents (and many older parents) will have benefitted from the unprecedented economic growth, and windfalls etc., of the 90s and 00s. Today's younger generation aren't going to benefit from endowment mortgage windfalls, mutual building society/insurance firm privatisation windfalls, house prices doubling/trebling over the term of their mortgage, nor wage rises that keep pace with inflation.

If the parent is middle aged or older, has a small mortgage (or no mortgage) compared to their house price, has a good pension scheme in place, then there's not much "need" for them to receive a whopping inheritance from the grandparents. Especially when the grandchildren are £50k in debt due to student loans, will have to save for a decade to get a deposit together for their own home, paying half their wages in rents, and suffer much higher indirect taxes than their parents/grandparents suffered at the same age.

I agree with you Op. I'd feel very irked in your shoes. This set up only really works after it's been done for a few generations, because I'm sure you would be ok with this, if you and DH had inherited from your grandparents. But if you didn't, you are literally the only layer to be bypassed, and that doesn't feel fair at all.

Who cares whether you need it - it could be the difference between a frugal retirement or one of luxury. I do understand as well, that now it feels as though the grandparents have set the kids up for house deposits, and it should have been you. It would have been you, if they had willed their money to their children. You have been robbed of this, I think.

I think it's utterly stupid when parents leave differing amounts to people based on a snapshot in time of people's finances. Wealth (or lack of) can spin on a dime, based on so many things. I was wealthier than my sister a few years ago. A costly divorce (for me) and a huge inheritance for her (her DH's mother died) mean that now she is wealthier than me. If I look at my own kids - one was engaged to a multi million pound heiress at one point, but then they split up.

My own parents have willed £10k to each grandchild, and then the rest of the pot goes to their 2 children (me and sis). This feels like a fair compromise to me. That said, my sister and I both have 2 kids. Maybe it wouldn't feel fair, if my sister had, say, 6 kids. I mean, every time she had a kid, it would be costing me £5k!

How much will each GC get? I think this is relevant.

DHs family left 'his' inheritance to our dcs. It wasn't a lot, maybe 20 ish K each. It went on holidays, lip fillers and the like, a fancy guitar, nights out, skateboarding. I suppose it went on 'fun'.
It was left by a hardworking class people who never treated themselves to anything much.
It seemed an awful waste tbh.

I understand why you'd think the portioning is unfair if it was going through the sons, but if they're gifting directly to the grandchildren then surely it's fine (and fair) to split it equally? It's not a family 'pot' after all, it's for those individual people to use, regardless of circumstance, so fair for them to be given the same.

It's also a bit ridiculous to be complaining that you wanted to give them money first - they are incredibly lucky to be getting two rounds of inheritance when most have none, and how long would they be waiting for that? In this economy they'll need all the help they can get.

If you're worried they'll blow it then have a conversation about it beforehand or ask PIL to gift it in trust (if they aren't adults yet). Realistically, it's their money to spend so you can't put stipulations on it.

Edited to say: my husband received inheritance from his grandparents in his early 20s and we used it as the deposit for a house - we're on our second home now. I'm likely not to receive anything from my side until I'm in my 40s, and only then because my DM isn't around, so GPs are giving it directly to us. My DB and DS will have to wait until then to even think about owning a home (both in very good jobs and have worked hard their entire lives). In my 30s and in a professional field with working friends and I know very few people who can afford to move out of rental.

I told her that I felt unloved & uncared for & the kids would ultimately get what we leave, everyone should have their turn

The brass neck of this!

If you feel money = love you are messed up.
No one "gets a turn" of other people's money, not even their parents.
You have emotionally blackmailed your poor mum into changing her will.

You should be ashamed of yourself.

I think, as long as the GC are responsible, it would probably give them much more of a leg up to have the inheritance early on than to wait until they are in their 50s or such to receive it from you. I have asked my parents to give part of their inheritance to my DC. It also means less IHT from anything that might come from me to them.

DH and BIL are due to inherit from DM (probate is going through). We have two young adult DC. We will def use it (and some savings) to help DC on their way, but only when they’re settled in jobs and have properly launched. They’re v welcome to live at home for free (or minimal rent to cover extra food) until then but they need to make their way first.

I’d be more tempted the other way. Reward hard work with an inheritance, rather than the dosser!

I am noticing an ever-growing tendency for people to leave money to their grandchildren rather than their children. Even on game shows, everything people win is 'for the grandchildren'. I find this quite sad - I wish the elderly people would spend money on themselves while they can still enjoy it, and then leave the remainder to their children, so they can enjoy it too. Why all the skipping a generation? Surely the grandchildren will inherit from their own parents, which is the natural order of things.

Its always tricky when an inheritance is divided unevenly based on the perception of which of the recipients needs it more. I have a work colleague who has fought bloody hard to get to where they are, studied hard, went to uni, put up with a load of shit in their career to get vital experience, got charterchartered etc. Managed to climb up the property ladder under their own steam etc. Conversely their brother was the polar opposite, lazy, entitled, mooching from one hair brained get rich scheme to another, been bailed out a few times etc. Their mum had a large house in Surrey which she decided to gift to the dosser brother as he 'needed it more'. Its hard to say it would not leave a bad taste in your mouth if you had done everything 'right' yet your lazy sibbling just gets a million quid house.

This. And any "I wanted to be the one to give the house deposit" is TOTALLY unreasonable.

This is AWFUL!.
You told your own mum, who had spent a chunk of her inheritance on your education, that you felt unloved because she wanted to give it your children. And you didn't even need it.
Every time I think I have heard it all, MN throws up another mind-blowingly dreadful post.
You should feel ashamed of yourself.

I think it's controlling

Why would a grown adult not have the right to make decisions (control) regarding their own money It is perfectly acceptable for an adult to make perfectly reasonable and legal choices about their own money.

Also very different in different families.
My nephew will get nothing if my DM leaves her estate to my brother and his wife. Divorce likely, so the money will already be divided. Selfish adults too, who will not pass on the money to their DS, where DM wants it to go.

In my case, I have provision for everyone except one family member who will drink himself to an early grave if he is left a substantial amount. I have named his children.

There are some very bitter and grabby adults on here.

You could suggest they do a straight split between the two sons with a letter of wishes saying that if the sons don’t need it then please do a deed of variation to pass it on to the next generation. That way there is flexibility based on you brother in law’s needs and you children’s ages.

If that’s not a goer, suggest 1/6 each to your three children, your brother in law and his two children. That way he gets a small sum and the children are the main beneficiaries, each receiving equal sums and each half of the family receiving equal sums.

I think as this thread shows, it’s highly personal and down to unique circumstances.

My husband (and I) were so so lucky to be the grandchild in this situation. It was life-changing for us, the money would have made almost no difference to his parents but enabled us to buy a house at 23, setting us up for life. His parents will do the same as their parents and leave to our DC, which is what we want too. PIL did a wonderful job raising him and setting him up for life, including by requesting this inheritance arrangement from their parents (skipping a generation)

DH’s sibling, despite also benefiting in exactly the same way we did and having comparable financial situation now, has asked his parents to leave to him and not his DC. So he will benefit twice from inheritance and his kids won’t inherit until a much later point.

My point being - not only is everyone different but you can’t rely on others wanting the same thing or being ‘fair’