Inheritance to grandchildren bypassing children

If their children are comfortable and alright, it makes total sense to pass the inheritance down to GC who are of a generation objectively more likely to find house purchase and retirement more expensive. And GC are people in their own right, not appendages.

The worry about them inheriting too young is potentially reasonable though, depending on everyone's ages. Any chance they'd be amenable to a stipulation that the money is held in trust til say 25? If they're all well into their 20s already and the ages are such that even the GC might well be pushing middle age by the time they inherit, that's not so reasonable.

Yes but if the bequest is to the children they can make sensible decisions about how to use that money in the best interests of the grandchildren, rather than it being wasted by the short term thinking of teenagers or young adults in early 20s. Cash can be gifted at any time they choose. There is no income tax on gifts and, if the gifter survives 7 years after the gift, no inheritance tax. No need for the cash to be sat on until the parents die or become infirm needing care.

Obviously different if the person leaving the money doesn’t trust their DC to look after the interests of the grandchildren, when leaving money direct but in trust until they reach the age of 21 would seem to be the best solution.

Yes, but if the GP’s estate becomes absorbed into their parents estate, the chances that IHT will need to be paid on that again increases, doesn’t it?

We’ve asked our ILs to leave my DH’s share of any inheritance they want to go to ‘our side’ directly to my DCs and skip him because mine/DH’s estate will definitely attract IHT as it stands. Adding even just 50k from each GP to the pot means that, in effect, when we die it would attract a £20k tax charge atthat stage because it is in our estate portfolio. Much better to leave direct to DCs who would get the full untaxed £50k. In our IL’s case it will be more and their estate will almost certainly attract some IHT, so it means it will be taxed upon their deaths (well the second surviving person’s death, anyway) and then again if it gets lumped in with our estate.

And this is despite the fact that we, personally, fully intend to fund carers/assistance to ensure their wish to remain in their home until they die. We don’t feel they owe us anything. Their money is to do with as they wish. It is not ours.

I will also add that while there might be a financial cost to caring for an elderly parent and that there usually is, there is also time and stress involved as well.

A person I know is well off and retired and looked after his aging parent.
Yes his wife helped but that's not the point.

This meant that his social life was severely curtailed as well as the huge burden of looking after an elderly parent with serious health issues.
There wasn't hardly any help from his siblings as they lived too far away.

Yet he did not get anything by way of compensation. Not even a holiday that he didn't have to pay for.
Yes money isn't everything but sometimes it's nice to get to do something paid by somebody else.

How anybody could be OK with that I don't understand.

And the grandkids are all high flyers who didn't need the money, either!

Nothing stopping you from giving your children their house deposit. They can just have a bigger deposit. Or buy a 2 bed flat instead of a one bed, for example. Nicer area. It’s a nice position for your children to be in. My parents are wealthy and their inheritance is split 3 ways between my two siblings and me. I agree with it even though the 3 of us are in differing financial situations.
I am also wealthy and the oldest; mortgage paid off etc and don’t need it so will probably look into a deed of variation so my portion can go to my children. One sibling is comfortable but has young children and a large mortgage. The 3rd is left comfortable, renting etc. so for me while I’d be fine with it skipping a generation but as it’s not right for my siblings, splitting it between us and me doing the deed of variation is the right thing to do imo.

All of this being said, I’d be happy if they left noting and just spent it on themselves. But that’s easy for me to say and less easy for my siblings. Either way I’d sooner keep them here alive.

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

As above - atm these 80/90yos appear to have had none of the care people are fantasising about their sons having given them. If she updates to state that they have been struggling under the burden of personal care, then I will possibly revise my position but she has said nothing to indicate that these do 60+ adult sons have done anything personally or financially, yet.

I would be horrified to think my DC would only engage in my care needs when I am that old on the basis of how much they will get in my will. What a world we live in.

This has happened in a branch of my family, one of the children is so annoyed that they were bypassed for the GC that they have refused to act as an executor despite being named as one. Various other complications means that it's been handed over to a solicitor to deal with. Again we are not talking megabucks but a parent wanting to control a narrative and leaving their children out.

Some approximate numbers might help. I mean, "not loads" split five ways doesn't sound like enough for your kids to quit work. . . Right?

Five grandchildren and the same amount given to each sounds perfectly fair. Deeds of variation exist - BIL's kids could hand some (or all) back to him if they chose.

You don't know what'll happen. PIL could live to be absolutely ancient. Or one of them could die soon and then the other remarries, changes their will and leaves everything to the new spouse. Everything they have could go on their care. You don't know what'll happen with the kids either - yours or BIL's. They might not marry. Or they might marry someone very rich who thinks the inheritance is small change. They might become high earners themselves. They might become chronically ill, or carers, unable to work. You don't know.

Higher education is expensive and property prices have gone nuts. If your kids are going to have a leg-up while they're young, be happy for them. The "I wanted to give them house deposits" thing seems a bit mad. I mean, you still can. Bigger deposits for them, better houses. Or, if they don't need it, sit on it and leave them more when you die. Or, maybe, help YOUR grandchildren. (People are living so long now that it feels like it might be a good thing if this skip-a-generation thing became the norm. Maybe it would also be good if young fit grandchildren did more caring for the very elderly, rather than their tired sixtysomething kids). If your kids inherit young, just be prepared to give them good advice on how to use it effectively - university fund, house deposit, maybe a wedding fund, investments, ISAs, starting a pension young. Young people often don't know what they don't know on that stuff - be there to help them.

This falls under the heading of "nice problems to have"; try not to worry. I do feel a tiny bit sorry for BIL, but it's their money and their decision and not your problem to solve. You can't say "I think you should leave it to him" without it sounding like "I think you should leave it to us". For now, forget it. It might not happen anyway, but if it does, be happy for your kids and be there to give them the right advice.

But at this stage, despite the ages of OP’s DH and BiL and the obvious aged of the elderly parents (clearly in their 80s if not already their 90s) NOONE has had to make any sacrifices in their care at all, have they?? She has not mentioned that the brothers have been sacrificing time or money to do anything for them. They may be like many elderly people, actually quite self-sufficient and pass away in their homes or after a brief stay in a hospice [which is what has happened to my DH’s grandparents and all their 13 siblings, all, remarkably, around their 95th birthdays).

IF there had been any costs involved as of today, I am sure @mucky123 would have mentioned it, as it would be salient. IF there had been a decision to provide care themselves to protect the inheritance pot (by not spending it on state care), it would have been mentioned. It hasn’t been.

At the moment the scenario is two elderly 80’s+ people who have decided that it would make more sense to ensure their estate goes directly to their grandchildren possibly so they benefit from it now, rather than in 20+ years if there is anything left, and so that the whole of their estate is subject to IHT once, not twice once it gets absorbed into their sons’ estates.

OP’s BIL should be grateful they didn’t decide to leave it to charity and that the grandchildren will be getting anything. NOONE is entitled to the assets and estate of an elderly person. Ever. Especially one who hasn’t even died yet.

How old are the kids/grandkids? I mean if the grandparents are likely to die when the grandkids are little and you & your husband and BIL & his wife (assuming he has one) could have done with the money to help fund family holidays and stuff, it seems a strange thing to do. If the kids and grandkids are older and the kids are earning comfortably, going to have their own decent pensions and stuff, then leaving it to the grandkids makes sense.

And on the other side of the coin sometimes being a care giver isn’t straightforward and isn’t shared - it’s often left to one person who takes on the burden to their own detriment. Carers allowance is a pittance and comes with an unrealistic earnings threshold and onerous 35 hours per week commitment to caring duties. For some, this very much means that giving care will reduce their own circumstances, and in addition they are saving the person being cared for a small fortune in professional home care/residential care costs. How can you justify bypassing the carer in these circumstances when you are benefiting hugely from what they are doing ?

YABU

1. They should definitely tell their sons (how do you know if they don't?)
2. No, most likely it will allow them to travel and buy a house, both of which are excellent
3. No, it's the grandparents recognising young people have it far, far harder than we did
4. Not at all. It is treating all grandchildren equally. They aren't extensions of the sons, they are whole, individual people

I do think your feelings are valid.
However, it does mean that their money is "safe" for their grandchildren if the 2 marriages break up. It also means your children will not have to use the money on care homes (as they would if it was given to you). Plus, great for house deposit which will hugely benefit them and why wouldn't you want your kids to be helped out (at no cost to yourselves too!)
Also, please remember, it is your in laws choice and your children still may not get anything if your in laws require care homes etc!!

My parents are going to leave a certain amount to each grandchild, and split the remainder between me and my siblings. It's not the UK and this makes things a bit more tax-efficient, but also recognises each grandchild while pretty much splitting it equally between children.

I am giving my inheritance to my daughters, despite my own massive debts. Their generation needs it more than mine.

Your ILs are wise to recognise this intergenerational disparity in financial potential.

I've known the skipping the generation thing happen.
Ostensibly to avoid taxes, which it did I admit.

I can't help but think, though, that the aging parent used it as yet another opportunity to get one over on their adult child who took on the burden of care and didn't receive any compensation for it.
Not even the ability to buy a little treat out of money they didn't earn.

Don't get me wrong, the adult dc is very well off but still not a penny. Doesn't sit right with me somehow.

This is what I am planning on doing and what I am encouraging my parents to do (maybe with a token for me and my sister, but the bulk going to grandkids). My grandma’s recently passed and it all went to my aunt and dad as per will. Neither particularly need it and are enjoying luxuries such as fancy holidays, new cars and expensive (£30k+) landscape gardening. I don’t begrudge them spending the money but I do think it would have had a far bigger impact for me to inherit in my 30s than for me to inherit in my 60s. (I would save 000’s on interest on mortgage tbh). I believe the best way to generate wealth is to skip a generation.

No it will be cash. So uncles who have absolutely token input at rare family events will have control over money until the kids reach 25. They absolutely don't know the kids in question and their attitudes to spending, saving, debt, lifestyle for young people in 2026 will have been shaped 40 years ago.
I think the in-laws feel it will pull the family together but these are not young men, they are close to retirement and cynical with life who barely what's app 'happy birthday'.

I do t know what the answer is, but money without clear communication and flexibility can be pretty toxic.

It’s only sensible if it comes with a sensible age restriction. If someone plonked thousands of pounds into the hands of my kids at 18 and bypassed me, who would have stuck it in an ISA for them, I would be bloody annoyed.

I think it’s sensible. The younger generation will be in more need of it.

I mean they could give it all to the cats home if they wanted so be grateful.

Is there an age where they can access the money? If not then I too would be annoyed.

rhe grandchildren need it more than the chikdren. It’s tough for young people now to get in the housing ladder, it will help them more. Giving it to the children puts it at risk, from
divorces, remarriages, care home fees, spending it all, etc and bypassing them guarantees it gives to the grandchildren. Makes perfect sense toe particular the children don’t ‘need’ it

My question would be who is going to executor, currently going through this myself and it's emotionally and physically draining and a lot of work. I think it would be hard if I was doing it all to receive nothing at the end of it. I also wouldn't want to put a young adult in that position.

You could speak with your children about it. If they agree with unfairness, they could re-distribute their shares as they feel appropriate.