Using child’s inheritance to get on property ladder

[Wanttobeontheladder]

We are in our late 30’s with 3 children and have been renting all our adult lives

We are desperate to get on the property ladder but I am SAHP and DH is sole earner.

After the loss of a parent recently there is a considerable inheritance that was left directly between our children rather than coming to us.

Using this money would mean we could finally get on the property ladder (just)

Seeing as the children benefit too we feel that we should use it.

Would we be unreasonable to consider this?

As you cannot inherit until you are 18, is it a case of their inheritance is held in trust with you as the trustees until they are 18, which depending on the wording of the trust may allow you to do this.
Yes this route has pitfalls as many people have pointed out. If you 'invest' the money on their behalf in a house for the family you will need to be able to 'release' that money when they reach 18. This isn't the daftest idea as saving rates are pretty dire at the moment. But the tricky bit is releasing it as it may mean you need to remortgage or sell your house. You would also need to be very careful with the paperwork so that it is clear what is going to happen to their money and when.
Our children's inheritance would actually be held in trust until they are 21, as if we both died it would be a considerable amount and we worry about putting that on the shoulders of an 18yo (as we made the wills when they were babies we didn't know if they would be sensible kids or not)
Our kids also have savings which we hold in trust for them and as they are young they are held in moderate risk investments which are more likely to accrue better returns but we will reduce the risk and change the investments as they get older and closer to getting access to that money. Obviously changing investments in shares is a lot easier than changing those in bricks and mortar. This is the key thing you need to consider - will this get you on the housing ladder or will it put you in a rather difficult position in a few years. I can see the attraction but also the pitfalls.

I would do it. This is doing something in your children’s best interest. If you can save £300 per month doing this, you will still need money to pay for commute so maybe you can pay back the 25k in 5 years.

I don't think YABU. A secure home over your head is worth more than £25k over 18 years.
And I don't see it as stealing from your children. It's providing them with a home. If it was stealing, then you'd be taking the money, buy a home and turf them out.

It’s £25k plus whatever interest it would have accrued...

With the right provisions, this could absolutely be done and could also represent a good investment for the trust.

It does however very much depend on many things, including the specific type of trust that the money has been put in for the children and the provisions for that trust.

It also requires a rigorous plan to ensure that liquid funds can be produced as and when required. As PP had set out, if there is really a saving of £300 a month to be realised then much could be done with that.

Anyone who thinks that the 'correct' thing to do is to just put the money in a cash account which pays interest at less than the rate of inflation (so that the value of the capital is eroding year by year) is really not very well informed. The funds will need to be invested someone, the family home is at least a possible suitable investment subject to the usual provisions for which you need a family and trust lawyer and possibly some financial/tax advice too. Possibly separate advice for the DC and the parents but family / trust lawyers will be in a position to arrange all that is required (subject to the type of trust - did I say that already?)

The place to start is to look at the provisions of the trust to see what can be done, there may be a requirement to use the value to the benefit of the DC or to allow the value to grow or all sorts of different things so start there will a solicitor who specialises in family and trust law. Involve the trustees from the start so that you have their buy in. too.

The trust could be kept going for subsequent generations to provide funds as appropriate, with benefits which are perhaps surprising for purposes including estate planning. This is how many bigger landed estates are handed down the generations, somewhat protected from the ravages of inheritance tax The principles can equally be used and be beneficial for more modest estates.

So the DC could be 60 by the time they inherit, which won't help them get a foot up in life.

That's not what OP is proposing - she wants to invest the money now, return it to the children in time for their 18th birthday, AND then they'll inherit whatever estate their parents have, at whatever age they are when their parents die.

There is usually a reason people skip a generation when they will money. Dh grandad left money to his two great grandchildren plus the baby due and nothing to his grandson, my dh. It went straight in the children's accounts. No other choice crossed our minds. It's not our money.

Do it.

Assuming you can afford to pay it back in the long term, it’s just bloody stupid to invest it elsewhere. Investing it in a home on your children’s behalf will offer them maximum benefit. They get a better quality of life now and also get their money when they reach 18 because you’re able to save the money to pay them back because you pay less in rent/ mortgage/downsize when they leave home.

Obviously make sure you do it all properly, legally with the trust owning part of the house and budget properly so you’re able to repay the money when the time comes, but I wouldn’t think twice about it ‘morally’.

As long as you have a repayment vehicle to repay the children their inheritance plus interest, that money will do far more good than sitting in a bank. I see nothing wrong here at all as long as you do it legally (get some advice from a decent solicitor)

YABU!

Not many people can get a mortgage with only one person bringing money in.

Maybe you could afford a mortgage or increase your deposit further if you work also?
Probably not worth it if all your children are under 4 with nursery fees I expect.

Don't flatter yourself that people will be jealous of you. Decent people don't tend to be jealous of people who screw over their children.

Who left the money? I'm curious what with your husband been dead set on taking the money that belongs to his kids.

Not sure on the legalities of this, as others have said.
I know my Dad is going to bypass my sister in his will and leave her inheritance to her children. He has been non-contact with her for 8 years, and does not want her and her husband having the money. The money has been left in trust for the children (4), and she cannot touch it.

If that money is in trust for your children, OP, I'm confused how you can even gain access to it?

@Wanttobeontheladder One of my siblings did this, not with inheritance but with money gifted from the childrens great grandparents. They used it to help pay off their mortgage and have repaid it back (with interest!) since with the money they would be paying on the mortgage. If you're £300 better off a month and you saved that each month for the next 14 years then you'd be doubling their money. BUT you'd need to make sure you did that and that you made sure all was legal so they children didn't lose out. It all depends on the legalities and how responsible you both are with money. My sibling had repaid it (and doubled it) before the kids hit their teens and so was a non issue but they are very careful.

I totally agree with Limp Lettice. To me it would be a no-brainer (I did something similar when my eldest was a baby - our car went kaput, we were very low income at the time - and he had a savings account. We used some money from his account to buy a new (old) car. The money was back in his account within a few years along with any interest he would have accrued. He's 17 now and it's a complete non-issue. Without the car though we'd have been screwed at the time - isolated, unable to get to work etc.

The point here is that you are a family and families pull together to make sure they thrive together. By my reckoning if you save the £300 a month by the time the eldest is 14 you'd have saved more than you'd borrowed and they'll have the cash ready to spend on whatever they want when they become adults AND had a more secure upbringing with less stressed parents. Win-win.

This is assuming that your have complete integrity and it's all done legally (in case anything happens to your marriage eg and future partners & families come into the equation. That could be dreadful so you have to put safeguards for something like that in to place)

If it could be done legally, whereby the children's inheritance is invested in a trust which co-owns part of the property, and they share in the rise in value over the years, it could be a good long term investment for them. (Not to mention growing up in a nicer house with more disposable income for you to spend on them.) If that's what you DH is suggesting, I can see the sense in it. If he's just thinking of taking it, of course that's not on. You've had some legal advice, insist on more so that the children's inheritance is 100% protected. They will probably make more in interest by co-owning a property than sticking it in a bank and getting the pathetic rate on interest at the moment.

If the will was drawn up properly, this money will have been left in trust for the children. If you are not the trustees, it will be up to them to decide whether to release the money. If you are the trustees, you need to get legal advice as to whether this is permissible, and about safeguards for your children as they come first.

Unless you put the property in trust for your children then yes you're effectively stealing their money.

What then happens when your children are in their 30s and need help onto the property ladder? People have these grand plans of 'downsizing' but the only way to do that would be to go from a 3 bedroom house to a one bedroom flat or move to a cheaper area which people don't often want to do.

The grandparents clearly wanted the money to go to the grandchildren so do the right thing and put it into trust until they are 18.

You need some decent legal advice before you do anything. There are probably a few details that you don't want to share on a public forum, which is fair enough. It may well be that you cannot make use of the money at all; it may be that you can put it towards a family home in which the DC have an interest.
It may be that the will itself isn't sound or could be contested (some people, after all, use wills as a way of controlling others). Though be careful of going down that route as it may end up with all the disputed money disappearing in legal costs and no one benefitting apart from lawyers.

No because its not your money! My children have been gifted a sizable amount of money. It was given in my name but I transferred it over into their savings accounts. You cannot take their money and invest it in a house for yourself! Are you going to sell up when they reach eighteen to release the money?! They won't be happy as that money needs to be there for university, and when they need a car etc.

How was the money gifted? Is the money in a formal trust or was it just stipulated in the will that you're to give them x amount when they reach a certain age?

They will obviously find out when we hand over the money at some point in untrue when they need it.

I can’t see how they can find out about it otherwise though

Did you and your DH have a good relationship with the family members that left the inheritance?

I can’t see how they can find out about it otherwise though

You sound like such an honest person

Of course not, it's not your money.

Both our DCs were left £10k each in inheritance about 9 years ago. Would that money have helped us out? Damn right. Would we even have considered using the money? Of course not.

I can't believe you'd even think this is an option.