Windfall at 18 - how would you prepare your child?

[Theothername]

Dd was injured as a toddler and awarded £40,000 which is held in trust until she’s 18, when she will have to attend court and collect it.

How would you advise/prepare her? And what would you say to siblings?

How old is she now op? Have you had many conversations about being financially responsible yet?

Hope she's okay.

She’s 13 and we’ve just shifted to a bigger pocket money budget and some responsibilities to manage (bus tickets/ lunch money)

My son (3), his cousin and his soon to be sibling all have funds set up by my dad and will each be able to access a substantial amount when they turn 18.

Our current plan is to not tell son about the money until we know what his future plans are, whether he wants to go to university or start an apprenticeship etc and then help him plan how he would like to use or invest it.

It depends what her future plans are really.
If she’s going to university and will get minimum loan because of your income then it will help top up her living expenses.
I would probably advise my kids to put some in a LISA and some in a more accessible savings investment.

It is a huge chunk of money but it would be used quickly if covering uni fees, flat deposit etc.

I think I would wait until their 18th birthday, then have a confidential discussion with her about sensible uses of the money (put into an ISA etc) and discuss with her how she feels this might also help her siblings?
She is likely to have her own ideas: new bike for Ellie, suit for Mikey for interviews etc - depending on their ages.
You need to talk with her about how to sensitively approach this with siblings to avert any bad feeling. She was injured after all and it must have been significant if she was awarded money. Does the injury have any effect on her life? If so then the money would rightly be to help mitigate the obstacles she may face.

I'd encourage her to lock it away in a 5 year bond, she'll have a better idea of what she wants to do with it then. LISAs are also a good option but you can only put max £4k in a year but have a good govt bonus there are TS and C's to consider though as getting the money out is very specific

If she's able, I'd encourage a gap year with 15k to spend travelling. 20k in an ISA and 5k for gifting to siblings or for a family trip.

I took my kids to the branch every year to manage their (v modest) savings into the highest interest accounts / ISAs etc. So that they saw money as something to look after and grow.

None did anything mad / irresponsible once the money was moved to their control.

Does your Dd have any long term affects or needs? I would just be matter of fact with your other children, this is something that affected Dd only, did not come from you, and is one of those things, the way life affects us all differently. It isn’t as if a parent or relative has shown favouritism, it is as a result of something bad happening to her.

I certainly wouldn’t expect Dd to share it or to be guilt tripped in any way.

That is more money than ds had at 18 however we did have discussions with him about the money he did get which was about 10k. I accepted that he would want some as fun money and he did do this but he also invested quite a bit which now he will use as part of a house deposit. He has added into it when he could over the last few years. In the end it is their money and they are adults and some of it may not be spent as you might hope!

This seems an unusual situation.

Often in cases of injury the money is used for care relating to the injury.

So for example I severely injured my foot in an accident. I received an insurance payout which was used for physiotherapy, hydrotherapy, manual and electric wheelchairs and taxis.

Were there not costs associated with treating/adapting your lifestyle as a family?

Regardless, little and often financial education is the way to go.

I definitely wouldn't suggest sharing with siblings unless that is actually suggested by her.

I'd strongly encourage her to put it away towards a house deposit.

Thanks for all the responses. It’s very interesting to read all of them.
To answer a few questions,

She doesn’t remember the incident. Ds had nightmares about it for a couple of years.

There is visible scarring but otherwise no long term effects. She might decide to explore options in relation to the scar itself but I don’t think it bothers her particularly (that I know of)

Treatment costs were paid by us, including a significant amount of physio and occupational therapy but I’d feel very odd recouping those from her. We could have applied to the court to have them extracted from the settlement but we didn’t. (We also had some help at the time from GPs who refused repayment)

Our circumstances have improved over the years and we would hope to be in a position to help the dc out a little bit as young adults one day. Dh feels we should give more to ds than dd and even it out but I’m not sure that’s fair. Or that it’s not. And in any case I would envision that happening mid twenties at the earliest.

A complicating issue is that ds has autism and quite likely will need our direct support for much longer than she will, so will probably “cost” us more, but be invisible to him.

I definitely don’t want her feeling guilty. Or obligated to hand it over to anyone. I hadn’t thought about that though and it’s really good to have that flagged.

I wouldn’t expect her to give any to siblings.

I wouldn't be secretive about it but more teach her about the costs of things. Start suggesting that it's used for driving lessons initially and for living costs at university if she goes, enough for a modest car plus insurance as well. I'd encourage her to put £10k into a one year bond, £10k into 2 years and £10k into 3 year if available (sometimes 2 is max) and £5k into premium bonds at first

fufulina · Today 14:29

I wouldn’t expect her to give any to siblings.

Neither would I, unless she volunteered it. Our 11 year old has a decent sum, which we told her about 3 years ago and she can have it when she's 21. Most of it's in a high interest 3 year bond and we feed the family allowance, birthday money - and any time I feel flush - into a select access saver.

I'd probably tell her sooner, so she has time to acclimatise to the fact that she's got a nice sum waiting for her.

Our older son has a trust fund based on similar circumstances. He is unlikely to ever live independently. Difference is that he cannot access the money until 25. He is now 14. DH and I are trustees and we have an annual meeting with his trust accountant and finance advisor. He is aware that there is money there and we can use it for therapies etc (although we are self funding those right now). Our plan is that when he is about 16 he will be included in the trust meetings so that he is aware about how it is being invested, and what the fund is meant for. When he is circa aged 21, and based on how cognisant he will be we have the option of going toi the court of protection and protecting his money beyond the age of 25 if the court feels it is required for his well-being.

The past few years we have been very focused on teaching DS about the value of money. he gets pocket money that he has complete control over and gets around £500 every christmas from doting GPs. First few years he would just splurge it on whatever interest he has. Now he is much more strategic about it and I think this is because we have been very careful about getting him to budget for things he wants. We listen to radio 4 every day and when they do their finance report his dad will give a potted explanation of it. (His dad is an accountant so that helps). I am extremely open about how much i earn and about how much things cost vis a vis household expenses, holiday expenses, his school fees etc, what tax is etc. When we first started this it all went over his head but now he can hold a conversation about tax and NI etc which considering he can't tie his own shoelaces is a start.

But- it's not a windfall. It's compensation for a very real damage that was done and that will be expensive to mitigate for the remainder of his life. The money is a tool, not a treat. That is important to remember.

DC both got money at 18 from a relative. As we are not a wealthy family, this was not something they were used to. We started discussing it when they were early teens, always referring to it as their 'uni and house deposit funds'. I waited for them to work out they could technically blow it on parties and fast cars if they wanted but both of them saw it as exclusively for those purposes.

We did also say that this was a windfall that had skipped a generation. if it had been left to us, we'd have earmarked it for house deposit and uni funds for them. But as it went directly to them, we didn't have a lot spare on top. Once it's gone, it's gone.

It would be fair, in these circumstances to explain that he was badly affected too, but got no pay out, so as long as she doesn't have to spend the money on ongoing physical treatment, but can use it for enhancing a normal life, then you might even things up a bit for him.