When is an inheritance "enough"?

[Wardrobefred]

Somehow, from really quite modest beginning our family has accumulated quite a lot. Ordinary jobs (no one has ever been a higher rate tax payer for example) but sensible spending/saving and investment (and property tbf) means that my last surviving parent has just left c. £2m (after inheritance tax), split between me and DSis.

I don't need or want it. I own my home outright, have a decent income and pensions that will be plenty for me, substantial savings. My life is not flamboyant, but I have want I need/want, travel a lot and can't think of any major changes I'd make with the money.

So, I'm thinking this money should go directly to my DC, early 20s and living at home. Obviously it's life changing for them. Neither have launched very well. Both work, but not particularly applying themselves to career progression or qualifications. There's a part of me that thinks this windfall won't be entirely helpful for their overall life and happiness.

Because of DC I've always been determined I won't remarry, to protect their inheritance. However, I'm now coming to the view that they don't need it!

I have a lovely DP who I've been with 8 years, never lived together and our life is good, but maybe it's time I thought about doing what I want (I've said I don't want to live with him because I enjoy my independence, but it's definitely fuelled by protecting my DC) and maybe it's time to consider changing my will so that the man who's made my life so good over the last few years inherits something.

He brings a lot to the realtionship, but not money (supports himself, doesn't cost me anything currently, but doesn't have savings or assets). If we did live together, I wouldn't want him homeless in the event of my death, even if he did bring it on himself by not being better at financial planning! I know you can leave a life interest, but where I've seen that happen it seems to bring nothing but trouble, as the DC want their money asap...

Also, I don't think my DC "deserve" it more than he does. I love them dearly, they're good kids and want to see them OK, but £500k each is enough without having worked for it?

I guess it's a good problem to have but there's definitely part of me that thinks this money could do more harm than good.

Why? Because they don't work a 70 hour week? Don't have a glittering career with 100k wage packets?

Because they don't have the motivation, ambition, sense of achievement or self esteem that I think bring happiness much more than unearned money.

Firstly I think you need to start spending more on yourself! Business class long haul from now on! Do you work still? Full time?

Secondly I would delay gifting to your DC until they are 30 (but don't tell them!). It gives them time to launch and mature. Assuming you are (🤞) likely to live 7 years after the gift so no IHT to pay. Finally you may be in a better position to understand your own lifelong financial needs.

What if they meet an absolute waster of a partner?

Do nothing for a few months, what are your children actually doing?

I would leave everythung to my children in those circumstances, probably pay for an amazing holiday for my partner and myself but that’s it.

Why don’t you sort of drip feed it to whoever you want as they “need” it.

Maybe gift a house deposit to DC whereby you transfer it to a solicitor, etc rather than give them £500k to squander?

There's a massive difference between helping them to get on the ladder with a deposit and giving them a 5 bed detached house, which is what £500k would buy here.

This

Fair enough- £500k is a one bed flat where I live.

Of course it doesn’t have to be all or nothing- give them some (enough for a flat) and keep some?

Genuinely OP, I wouldn’t hand the money over to your kids. Use it to help them but do not just give it to them.

Look at the stats on the number of lottery winners who go bankrupt within a few years of winning. I know one of them, he won £1.2million a few years ago and has not a single penny left, hasn’t had since last year. My BIL won a pretty big amount of money shortly after his 21st birthday and not even a year later it was all gone with nothing to show for it.

Handing someone money isn’t enough to help them financially, not long term anyway. It’s all well and good giving them £500k and saying they won’t have to pay a mortgage but actually, they could use £300k to buy a home outright, fritter the rest away (it is dangerously easily done), and a couple years later can’t afford the bills on the house they have and need to sell it, use the money, buy a new one and end up with a mortgage.

You are of course correct, children should learn to stand on their own 2 feet first.

So i go with keep the money, invest it/spend it/give some away whatever... bear in mind life can change, your health needs might change dramatically and you'll be glad of that money.

My DD works in Neuro, some very young people get awful conditions and money can ease that somewhat.

I also wouldn’t hand the money over to your kids, help them out by all means but they need to be showing they are working towards something. Also if they where to get married then the spouses would be entitled to half in a settlement

You are overestimating the importance of ambition. I don't mean to be unkind but you maybe need to realise that your priorities are different to those of your children and that is absolutely fine. You didn't raise them to be your indentikit human. You raised them to be decent, happy people.

I would keep it in your control.
Then suggest you triple any deposit they save for.
I know some wealthy people who have done similar things.
Like if their adult kid is renting for example they will match what the kid pays in rent. Or if they get a deposit together they will tripple it.
Or you could buy a holiday let for you all to enjoy.

Could you keep hold of the money and then when they need a house use the money to buy a house for them? They would need to still work hard to ensure they can pay for other bills and living expenses because £500k won’t last very long so they’d still need a job

Utter madness! Your DP must be what, in his 50's, and he's never launched either! You seem to be wanting to use this money to pay off your kids, so that you can move DP into your house, and then not feel guilty about leaving your house to him. You're not married and don't even live together!! He must be a demon in the sack. No way on earth is this a good plan. Your kids will resent you for it, and I would imagine that about 2 years after your death, he will have moved another chick in, and she will get your house if he dies first. By then you could have 6 grand kids who could have used that money.

I was trying to think of something similar, but the only examples I can think of are American ones, I’m not sure the legalities of these sorts of things in the uk. Off the top of my head, isn’t it Alan sugar who will only let his kids benefit from his wealth by giving them double or triple (there’s restrictions depending on their type of job) of their annual salary. They’ve got the motivation to do well. Surely something similar could be applied to the ops adult children

Yes and a good job I did too. But I don't think they'll be happy in minimum wage jobs for the rest of their livesand this would "enable" that.

I wouldn't be giving the kids anything until they started pulling their fingers out and applying themselves.

I would vary the will on condition that it goes into a house each for your dc.

Rather than giving them the money, could you not buy them property so that have a roof over their heads or similar?
In dream land where I win the lottery, I would be buying my siblings and Mum a house each/pay off their mortgage!

I find it very shocking you do not want this money to benefit your children, but you’d be happy to hand it over to your boyfriend who also ‘failed to launch’. Does your parent know that’s what you’re palming on doing with the family inheritance?

OP does not say how old they are. She needs though to consider the IHT implications if she keeps and invests the money in her name. 40% may end up going to HMRC. She can however vary the terms of the will and fidt an amount directly to her DC free of IHT.
Many young people have no hope of ever having a stable roof over their heads so this kind of money at this age can be life changing. It does not have to be £500k each. She can gift a smaller amount - enough for a substantial deposit on a home - and keep the rest until later.
She really needs professional advice.

You won’t want your children living at home forever what are your childrens plans? A house deposit would seem sensible to gift them. Controlling your children through a promise of inheritance is never a good strategy so many variables can change their future partners, changes of jobs careers, children etc.

gift not fidt!

I assume you are talking about varying your inheritance formally (rather than giving them a gift, hence avoiding IHT on this money as part of your estate). A formal deed of variation can be done anytime within two years of death so perhaps you could wait a bit longer before deciding. If you did vary it then you could put it in some of trust or condition it on age perhaps?