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.

I would probably look into settting up a trust so that the trust owns the house ( prevents partners from walking away with half in the future as it’s such a large amount )

my parents left my son a large amount with a set amount he could “splurge “‘and then the majority to be used as a deposit for a house with me as the trustee

he’s fairly sensible but in a low paid job but is a hard worker
his deposit is protected and he and his partner have no interest in getting married

his splurge was a new car ( well 2 years old )
month long holiday with his partner
and a large amount as a deposit on a lovely house
he’s still got a fair amount left over and will also inherit from his other grandparents shortly and sadly

But it will mean at around 31 him & his partner will be mortgage free by next year once he gets his next lot of money

which for both of them is amazing position to be in

If you are left with £1.2 million after inheritance tax then I would gift the children each £400K to be spent on property (or put it in a trust to be used for property if you don't trust them to spend it wisely). Then take the remaining £400K and enjoy it with your partner. I think we underestimate how difficult it is for this generation of kids compared to us - there are less opportunities, property prices are insane and the world is a depressing place. Do something to make their lives easier.

“it's plenty to never have to pay a mortgage or rent!”

I take it you don’t live in London, then! If you can afford to give it to them so they can get into the property ladder, I wouldn’t hesitate - but I would point out that houses need paying for by way of maintenance and upkeep, and that they will still need to get jobs in order to feed and clothe themselves.

Also remember that inheritance tax is tapered so that if you give your DC a gift and then die say 5 or 6 years later, you pay a lot less than 40%. It's only 40% if you die within 3 years of the gift.

As an aside, is 'launching' something people talk about now?

I really think you need to find yourself a decent, properly independent financial adviser. If they do their job properly they will talk you through all your options and listen to what your aspirations are. A good one will understand all the tax implications of your options. If you're in the SW I can recommend a couple.

This 100%.

In my opinion giving your kids each £500k at this stage as it might make them lazy. £500k in the grand scheme of things is not enough to live off forever and they should be pushing themselves in their prospective careers as much as possible at this age. I have a lazy brother who has been given a lot in his 20s and honestly, I don't think it has helped at all. If anything it has made him far less motivated. Put most of it in a trust and when they want to buy a property when they're older you can help them with the deposit. Do not just give them £500k at this age!

I wouldn’t be giving it to them now. I would be saying I will match what they can save for a deposit on a house or offering to fund training or a car to get to work. Then if they show they are working hard and trying to get on I would gift them some hefty lump sums on big birthdays or the odd Xmas. I don’t think k id be giving my partner anything. If he has no assets or savings by what I assume is near 40 that’s fairly concerning to me.

I don't really understand your attitude towards your children. They appear to basically be doing the same as you and their grandparents did before them, surely? If none of you have ever paid higher rate tax, which currently starts around £50k so not mega bucks, then it could equally be argued that their parents and grandparents also did not "apply themselves to career progression" in any meaningful or fruitful way. Although you've tried to minimise it by adding it as a little afterthought, it seems that your parent's wealth must have come almost entirely just through the pure dumb luck of being born and buying a property when they did. To amass a huge fortune of £2m in average jobs is just not possible through making savings. You're hand-wringing over your children benefitting from "unearned wealth", but that's what all of you have done/will do because your family wealth is largely unearned and just the outcome of external economic factors.

As other PP have pointed out, your partner hasn't achieved anything in terms of growing wealth or accumulating assets, despite having had a longer life so far to do so. And yet he escapes the same scathing assessment you've made of your offspring.

FWIW no I don't think it's right to leave money to your partner when that money could be left to your children and their (future) children. But that's my opinion and we are each entitled to our own. It seems you are going to great lengths and mental gymnastics to justify it to yourself, which probably says something about whether you actually believe it's right yourself.

Id put the money in trust. Don't just give it to them. Dont leave anything to your partner. Let jom fund himself.

I would offer the 500k each, only to be spent on property. Would that comfortably buy them somewhere to live? With interest rates showing no sign of going down substantially, you’ll be doing them a favour, by forcing them to invest.

Give some to charity.

This really. There’s a lot of judgement on this thread with very little information. All the op has said is that they lack career ambition and are currently unlikely to progress in the jobs they’re in. However they’re both clearly working. I’d say the op needs to take a little look at her parenting if she is so unhappy with these two adult children she has produced and the way that they behave. I could not imagine having a million sat in the bank while my children struggled, from how she’s said it they are very far from being able to afford their own homes. Who on earth would deny their children that? She really sounds like she doesn’t like them very much

Hey OP why don't you compromise and maybe give them a enough to do a bit of a soft launch into independence? Maybe 50 or 100k? Enough to set up their own homes, study or set up a business? See how they get on with it. Keep 400k each back for when they've matured a bit. 20s is still pretty young and as long as they're good kids, I'm sure they'll get there eventually. I was well into my late 20s before I started being sensible with money and by 30 managed to get a house deposit together with my husband.

Early 20s I was also struggling to launch, got myself in silly bits of credit card debt too although I was trying, went back and did an MA when I was 25 and my first proper industry job at 26 then things started to fall into place.

I think £500k in my early 20s would have been disastrous, but a few grand would have helped me not struggle to fund my studies and rent my first place. By the time I was 30, married, career sorted and looking to buy a house that would have been the perfect time to get that sort of cash injection. _

£500k does seem like a really good inheritance and you may want to leave your house to your partner and that seems fair, although if GCs come along and also look like they might struggle to get on the housing ladder you may wish they had the money your DCs might receive from you skipping a generation with inheritence. So I wouldn't make any permanent decisions about wills just yet beyond the right to reside in your house and make it clear tp your kids you don't want your partner bullied out. Xx

I think £500k is a life-changing inheritance for anyone so you should concentrate a bit on what you want for your own future. You're not exactly going to be stealing from your DC if you ensure some protection for your DP.

Have you already been paid the money? If so, your dc might end up having to pay inheritance tax on what you've inherited and paid inheritance tax on.

If the estate is yet to be distributed, then you can sign something called a deed of variation, which means that funds don't come to you, they go directly elsewhere. Either to your dc, or into a trust for them.

With the sum of money involved, you do need to take some advice.

First of all hats off to your parents, that is impressive (surely some of it came from your GPs?)

Tough one as 500k at that age can make people lazy/target for gold diggers

I think good idea to do deed of variation for some (100-200k each) - tell them that’s the lot if you can, enough for a deposit or to invest

Delay it to the end of the 2 years to motivate them to launch …

You can pass on 500k to your DCs IHT free (1m if 2 in couple combine allowances), so it won’t all be taxed - this might be something to consider for the future/a reason to gift 250k each and you keep back 500

i would want to protect from your kids’ future spouses/divorce too

re your partner: you can give them a lifetime interest to live in your house, you don’t need to gift the house

what if you have grand kids later, you might want to give to them

you need time, and advice

personally I think that you need to control this money for a while as your kids are not fully responsible… however it belongs to you and your blood, I wouldn’t be providing a generous inheritance (even out of your own earned money) to your boyfriend

If I were ever in this fortunate position I'd purchase a small home for them each, keep the properties in my name and charge them a small rent. When I feel they are sensible enough I'd legally hand them the property. I'd also keep the rent money in an account each for them.

I can't imagine having the opinion that my children have failed to 'launch'. As long as they are happy, kind and healthy individuals then as their mother, I too would be happy and content. By your own admission your family have never been high earners, just happen to have lived during a time when property and the cost of living was much lower (my own parents are the same, average earners with almost a million pounds worth of assets).

Also take into consideration your own long term plans. What if you get dementia and need long term care, that doesn't come cheap (sadly this is the reality now for my parents), I know you say you don't need any more money but life can often blindside us.

Do you truly think that by holding back the money you will encourage them to develop these traits? They're already adults. Clearly, it's more complex than this.

Living with parents in your 20's can be quite demotivating, and young adults in that situation often have some regression.

They won't suddenly find motivation and ambition whilst still living in the family home.

In your position, I'd give them enough to get them started with an independent life - a good sized deposit on a house, cash for furniture/ decor etc of their choosing, a couple months' mortgage payments, maybe a basic car if they don't have one. Maybe £200k all in.

Once they have all that, they will have more motivation to work and make a success of it, and keep it.

From their current position living at home with you, they maybe can't see that they will ever have such independence. They quite possibly just need a leg up, and to start to experience it a bit, which you could definitely give them.

Regarding your inheritance tax worries on the rest of the money, you can just gift it to them when you like, as long as it's 7+ years before you die. You could give them several lump sums over the years and they wouldn't be taxed unless you pass away.

Give them both a substantial house deposit but keep the rest until later so they are motivated to forge their own way in life. Tell them if they get a job and mortgage you will provide £100k deposit. Keep the rest to gift them at a later stage when they are established. A friends son is lazy and feckless after getting a large inheritance young. I’m don’t think he’ll grow up and start working till the moneys all gone.

@NojitoandLime makes a really good point

when you have a bit of savings, you can see how your own actions can make a better future, vs starting from scratch…

Yep. And the fact is simply that things are harder for young people now than they have ever been.

Wouldn't you want to make it a bit easier if you could?

I would give the DC enough money for a decent deposit on a starter home each so they will be able to get an affordable mortgage on their current salaries. At that point it will be up to them whether they continue in their current roles just getting by or whether they chose to study and go for promotions - this isn’t important to everybody. I think it would be wrong to withhold any financial support you can give them until they are doing what you think they should be doing with their lives, that’s a kind of blackmail. OTOH I certainly wouldn’t be giving them £500k each.

I would invest the rest of it and consider any further action in a few years time (I’m guessing you are in your 50s?)

Don’t leave to charity in your will. They will torture your children. If you want to give to charity, do it before you die.