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.

@Hellohelga
The OPs DC have jobs.

I think I'd be tempted to give a 2 bed starter home to each child. Something without too much maintenance. Then see how they get on with that. They would have an incentive to do better but a massive leg up in life. Maybe having something of their own that has to be maintained by them will kick start them? Then you can always top up later if you feel it's a good idea. I know you'll have to pay more tax on some of the money but some will be going straight to them at least.

In the meantime, I'd definitely move in with your DP if that will make you happy. And I'd leave him enough to have somewhere to live when you're gone.

And how would that work exactly? If the OP put £1m in 2 trusts, she’d pay 20% tax on the amount over £325k… not exactly a great idea

It’s 40% on the full NRB for 7 years and only tapers on amount above that.

I would get some estate planning advice, and probably before distributing the will.. though as you are likely to live more than 7 years, changing your parents will to go straight to your kids probably won't change anything.

I would try to find someone to talk this through with, who can advise you on the fiscal as well as emotional elements of this set of decisions... and maybe also help you to decide what it important to you, what you can control, what you can let go of.. etc.

It can, as the Will can direct assets to Trust beyond what the OP can do. A deed of variation would be very useful in this scenario.

Your children are probably feeling demotivated because they are stuck in minimum wage jobs and can’t see a way out or a future for themselves. They know they’re not good marriage prospects so can’t imagine having a family.

You mentioned they have self esteem issues - this is sad, can you offer to pay for therapy for them? This would have been life changing for me at 20 but it wasn’t until I was 30 that I earned enough to pay for therapy. I was stuck in a chicken and egg situation of not being able to progress my career due to a lack of confidence, but not being able to afford therapy to improve my confidence. I got there eventually but it’s hard to pull yourself out of that pit.

Did they go to university? Have they struggled to find work in their field? Job centre staff will tell you that any job is a start. It’s ok not to immediately start a career in your chosen field, working in a minimum wage job is good enough to begin with as you can develop your basic transferable work skills - working with others, time management, customer service, planning and organisational skills. It’s a bit dispiriting that you seem to have written them off when they are actually working and are so young. They are doing great to drag themselves to a minimum wage job each day, despite it not being their chosen career, surely?

It’s sad that you are more focused on your partner (who appears to have failed to launch) rather than your kids who have so much potential right now. Your financial support now - to get them on the housing ladder and to tackle their psychological issues - could be a huge boost.

You can stipulate in your will that your partner can stay living in your house until he dies, at which point your boys can inherit it. You don’t need to disinherit your children to prevent your partner being homeless.

You can do a deed of variation to bypass you in favour of your children. The advantage of this is that if you die in the next 7 years they don’t pay inheritance tax on it immediately after you have paid inheritance tax on the same sum from your mother’s estate. The disadvantage is you have no control. The alternative is that you accept the money, put it in a high interest savings account and tell your children they have half each as a large deposit for their first property. This might buy a property outright (depending on where you live). They then need to be sufficiently responsible to pay their bills, either from income or from getting a lodger.

You wouldn’t handover the keys to a Porsche to a non-driver or even to a Mini… I can’t advise on tax but I would advise you, DP and the DC to look up the Donegan’s Rebel Finance free course. They’re a husband and wife team who have been given OBEs for their free financial literacy courses and honestly they’re life changing. It’s a fun course all done online and may change all of your mindsets. Yes they offer advice on how to boost your income (eg more work) but the main takeaway is working out what to do with the gap between your income and your outgoings. Spoiler alert: it’s not always about tying up vast amounts of money in property. A PP who mentioned paying into a pension is right…

Sit with the money for a while - 6-12 months and see what you feel then. Is your children’s failiure to launch related to them being in the wrong industry? If so, you have means to help them retrain. I wouldn’t divulge how much you have inherited as that could interfere with their motivation to succeed in life

Tricky one @Wardrobefred personally I think I would be exploring what it would take to either buy a property for them that they rent at more or less market value, and try and encourage them to take some responsibility. They are early 20s, not small children and gifting them something they don't value could cause issues in the longer term. Seek legal advice on this, but you could co-own with the kids if that supports them to start to step into home ownership without taking on the full commitment. But ultimately you need them earning and out of your house first.

Or set them up with a long term investment like a pension fund.

Don't just handover a blank cheque.

Yet this is controlling buying property but charging them a small rent takes their independence away they might want to own their own home to do as they please with it not have parents have a hold over them. A gift should be a gift not have strings.

Can you put 500k each into a pension for them? That way they can probably not worry about putting any / much monthly income into a pension now and use whatever they do earn to save towards a house deposit. That way they’re not getting it easy now, the incentive is there to work hard and ‘launch’ properly knowing that their old age isn’t going to be one of poverty.

Bang on. You will hinder their chances by doing this. By all means earmark it for them, but do not just give now or soon. Actually an unkindness.

Agree completely. I'd not tell them but when they save for a house/if they bought one, I'd match whatever they saved towards a deposit for it. I'd also offer to pay for education, qualification or training to get them in to or further a careernor help launch a small side hussle with aim to make a business.

I wouldn't be telling them how much I have either but I'd want my kids to learn to stand on their own two feet and value what I would be giving them in the long term.