I have no idea whether IABU or not, I think that my view is possibly clouded by past events so I wanted a few opinions... Sorry if its long - there is a bit of a back story!
FIL is extremely rich (think cash+assets 10mil at least) he is also very manipulative, controlling (and he uses his money to try and do this) and extremely secretive.
We have had issues with him before, a year ago he offered us some money towards our wedding and then several months later when we had spent it, demanded it back because we decided to do something he didn't agree with. He also at that point said if we didn't go with what he said he wouldn't come to the wedding etc etc.
He used to help us out a bit financially and honestly it was the most stressful period of my life - he used it as a stick to beat us with constantly, and attempted to control the decisions we made. Even now, he wants a lot of info on our finances which we are not prepared to give e.g. how much our rent is, how much we earn etc.
He also has rather toxic views in regard to women, he thinks they can't be trusted and are all basically gold diggers. He behaved rather appallingly towards my MIL (they were unmarried) when they separated a few years ago. He has in the past when helping us financially refused to have me in the room when discussing it (despite it being obvious that I would at some point have to know!) and other similar things. To cut a long story short - I'm not his biggest fan.
Here's the tricky thing. He wants to put some money from a trust fund into an account for DD (who is 2.10). It would I imagine be quite a substantial amount each year, probably around 7k or so, and he would use her tax allowance in doing so. He says he would like this to be used for her benefit for things like swimming lessons, school trips or school fees at a private school etc rather than as a savings account for when she's older. I don't know but I suspect he may have set one of these up for her already. Obviously, DH and I would have to sign off on this one as we would be the ones that had to sign the tax return to let him use her allowance.
The issue we have with it is that he wants to be the signatory on the account along with DH. So anything that came out of it would have to run past him. The idea of having to ok the decisions we make is frankly rather repulsive, as is the idea that we would use it for anything other than her best interests and so need to be checked up on by him. I think it also puts us in a very vulnerable position, imagine dd is doing termly music lessons or something, FIL falls out with us and refuses to sign off on the money - how would we explain that? I think DH and I wouldn't be able to use the money and would have to just leave it in the account. Is that selfish though? Should we get over our own awkwardness for DD's benefit? And whilst we can pay for bits and pieces the money would no doubt be of great advantage to her.
My other thought is that if we are going to just leave it in the account then I would really rather just not accept it - it will still feel as if we are entangled with him then, and I worry that if something comes up (expensive trip, private tutoring if she's behind or something) we'll be tempted to try and use the money and I find the idea of going to FIL like that unbearable. Ultimately when she gets to 18 or so, I really doubt she will have any trouble financially - but who are we to deny her a rather large lump sum?
FIL has a very warped view of what would be to DD's best advantage - private school fees would be fine, swimming lessons or music lessons I imagine we would have to fight tooth and nail for.
I'm kind of thinking that we should say to FIL that if he wants to give DD the money that would be very appreciated and we will use it for things which will give her the most benefit but that we need to be the signatories on the account. Otherwise to pay the money into his own account and use it to buy her what he see's fit. AIBU?