To say this to FIL?

[MushroomMagee]

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?

Also - the above is just my assumption. If this is making you think about things differently please verify that the arrangement is through a trust and the money isn't coming from him personally.

Schools - I'm not saying that's not true. Just disputing some people's comments that he would personally benefit from her personal allowance

A flat no to this one.

I'd go further and tell him why - because he uses money to control.

If he then offers for you and your DH to be the signatories instead, maybe then you can talk.

But as for denying your DD, personally I think you're enriching her far more by upholding this kind of principle in your family, instead of inviting conflict in.

riksti: It is definitely coming from a discretionary trust. But my understanding is that the money is a "distribution" and that the trust has to do this to a certain extent? It can't just keep it all? So by paying it to DD he doesn't have to "distribute" it to an account which would then have to pay tax on to it. I could have that completely wrong, but that was my understanding.

There have been "issues" with this trust before - DH is named as a beneficiary, when he was at uni and not earning, FIL was declaring huge sums of money as DH's income, and getting DH to sign off on it by telling him it was going into an account that would mature at 25. In actual fact, he was using this money to pay school fees for BIL. Therefore not actually income for DH at all, it was tax evasion.

Thanks for all the responses. I really appreciate it. I've chatted it through with DH a bit, we discussed the scenario of something like DD complaining to FIL we wouldn't allow her to go on a trip and him saying "oh take it out the account" or something - I think using it at some point if it were there would be unavoidable. So we're going to say we'll be the signatories or no thank you.

Trust doesn't have to distribute, although there could be reasons why it would.

But yeah, money distributed to beneficiary belongs to him - what your fil did with your husband's share was definitely wrong.

For what it's worth - I agree with your plan. If he has the tendency to manipulate his own children to get control over money he had given away I would not want him to try that on your daughter.

MushroomMagee, I think I understand your concerns. You are worried that you're cutting your DD off from opportunities that your FIL can provide that you can't. I would point out that your FIL is not going to change his opinions on women for his granddaughter.
You are protecting her from his greed, pure and simple. He won't deliver on his promise, he's only looking to save more of his money for him. You know this already and you're right.
Well done for not falling into his trap - control is all he's after.

Your daughter's love, and her happiness, are not commodities to be bought, no matter how much money her grandfather has.

I think your plan is a good one. Stick to it, if you go with fil's terms and conditions it will only lead to a life of misery and resentment. If he doesn't agree with you then so what? Your dd will still have a great life, you don't need huge amounts of cash for that. Better to be happy than beholden to someone else.

"The difficulty is: when he offers something, particularly when its for DD it can be hard to justify."
Why does it have to be justified? 'No' is a complete sentence. If he pushes for an explanation (note- explanation, not justification) than you simply say that it must be offered with no strings attached as he has form for pulling the strings. And then just drop the subject and move onto something else.

Personally I would refuse his 'gifts'. You are her parents, it is your job to protect her. It's a pity you have to protect her from family, but those are the breaks.

A couple of people have suggested saying why we are saying no i.e. he has form etc - we can't decide whether or not to do this. It would probably end up in a huge row - but I can't really see a way around it to be honest.

As a rule I prefer one huge row to endless attempts to manipulate and control me. But I can appreciate that's not the choice everyone would make.

again, so what if a big row ensues

your family ought not to be able to be bought

gifts should be given, and received, with no ties or conditions, or caveats

I feel quite sorry for you actually, you must feel a bit ''caught'', torn, even, as precedent been set previously. Kinda, it was okay then, but not now, and how to express that to FIL, clearly and without rancour.

Good luck

No whereyouleftit I do too - but FIL is not a normal person!

We had almost this exact row (him trying to control us with money) last march and didn't speak for several months. It just seems to go over his head. He doesn't change his behaviour and doesn't seem to realise we actually mean it. He now has "forgotten" that row ever happened.

I find it hard to be bothered with the stress of an argument when it feels like it won't actually change anything.

OK. Don't accept his money. Use your own money for your daughter.

But... all the money he could give DD would be his gift and not attract inheritance tax if he dies after a certain amount of time. If you do accept the money for DD, it makes the amount of his estate less when he dies. Therefore less inheritance tax for you to pay if you are to be beneficiaries of his estate...

As it is, unless he can give some of his money away before he dies, the inheritance tax will be an horrendous amount. The Treasury will gain and your DD will lose out.

Amber - it doesn't seem to be a case of giving her a gift but an income instead. Therefore Inheritance tax is not an issue.

Yes I don't think it affects IHT Amber - its a distribution from a trust so it probably wouldn't be liable anyway?

Why not just set up your own savings account for her and use the tax -free allowance on that account? You and DH would obviously be the signatories. Then when he offers money you can justifiably say sorry but there is an account already open so it's not possible to set up a further tax-free account in her name, but he is welcome to either put money into the existing account or save in a different account which he controls. That way there is no issue of him having control, as you and DH already have it.

I agree that you should avoid agreeing to FIL's terms- it sounds like he just wants to control the choices you make for DD, and he's proven that he's willing to swindle his own child on a money-grabbing wheeze. Don't put yourselves under his control.

Inertia - I'm unsure of how the system works. Can you only have one account open which is tax free? Do you designate it with your allowance or something? I kind of assumed you could have as many as you wanted and declared it all on the tax return?
If not then we could avoid a row as DD already has a savings account open in her name. When we suggested using that though FIL said he didn't want to use that one..

Could you have 3 signatories (ie. you, dh & FIL)?

Then don't touch the money unless it's something all three of you can happily agree on...otherwise, it just sits there totting up to become a very nice sum eventually for dd. Presumably you could agree in advance when dd gained control of it, at 18 or 21 or whatever.

Then if FIL subsequently starts pushing private schools or whatever at you, it's two to one (& you could veto any chance of your dh & FIL colluding against your wishes 'well I do think Dad has a point' etc).

You'd also need to agree that any long term commitments eg. school fees, there was a clause in place to prevent him from suddenly cutting off access to the money if he felt like making life difficult. Don't know if that would be possible.

If he won't agree to that then I definitely wouldn't touch it...but I might get some professional advice about the best way to set something like this up before rejecting it out of hand, iyswim.

This sounds very similar to my DH's family. My Dh's grandfather (my DH's Mum's father) put money aside for him to go to a private school. By all accounts he was quite a difficult man to argue with and what he said went basically. My DH's Dad went along with it even though he hated the idea, they are not a well off family and he knew that there would be issues further down the line with "fitting in and the like", DH's Mum and her parents wanted this and she wouldn't take his opinion on board and thought that her parents knew best.
Grandfather then dies before DH is old enough to go to this school but Mum now feels more than ever that DH should go to private school to "honour her fathers wishes". DH's Dad puts up and shuts up (probably a bad thing to do but he felt helpless), DH goes to private school his relationship with his father becomes virtually non existant because he feels his son has been taken away from him. All DH's Mum cared about is how well he was doing at school in order to brag to her teacher friends and the grandmother (whom she preferred to spend vitually every waking moment with rather than her DH and DC's) but she showed no interest in him personally. DH's Dad has an affair as he feels like his family has all but gone. DH goes off to uni (his Mum forced him to apply for medicine- he didn't get in as he didn't have the grades and ended up doing a science degree) as far away from his family as he can and never returned to live with them again.
It took years for my DH to sit down with his Dad to find out what the hell went wrong with their family and relationship in which conversation his Dad basically told him all this. His Mum agrees with the situation and deeply regrets a lot of what happened. My DH has issues a lot of which I think stem from this whole situation. Think very carefully about accepting help- especially financial help as, depending on the people, those who have given it feel like they have a say in how you should run your life.

I don't know how many accounts you are allowed, but I think there is a limit to the tax-free amount that a child can have. So you can justifiably tell FIL that you intend to keep money in DD's name to the one account you already have, in order to avoid incurring tax . Otherwise, surely FIL's money will be sat in a tax-free account that DD can't access without his say-so, and she'll be paying tax on the interest in her own account that you've set up!

Of course FIL doesn't want to use that one. He doesn't actually want to give DD the money. He just wants his money to sit conveniently tax-free while he deigns to decide which favours to bestow upon her, providing you and DH perform as expected.

If he wants to provide for DD and decide how the money is used, he can keep the money in his name and pay fees for whatever it is directly.

If you don't want him to have a say in your DD's schooling and extracurricular activities, then don't accept the money because it will come with strings.

Tell him he should donate to good charities to help lower his taxes.

I would ask him to pay school fees directly to the school. Explain that you will let him know which school you have decided upon next year. That way he has a direct responsibility for something he sees as valuable. I would also squiril away money so that if he decides to stop school fee payment, you can pay instead. I wouldn't enter into setting up an account with him/DH. You could explain to him that that would be impractical for you.