To not know how best to use this money (for DC)?

[Flumperama]

Name changed just in case this is outing. In AIBU because not sure where else to post...

2 DC (6 & 4) have been left, over the past few years, about £160k (from GPs). It's currently invested, and we're happy with that side of things. However, we're not sure what the best use of that money is, in terms of setting them up for the future. Both are in a good local state primary (that we're happy with). Local secondary state option ok - I hear both good/ok and terrible things about it! I'm ambivalent about private schools, but am worried about the encroaching impact of cuts on state secondary education (in terms of scope of subjects, teachers, facilities, etc).

For context, our household income is approx £60k a year. Unlikely to go up massively in the next 10-15 years due to the nature of our jobs.

Options:

1. Private secondary (obviously it won't cover the whole cost, but we could, I think, make up the rest from our own savings + economising on household expenditure).
2. Use it to pay university fees/ living costs / etc
3. Split it between them for deposits for their first homes (although we potentially have another source to be able to do this when the time comes)

I guess the question is - which one of these things helps someone on their way in life the most?

(p.s. I realise we/they are really fortunate to be in this position)

I would not be happy if money left to me had paid for my education.

My children were privately educated, I have nothing but praise for their schooling. However, sensibly invested, coupled with compound interest over the next 15 years plus could create a decent growth on their inheritance.

Then let them decide what to do with their money.

Uni and or housing.
They won’t NEED private education but will always need a home.

If the £160k was left to them then they should each have a investment account of £80k.
It is not your money to decide if you should be using it for any other purpose. When they reach 18 they can decide whether they want to use it for uni costs or house deposit or even just take off on a trip around the world with it.
You certainly can’t decide to spend it on their behalf on school fees.

Given the context, I’d prioritise uni fees and property deposits. Perhaps 10k towards Tuition/extra curriculars while in secondary school (depending if you can afford them or not).

Just make sure you’ve picked wise investments, ie some funds and not savings accounts. As soon as they turn 18 (I think), you can feed some of the money in LISAs for financial efficiency.

Not option 1....

Let them chose between 2 and 3 when they are old enough, its their money

Is it in trust & only accessible by you til a certain age? I'd say pay for Uni & first home. If they're bright, private education won't give them any more advantages or qualifications. I had a way smaller amount of money left me that was in trust til I was 21 & I bought a car then frittered rest of it away. If they're really mature/ sensible at 18 I might chance letting them decide, but they'd have to be very mature not to go mad with that amount I think.

Definitely not 1. It’s not just the fees but the whole lifestyle for children to fit into some private schools.

What are the terms of will? You might find it’s for them to have at the age of 18 and you have no further control. Personally I would be happy for my child to use it to help them through university if they needed it or perhaps they will want a lump sum for driving lessons and a car. Who knows but unless the will says it’s indefinitely in trust for you to make that decision, you don’t have the control to decide what it’s spent on.

Buy a house now , it’ll appreciate in value and the rental income would allow you to build up a secondary pot to cover Uni etc. When they’re 18 they can decide wether they want the money for university or a house of their own

No stipulations/ terms in the wills. To all intents the money was left to us on behalf of DC rather than to them directly. It is already safely invested but we could access it at anytime on their behalf.

But I do take the point (and thanks for all the responses so far). It's their money. That's how we look at it.

I'd be very pissed off if I had been left money and my parents decided to spend it sending me to private school when it could have set me up later in life

This times 1000.

@ Flumperama either it was left to you or it was left to the children. If it was left to the children then you really need to take proper legal advice on this because if you spend it, wisely or unwisely, there may be consequences when the children turn 18 and decide they don’t like the way you chose to spend it.

Property/deposit.
A waste to pay for uni upfront, or to swallow it all up and still need more for pruvate secondary.

So the money was left to you, but to be spent on/given to the kids (assume for IHT reasons)? That's a bit of a backwards way of doing things and leaves a lot down to trust.

However, I'd echo what someone else said - £80K each with perhaps £5K each in a more accessible bank account that can be used for school trips or similar that they perhaps couldn't do otherwise, and they choose what to do with it at 18 (or whatever age you decide, as you control the money).

I'd keep it invested for another ten years before beginning to think about this.

You will have more of an inkling of where your children's interests lie; one may need a starter flat in Dubai while they create internet content on the Youtube that hasn't yet been invented, another may need a swathe of forest to feed their passion of becoming a park ranger.

Those are silly examples but the point stands. Sit on it until you know the young adults your children will become.

Uni if the state secondary is ok. Imo the best gift you can give your kids is uni and a debt free start to adult life- what they do after that is up to them. Private secondary won't necessarily be any better and while a deposit is great, imagine the empowerment of working hard, graduating debt free and Savin hard for your own deposit

If the secondary school is okay then I would not do a private secondary.

You could consider a private 6th form (if you have views on which university) and then use some money for university. Whatever is left over could then go towards the house deposit.

You absolutely should not spend your children’s inheritance for them. It’s hard to understand how you could possibly be even considering this. You need to invest it wisely - as you have done - and give it to them when they reach majority. Spending it on them before they are adult would be very wrong indeed. It’s not your money.

It’s a lot of money but not enough to last for long if splurged. Therefore I would put it into trust till they are 25 to stop a teenage fool who may not appreciate it pissing the cash away.
Better to try and teach them to make their way in the world then they get a good lump to help them along.

All I can say is option one is the worst one for all of the reasons PP have pointed out.

3 but would use a little towards uni to help with some of the burdens of living cost.

I’d do as a PP said and invest the money now in 2 properties with a large deposit and small mortgage each. Rent them out and use the money to pay the mortgages and put the rest back into the bank. By the time they reach 18, you’d probably have the £160000 back and a property for each of them. If they want to move away, they can see their property to raise the funds for the property that they do want.

I had the benefit of being gifted a deposit for a house- it’s life changing and a huge weight off a young person’s shoulders knowing that’s taken care of, especially today when house prices are so high.

I’d have felt pretty peeveD if it had been used to pay for private school when that doesn’t always result in a greater earning potential in later life.

I wouldn't use it for uni fees.... There's lots of v good reasons not to pay uni fees upfront... See Martin Lewis..

Absolutely what Loony says.... You'll get a much better rate of return investing in rental properties... You could get a couple of rental properties in the North West with that sort of money to invest.
You could always hire a decent agent to manage.

Invest it and let them decide when they’re old enough .

Thanks all. Clear consensus is that the best 'leg up' one could give ones kids is a house deposit.

I don't think we'll be able to do the investing through property thing - that amount would barely stretch to a 1-bed flat in our part of the world!