Large financial gift to one adult child

[Betty52]

Is it unreasonable to make a significant financial gift to one (adult) child but not the other in these circumstances?

Two parents (DPs), in their late 60s, have two adult children (DC1 and DC2) in their late 30s/early 40s. Both DCs are married/long term partner and each have two of their own children. DC1s household income is roughly 3 times that of DC2s. DC1 has a decent family home in a pleasant area of an expensive part of the country. They’re in the process of doing major building work and have re-mortgaged to retirement for that but they’ve built up a lot of equity because of the location and work they’ve done. Their children are pre-teen and settled in school so they have no reason to move. DC2 has a 2-bed flat in an OK area in a cheap part of the country. There is very little equity due to prices not rising much in this part of the country and having had to buy a previous partner out of the flat. They hadn't intended to have children but changed their minds and now have two pre-schoolers in a flat that’s too small. They would like to move to have more bedrooms/a garden/near better schools but can’t afford it without help.

So would it be unreasonable to gift DC2 and partner the c£100-120K needed to buy a family home in a nicer part of town? This would be an ‘advance on inheritance’ so DC1 would get the same amount in DPs will (with the remainder split equally). DPs both in good health (and still have two of their own parents) so want to enjoy life now and be able to plan for what might be quite a long future. For this reason, DPs can’t afford to give both DCs this amount now and giving half to each wouldn’t give DC2 enough to move to the house/area that they want.

So is it unreasonable to give DC2 that large gift now and make it up to DC1 in the will? (YABU = it is unreasonable, YANBU = it is not unreasonable)

I'd give a smaller sum to both DC.

Yes DC2 would still have a mortgage - the (small) equity in flat+mortgage+gift would get the house they want.

I think much hinges on “the house they want”.
£120K is a massive “advance on inheritance” - would £60K really not help at all?

Could DPs or DC1 loan the extra £60K rather than it being gifted? Yes, I know this would create an issue with mortgage and title, but worth looking into.

I’m afraid I think it’s a terrible plan due to the amounts involved. £12K, meh. £120K, no.

Thanks, I'm finding it really helpful to hear the different views.
Just to say in response to some questions. No there are no disabilities/alcoholism/abusive situations etc. It's fair to say that DC1 always a much harder worker in school and early 20s than DC2 but DC2 has been working in steady full-time job for long time now (as does DC1).

If you gift money it should be equally split. That is the only fair way.

That's 100% reasonable to me. I would want to see my sibling and nieces/nephews supported in this way and hope my DC would be pleased to see each other helped. I dont think u even need to even it up in the inheritance tbh. You have two DC one needs help you are luckily enough to be able to help and so you are helping. The other has a comfortable life and doesnt need help. Being fair doesnt mean being equal. Help whoever needs it if you can that's what families are for.
If my mum needed help and I could help her I wouldnt feel like I had to also help my dad who didnt need help to make it equal if you see what I mean.

My DM I know has given sums to my DB, and at one point mentioned doing exactly this. I felt really pissed off, tbh, as he's always been the golden boy.

For other reasons we only now send Xmas & B'day cards, so I may well be out of the will anyway, so fuck it.

I'm a single mum to a disabled DS & she hasn't been there for any support at all - so the money thing was a kicker. Not that I should expect anything - just that she talked about it so much.

No way.

So many things could change.

I really would not grudge my sister getting the money in these circumstances

@Halo1234

I agree but we’re in the minority of posters.

I’m curious - are you now we’ll off after growing up not? Do you have siblings ‘left behind’?

My siblings are much worse off than I am for a variety of reasons. If a relative offered my sister £100k I’d be overjoyed for her.

It depends on the personality of dc1 and their relationship/attitude towards dc2.

I think it would be fairer to give both DC a gift of money now. Even if my parents discussed this scenario with my sibling and I, I think we would both feel obliged to say, “lovely, of course”, regardless of how we really felt.

Had a meeting with our financial advisor recently. Deprivation of assets is a real thing which councils are clamping down on re: care homes. Also gifting that amount of money raises inheritance tax implications. The sum you can give freely is still only 3k per annum.

Your parents could advance you a loan with a minimum amount of interest perhaps. All this needs to be talked over with a professional person to ensure that you are not going to be in a financial mess in the future looking for 40% of the gift value to give to hmrc.

I voted YABU. My husbands parents did this. Gave their DC1 money to pay off mortgage on the birth of their first child and promised DH he would get the same. He never did. It’s now over 30 years later.

Apparently DH will get the extra money when MIL dies. But 30 years ago £30K bought a 2 bed semi. It doesn’t go very far now. BIL had years of being mortgage free. SIL got to give up work so no childcare costs.

I have two children and could never treat them so differently. The only way I would do it would be if I could afford to invest the same amount for my younger child so that he received the same ‘indexed linked’ amount.

I have two DC. If one grows up to be well off and one is struggling. I would have zero guilt evening it up so they both had nice homes that met their needs and were both comfortable. It's your money. You can gift it how you wish noone has the right to question your choices. Although I would prob explain to the wealthier one that should the situations be reversed you would have dis the same for them

Hm, this is a difficult one. On face value, I would absolutely say that you are not being unreasonable, and I would hope I would be understanding of this happened in my family.

On the other hand, DH and his brother are similar to the children in this scenario, with DH being DC1. I know that he would feel this very unfair as he has made many sacrifices to get to where he is now. He studied and took on debt to do postgraduate qualifications. He basically had little social life while he grew his career, and continues to work very hard for what we have. We have a nice house in an expensive area, but we also have a long mortgage and do not have masses of disposable income (unavoidable as DH can’t really do his job anywhere other than London).

His brother lives in a tiny house in the North West, with two children and a mediocre salary. He chose to work in something he lived but that doesn’t pay well or have opportunities for progression. His children can only access mediocre schools and they cannot afford to move.

I know that while DH would not want his brother to be struggling, he would resent his parents giving him and advance on inheritance, when their lifestyles have largely been the outcome of different choices.

Obviously, choice has not always determined the difference between outcomes, but the reasons for the differences should be taken into account t when considering how DC1 might feel.

Personally I wouldn't do this - you cannot guarantee that DC1 will ever inherit anything at all. Although you are both healthy now you really don't know what will happen in the future as all of the "inheritance" could be swallowed up with care fees -even 5 years ago DM's care home was £1,000 per week.

It also sounds as though you are penalising DC1 for planning, saving and borrowing for their future properly - the have planned and taken out the huge financial strain of decades worth of debt that they will be repaying up to retirement and get nothing. DC2 didn't plan and changed their minds and get bailed out. Personally I think you should split the money and give £60K each.

My parents have done this - twice, in fact. I am one of three children; my parents lent my older brother a sum of money on the understanding it was taken out of what he'd get if they died. He paid it back over the years, and more recently, they offered to lend us the same amount (we've not taken them up on it but we expect to do so at some point).

I don't see it as unfair at all. I don't think parents have to justify to their children how they spend their money (and as it happens they didn't mention to me they'd lent money to my older brother, until they discussed lending some to me). But I also know my parents have changed their will each time to make clear where we all stand.

There are Tax implications of gifting large sums of money. Hmrc might ask for 40% back - that’s £48,000.

Deprivation of assets if one of the parents needs care. I believe the 7 year rule is outdated and the council can now go back much further in looking for evidence.

You need legal advice and suggestions that won’t have potentially disastrous consequences.

@Merryoldgoat
Spokey yes I am relatively well off compared to what I was growing up. And slightly better off than sibling. Would hate for her to struggle and would be delighted for my parents to help her if she ever was struggling. I know they would do the same for me. But thankfully dont need them too (touch wood).

Merryoldgoat, it probably depends a lot on the pre-existing family dynamics. As with QueenofOversharing, my parents did this after years of treating me like an afterthought. A decade of Christmases watching my brother and his family open high end, expensive gifts, whilst I got something that cost pennies. Years of them turning down invitations from time because the grandkids might call.

The house was the final straw ad devastated my self-esteem. I just felt of no value to them. Hard as it is to live without contact with my parents, it was easier than continuing to keep my mouth shut whilst my brother was favoured.

Clearly the OP knows the family dynamics, but the plan does have the potential to cause immense hurt if handled badly. Particularly as part of the reason DC2 is less financially stable is their own life choices.

So DC1 is basically being punished for working hard. Parent are creating their own little unfair society right there.
Split the money. Easy. Happy family all round. Why would parents not do that?

What happens if either divorces?

On the whole I dont think this is unreasonable. If one sibling is better off than the other it does not necessarily mean they work harder. One of my siblings and a number of my friends are very wealthy. If you read the business pages you will likely have seen them all at some point. All state that there was a huge element of luck, yes they are bright, hardworking people but they were also in the right place at the right time. They are not especially talented compared to others of a similar background. None of them had the big idea they were just along for the ride,the same as the majority of people in their situation. Good for them but it doesn't make them better people or more hardworking than a carer for example.

I'd like to spend my money when it can make a difference so I would help out DC2. But I do think it all needs to be out in the open and discussed with both. What if DC1 is actually in debt up to their eyeballs and on the cusp of losing everything?

I do agree with other posters that legally you need to make sure it is as watertight as possible so it cant disappear in a divorce.

Even if my parents discussed this scenario with my sibling and I, I think we would both feel obliged to say, “lovely, of course”, regardless of how we really felt.

This is true - it’s basically putting the onus on the eldest not to squash their siblings dreams.

To go back to it, surely an extra £60K would help DC2? It might not buy the exact house they want but enable them to move from a flat to a smaller house? Have they looked at the maximum they can borrow as a mortgage too?

I'd say that it needs to be discussed by the parents and DC 1 & 2 (separately). The parents may intend to make DC1 'whole' in the will but what if the parents assets get depleted due to bad investments, care costs, property values, or the 100s of financial things that can happen. Would DC1 be OK with taking the risk that, when the time comes, there may not be enough to 'even things out'? Would DC2 be OK with everything left in the estate going to DC1 because there was only enough to make DC1 whole?