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)

You have to be fair. My friend has 4DC and they all have had varying financial needs but they are meticulous at being fair - even though the situations the DC find themselves in are not always fair. One child in particular keeps tabs and has done since childhood- so what they do is always open and equal. When, for example, one child got divorced and needed more financial help than any of the others ever had, and needed more than the parents could give to the others - rather than make a gift or reduce the sum available, they 'bought' a percentage of her FMH. There's a contract and she can pay down that percentage as her circumstances change, and as the house goes up in value or when it is sold there is more money in the Bank of Mum and Dad for the next DC crisis. No deprivation of assets issues, and everyone knows where everyone stands. Is that an option here?

I wouldn’t. There may be nothing left after care fees or something going wrong and DC1 will never get the same then.

I’d feel penalised in her shoes for making sensible decisions and self funding whilst my sibling was rewarded with a house because she made different choices.

There’s no guarantee that there will be anything left for DC1 or that DC1 will live to see it. If done, I think it needs to be done as a straightforward gift - not an advance - with DC1’s blessing. Also, how does tax work in these situations? Will DC2 see enough of the money to make it worth your whiles?

MintyMabel see this is where value judgements come into it and exactly the reason parents have to treat all children the same. As soon as you start justifying massive unbalanced financial gifts by saying things like "DC2 works just as hard in her socially responsible job as dc1 but dc1 chose a financially motivated career, so we'll compensate dc2 by giving them a hundred thousand pounds" there is a subtext waiting to be infered, intentionally implied or more usually not, conscious or not, about who is the better human, who mum and dad approve of more, and ultimately who they love more...

Parents are not the state. The same principles don't apply because we don't need the state to approve of us or love us, and no matter whether you're 9 or 49 most people need that from their parents and can be easily hurt by them, no matter how hard they try not to be or pretend to be beyond that.

This happened in the generation above me in my family. My parents were gifted a large advance on an inheritance which enabled them (us) to move to a bigger house. It felt to me as an early teen as though our family's financial situation changes dramatically for the better overnight and meant we had room for friends over etc.
It was done with the full agreement and consent of my dad's sibling, and never caused any arguments.
The house we.moved to had an accessible downstairs bedroom and my grandmother moved in there for the last few months of her life.
AFAIK it worked out well for everyone.

I’m similar to DC1 and I’d be OK with it. I agree with others though that I would discuss it with DC1 first so they know it’s not based on ‘love’ but wanting a better life for both children.

Also I think if it put DC2 in a better position than DC1 (so smaller mortgage, less need to work till retirement) that could be an issue.

I'm much better off than my brother. I wouldn't mind at all if my brother and his wife got a helping hand and I didn't.

I would be annoyed if my parents did this. Although I am better off than my sister I have (a) worked very hard and (b) don’t go on as many holidays etc. I also have unexpectedly given up work now to be a SAHM - you never know what is round the corner for the wealthier one.

As others have said I would be furious if this happened behind my back! Potentially I would agree to it if I was involved in the decision making process...

Impossible situation. Yes on paper it makes sense. But what if there is no inheritance left? As a poster above said, it could easily have gone on care home fees. What if DC1 is too old to enjoy the money when it finally comes along?
I think the parents should speak to DC1 first, without mentioning anything to DC2, and take it from there. This is the kind of stuff that could lead to long-term family fall-outs if not handled well.

Absolutely not ok.

One of my siblings works physically hard but gets paid in kind through extensive access to a hobby that would not otherwise be available to someone on her family income. She has zero income on paper. Her husband works part time but works long hours on one crazy get rich quick scheme after another and has lost hundreds of thousands of pounds of his parents' "investments". They essentially live on handouts from both sets of parents. My parents pay my sister an allowance (which was explained as being for walking their dog but the dog died years ago and had not been replaced - nobody is allowed to mention the anomaly) and she's in her 40s...

Some people "work hard" in rather... Idiosyncratic ways which benefit nobody, and expect handouts from family...

I think the best decision would be to gift it 50/50 even that bit of help each will help both children. It's not fair to DC1 and I think you know that what's why your unsure. Parents should treat their children the same regardless of the child's life choices.

I voted yanbu but after getting to page 4 of comments realised that actually it'll create so many arguments.
My mum was gifted a large sum (although not this large) and her sister doesn't know. It sits uneasy with me.
My husband and his sister have both been given large sums to varying degrees and it does cause resentment between them, that is due to an imbalance in sums given.

If I were dc1 having major renovations they are probably doing so to ensure home is suitable for aging teens as they become young adults and have had to decide between retiring early V house improvements. In the same way dc2 chose not to work hard in younger years and have 2 kids in a small flat.
I'm sure dc2 would love a bigger house but dc1 would likely also love to not have a huge mortgage hanging over them.

As an advance on inheritance it's fine, I would be fine with my parents doing this as my brother doesn't own, in fact they have offered me money following my marriage break up, my brothers are quite aware (I will pay them back but my brothers suggested the money goes into a trust rather than back to them because of potential care costs 10 years down the line)

I agree with @ShirleyPhallus. Discuss it with both children first.

I wouldn't. What if by dc1 dies passes away because xyz before parents ? Won’t be ever able to enjoy the inheritance they’re due

The will can provide for DC1's inheritance to go to grandchildren in event DC1 predeceases OP

Hand it as a loan, and write it off in your will.

Putting the moral arguments to one side, as others have said the DP will have to be very very careful. If something were to happen to both parents within 7 years of the gift then DC2 could be liable for Inheritance Tax on that gift.

Additionally, deliberate deprivation of assets (in order to avoid care fees) is taken very seriously and Councils have the right to go back as far as they like to investigate finances. If they thought such a scenario was an attempt to ensure money was inherited rather than spent on care fees they are able to go through the Courts to claim every penny back from the recipient.

Putting the moral arguments to one side, as others have said the DP will have to be very very careful. If something were to happen to both parents within 7 years of the gift then DC2 could be liable for Inheritance Tax on that gift

Which can Ben paid out of the sum / equity on new home

And for which there is insurance

And for

And which in any case would have to be paid on death

No, this is a terrible idea and could ruin sibling relationships for years to come.
Firstly, DC 2 CHOSE to have kids in a flat that was too small. I'm sorry, but it was an unwise decision and they aren't living within their means. If they are constantly being bailed out then how the heck will they ever learn to save themselves? Giving someone money appears to be a good will gesture but actually, for people that aren't great with being fiscally responsible, giving money to solve money problems is the absolute worst thing you can do. Once they've bought a house it doesnt end there does it?- they've then got upkeep/maintenance, repairs, bills, council tax, mortgage payments etc- all of which will be MUCH higher than they are paying currently in a flat. Can they afford higher mortgage payments on a long term basis? would they then decide to have a third child like they did last time? Will this money help them or will it actually place a financial millstone around their neck?

Secondly, it feels like DC 1 is being "punished" for saving their money and being fiscally responsible. Not only that, you never EVER rely on an inheritance. How many times does someone mention inheritance on MN and they are told over and over again that you cannot rely on inheritance because if the parents go into nursing home care, thats about 5k a month. At the rate of 5k a month, any potential inheritance will be eaten away at an astonishing rate leaving little if nothing left. At the end of all this, that means DC2 gets everything and DC1 gets nothing. I'm sorry but that is deeply unfair and I would be really upset and felt like my parents loved my sibling more if I was DC1.

You always, always share out monetary gifts fairly. If you dont, then you risk ruining sibling relationships down the line and surely, the best gift you can give your kids is a supportive sibling? not one who feels resentful and left out and takes it out on the other sibling.

Share the money out equally.

If you are worried about fallout, would it be possible for your parents to buy a house instead and let DC2 et al stay in it? That way the money still remains part of the estate but they get a house.

So then DC2 gives up the house they own and moves into a rental which would have to be sold as part of the estate when the grandparents die? That’s a rubbish idea!

"I would but I would get it done legally as a loan to be paid off either during your life time or via inheritance."

I think most mortgage lenders require the donor to write confirming that the money is a gift not a loan, with no requirement for repayment (or interest). (Not sure how they would regard a loan repayable via inheritance - would be interesting to know.)

This thread is very interesting. I think the dparents who give money for house deposits do generally do it in stages - dc1 first, then a few years later dc 2 once that dc2 is in a position to buy. But of course posters are right, there's no guarantee that they'll be able to find the same amount of money for dc2 when the time comes - although I suppose waiting 3-4 years is very different from waiting an indefinite time for inheritance.

I’m struggling to envisage a cheap part of the country where you would need £100k to move up from a too-small flat. Sounds like there’s some emotional strings being pulled regarding DC2’s children ie DGC missing out on opportunities. Surely £20-30k would enable a move to an ex local authority house and garden?

Totally unfair and will lead to resentment. £120k is a huge sum by anybodies standards.
DC1 has made sacrifices to get to where they are and mortgaged to their eyeballs. Big paying jobs don't come without stress. And not the sort of stress that disappears at 5pm when you walk out the door. What happens when they are burnt out and can't cope any more?

DC2 made their choices to have children.

Treat them equally. You don't know what you'll have to leave them in 20 years time.

My DHs family have done the unequal things, DC3 gets handouts. The boys are suppost to get it made up to them in the will. But by then who knows what money will be left and the cash will be worth less in 20 years time. On the surface the DSs let it go but underneath I'm not so sure.

Interestingly enough MIL had the opposite happen, and inheritance was split in favour of her DB 10 years on they barely speak. Caused a massive rift.