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)

MrsTidyHouse if it were a bigger house in the same area if a cheap part of the country you're right. Betty52 is talking about financing a move not only to a bigger property but a nicer area, all in one go. That's a two in one jump almost nobody makes using their own resources.

I've voted YANBU but as a family lawyer you'll want to protect this in the event of relationship breakdown. If there's a chance that they may get married make it a loan. I've seen too many "advance inheritances" end up outside of the family on divorce to advise any different.

Giving anything as "an advance on inheritance" is a non-starter for reasons already stated.

Assuming that DC1 and DC2 were brought up in similar ways and have both had the same life chances, I'd argue that there is no reason to give one child money now, simply because they've made difference choices/been luckier/whatever.

What if (e.g.) the other child splits from her partner next year and needs money to get them back on their feet? Or something similar?

An advance on inheritance isn't always that simple. What happens if the dp end up in a home and they have to use savings and half their home etc to fund? The other dc could quite easily end up with less than the 100k given out now.

This happened to my gp. They were very wealthy, but ended up with long term medical issues and dementia. All that was left after they died was 50% of the house, which, when split according to their will, left 85k per child.

Care homes can be upwards of £1000 a week these days and there is no way of ring fencing an amount for inheritance.

Imo if one child gets 100k, then the other should get it at the same time. It's unfortunate but unless we are talking about a dc with specific special care needs then it should always be fair regardless of circumstances

My parents were in exactly this situation twice. We are 3 DC.
My parents discussed this with us both times and we all agreed that its fair.
Im happy for my sibling that they were able to buy a home this way.
My parents gave my sibling a significant amount for their house a few years ago. I have received something to a few years after that for our house. It was about half of my first sibling, because i didnt need as much. Sibling 3 hasnt received their share yet as it wasnt needed so far.
If in the end theres no money left to even it out, then thats just how it is. We are all happy with this arrangement.
I would definitely discuss it with the both of them though.

Just step back. Stop interfering. Your kids are adults. You don't need to choose to favour one of them, no matter what the disparity in their lives.

ANY inequity in parental regard hurts. It cuts through family ties and is often irredeemable. Why would you do that? Why would you knowingly alter the balance of regard you and your DCs have?

As things stand now your DCs have the lives they have made. If you step in you are changing that and giving them a clear message:

• for pity you are stepping in to rescue one child from the life they have made;
• you are more emotionally attached to one than the other.

If you have to 'help' help both of them. They will each have their own financial burden and will each be able to make good use of additional money.

But don't treat them differently. That's setting off a bomb in the heart of your family.

And then add all the possible legalities into it...

Agree with others , DC1 should know about this before any final decision is made. I’m not a solicitor but I think that the PP is correct in thinking that, if the DPs die within seven years, this money would be taxable. (Certainly I know that this was the case ten years ago.)

If there's a chance that they may get married make it a loan. I've seen too many "advance inheritances" end up outside of the family on divorce to advise any different.

Yes, that is a concern. But I think most (all?) mortgage lenders require any money provided by others for the deposit to be a gift, don't they? Afaik the dparents will have to write to the solicitors confirming this, and that there's no repayment required.

It would be interesting to know if many 'bank of mum and dad' parents try to ensure that their gift for house deposit is evenly matched by the other spouse's parents. I suspect that is more or less impossible for many reasons! If not married might you be able to protect against this by holding the property as tenants in common in unequal shares?

Unequal financial gifts and/ or inheritance almost always cause problems.

Only exception is when the less favoured is so wealthy that the sum in question is genuinely picket change to the less favoured and the poorer is not put in a more favourable position by the gift or unbalanced inheritance (for example suddenly the poorer is mortgage free or with a tiny mortgage in a lovely property and the richer tied to a mortgage on their lovely property until retirement).

Inheritance can't be relied on, I really think it's an absolute red herring.

On my husband's side of the family a wealthy family member died at a very advanced age and had made substantial gifts of land to some of her children and promised others inheritance. The children are mostly dead and the grandchildren and some of the great grandchildren and nephews and nieces have been feuding over the will for years now. The assets can't be released and are costing the potential beneficiaries money in minimal upkeep.

It would have to be discussed with DC1. But with care home costs there could well be nothing left to inherit. I would treat them both equally, it's just life that one DC is financially better off than the other.

I know people who have never made anything of their lives, because they expect to inherit.

I think it's fine. Money isn't everything and communication will help. Talk to DC1, make sure they know what's happening so it won't come as a shock. I wouldn't mind at all if my parents did this, in fact they already have given one of my siblings money to buy a house. Doesn't bother me, I don't need that money, sibling did. I don't expect to inherit anything apart from a couple of sentimental items I asked for when my mum asked.

Really bad idea. Split the money and give each the same.

If DC1 is mortgaged to retirement, why shouldn’t DC2 do the same to get ‘the house they want’?

Splitting the money now means both DCs get the same value from the money. Giving to one now and leaving the other to get their share from inheritance means they will effectively be getting less because of inflation.

You have no real idea of DC1s real financial situation only see that they have a high value house with a big mortgage. London living has costs that don’t apply or are much higher in other parts of the country so just because they are on a better income doesn’t mean they have a lot of spare cash.

Give them the same - up to each child how they use it.

NB - even in London £60k is a lot of money; elsewhere it is a huge sum to put towards a house purchase.

I would do it. I don't agree that dc1 would have 'inheritance they are due' because dc2 got a gift. It's DP's money to do as they wish with. It's not dc1's money that dp are minding. And dc1 doesn't need to be consulted imo.

No, it is never acceptable.

Op, if you want a peaceful life , I would urge you to share the money equally

@hairquestions2019 my PIL insisted my husband and I are married before buying a house together using his inheritance. They knew I didn't and wouldn't have access to match his £50k deposit.
In their family they skipped a generation so the money from a grandparent went to the grandchildren.
I hope I'm in a position to do the same for my kids if I ever receive an inheritance, although that's unlikely from my family

I voted YANBU but after reading these replies I've changed my mind, it's not fair to DC1; especially as you say that DC1 has always been a harder worker hence these financial disparities are down to different life-style choices, not different luck.

Treat them equally. Your current good health is no guarantee of future good health til you die. My parents were spritely and robust c.3 years ago but have deteriorated at a horrifying rate and we've just entered the realm of professional carers. It would be so unfair if DC1 ended up with nothing because of care fees etc and DC2 had this huge lump sum...

Or keep it for yourself.

DC1 isn't "due" the money I agree - but not is dc2, and life changing gestures of favouritism from a parent cut to the marrow no matter how old the parties concerned are.

Both the same, or keep your money.

As PPs have mentioned - £120,000 now is likely to have a VERY different value in 10-20 years time.

In 2000, the average house price £67,000. In 2019 it was £213,000.
So that £120,000 inheritance would have gone a lot further 20 years ago.

Inflation would need to be taken into consideration for DC1s share.
Assuming there's enough left, as 20 years is plenty of time for the DPs to spend the money.

PersephoneandHades and others who've changed their minds:

You can change your vote on these MN polls, just click on the other option.

MintyMabel see this is where value judgements come into it and exactly the reason parents have to treat all children the same

No it really isn't. A lot of negative assumptions have been made about DC2, including the delightful old trope that poorer people shouldn't have children. Not sure who people think will be wiping our bums when we are old and dribbling.

The OP has said both have worked steadily, we don't know why DC2 took a bit longer to get going, maybe they were made redundant or started in the wrong job or had some other difficulties to overcome.

Its the parents' money, not DC1's. Its entirely reasonable to help a child who has more need. It seems to me the main beneficiaries of this gift would be teh DGC who would no longer need to share a bedroom, have outdoor space to play and possibly access to better schools. In effect the benefits that the other DGC already enjoy. Presumably nobody considers the second lot of DGC are idle and feckless or haven't worked hard enough?

As I said, I'm DC1 in this scenario.

Personally think its unreasonable

It likes saying - You worked harder so you get less!!

I fall down on thinking there should be a split, though perhaps not an even one.

70k/50k would probably sit about right (on the assumption that someone who can give away 120k is hopefully well set up for retirement and care fees that at least 20k is fairly likely to remain...).

I basically don't think DC2 deserves 'the house they want' as a consequence of this gift (I infer from that that this is actually chosen and shown to parents?), with a 'small mortgage'.

Not at the expense of DC1 receiving nothing. As a DC1, I would be happy for my sibling to receive a little more help, but not a total bail out of life decisions, which is what this amounts to.

It's ridiculous to consider an absolute position when there are suitable compromises inbetween. The compromise is all on one side here.

OP, I think I agree that your family dynamics (which only you know) might make all the difference to whether or not your plan is a good idea, but there's no doubt that £120,000 is one hell of a "gift".