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AIBU?

Share your dilemmas and get honest opinions from other Mumsnetters.

Original poster

To think that saving money for DC is risky.

38 replies

Changeychange1 · 15/04/2021 18:30

So I have one DC, not yet 10. I am divorced from her father but he adores her and will always provide for her financially. I am likely to die young, not excessively young, think 50s due to a medical condition. I am saving like crazy for her so that if anything happens to me sooner than expected she will have her her own safety net. I’ve saved £14,000 so far, and probably will have about £35000 for her when she is 18. These are my worries;

She might be terrible with money and blow it all.
It will be taken off her to pay for university and she won’t ever actually have the money (I know she’ll have it, but it won’t be used for her as such)
The interest rates are terrible and the money will be worth less than it should be by then, for example if I invested it into properly for her.
She might meet/ marry someone awful who will take half of her money on divorce.

I’m completely aware that I’m being a ridiculous worrier, but can anyone reassure me/ give me ideas of what you’re doing for your DC. My early expiration date is clouding my judgement.

OP posts:
Themostwonderfultimeoftheyear · 15/04/2021 18:33

We don't plan to give it to our DS at 18. It will be for buying a house so will be given when he is ready to do that.

Umbivalent · 15/04/2021 18:33

This must be so tough for you Flowers

None of those things might happen. Especially money that she has before marriage, that can't be taken away.

However, have you looked into a Trust? That would give her a certain amount of money per year, or on big birthdays, or whatever. You should take legal/financial advice on this, but it might be able to address your worries.

Umbivalent · 15/04/2021 18:34

With a Trust, you would choose how/when she gets the money. And/or what it can be used for. (I think)

Original poster
Changeychange1 · 15/04/2021 18:35

Thanks for replying. I don’t definitely know that I’ll be here when she’s thinking about buying a house, so although it might be possible to hold onto it until I die, that could still be before she’s ready to buy. I just feel that it’s such a tricky situation.

OP posts:
Original poster
Changeychange1 · 15/04/2021 18:36

Oh, a trust! No, I did not know about that. I guess a solicitor could walk me through that? Or a financial advisor?

OP posts:
Mummy1608 · 15/04/2021 18:36

I second the idea of a trust. This is the sort of situation that a trust is for, as I understand it.

I'm really sorry about your condition.

Original poster
Changeychange1 · 15/04/2021 18:38

Thanks all for replying and your kind words. I’ve always known, so I really am ok with it all, I just worry about her. On the plus side, I don’t need to pay into a pension so I can use the money that would’ve gone into a pension for her. Every cloud Grin

OP posts:
Mimosa1 · 15/04/2021 18:39

Gosh that does sound like a worry and you seem like a wonderful mother. I wouldn't underestimate how freeing it is for a child not to have to worry about their mother's finances so I would focus on making sure that YOU are well provided for so she doesn't have to worry about you.

crashbandicoot4 · 15/04/2021 18:42

If it's after you are gone you are worrying about then get some life insurance and do a will.

User57327259 · 15/04/2021 18:42

Depending on your age and her age she could be well into adulthood before you die. This is not necessarily going to be wise with money or that she will not be involved with an awful man/woman who might only be with her because she has money coming.

I am watching this thread because I am in the older situation of having grown up children who could not be secretive about the money which was destined for them and therefore attracted some nasty types.

Do you have a sibling or a cousin who could watch over your child and make sure that your child alone benefits from the money you are saving for him/her. Other than that it might have to be a solicitor.

Mimosa1 · 15/04/2021 18:44

I wanted to add that I didn't want to seem insensitive about your health condition OP. I just know how stressful it can be to have to financially support relatives when one is starting out in life so making sure you're OK for money is not inconsequential (and that a trust is in place for your estate to your DD if you die younger than hoped). Wishing you all the best.

therocinante · 15/04/2021 18:44

Definitely a trust! See a financial planner or wealth manager (I know it's not millions but they're best to advise on this kind of thing).

nannynick · 15/04/2021 18:45

She might be terrible with money and blow it all.
On the other hand she may surprise you and be very money savvy, use some for living expenses and continue investing the rest.
You may spend some time over the next 8 years to encourage her to take an interest in money and investing. A starting point with that may be the Warren Buffett's Secret Millionaires Club cartoons on YouTube: www.youtube.com/channel/UCaf88EBmtZuBFOifL0i5DFw

It will be taken off her to pay for university and she won’t ever actually have the money (I know she’ll have it, but it won’t be used for her as such)

Will it? Interest on the money would count as income but I don't think SLC assesses the actual money held itself. Could be wrong but I don't think much of it would have to be used for Uni.

The interest rates are terrible and the money will be worth less than it should be by then
Interest rates are low at the moment. Invest it instead and there is a chance that investments will grow more than interest in a savings account.

She might meet/ marry someone awful who will take half of her money on divorce.
They may steal all of it. Not sure you can do anything about that. Maybe she will spend a lot of time deciding on a partner and maybe if her investments are worth a lot then have a prenuptial agreement in place.

Thebookswereherfriends · 15/04/2021 18:47

You could also start a pension for her - even a few thousand now would give her a good start, she can carry on paying into when she starts working or just have it a little extra when she’s at that age.

1Morewineplease · 15/04/2021 18:49

A trust is the way forward for you.
You can dictate when your child gets the money eg 21, 25, upon marriage etc... entirely up to you.

All good wishes to you.

Tal45 · 15/04/2021 18:51

I would just not tell her about the account until she is ready to buy a house - or tell her you have some savings but not say how much (assuming you are likely to still be alive when she is in her 20's). What I would do in the next few years is educate her about money - university fees (she should get all possible loans and see the repayments as just another tax if you earn enough to have to repay), savings (understanding interest rates, how to set up an account, pros and cons of credit cards etc) mortgages (what all the different types of mortgage are, effect of interest rates etc), wills (where your will is kept, probate, inheritance tax etc).

TrexDrip · 15/04/2021 18:51

If your employer offers a pension you should definitely pay into it as you are missing your employer contributions which might double what you put in. That would be paid out to her when you die.

TeenMinusTests · 15/04/2021 18:52

#1. Save in your name not hers
#2. Write in your will that it goes in trust for her until she is e.g. 25 and name sensible trustees.

Planttrees · 15/04/2021 18:53

You need to write a will and appoint an executor. The executor/trustee would then be responsible for holding the money until your child was 18. If you set up a trust, then the trustee (executor) can hold it for longer and make sure it is spent the way you direct. Go see a solicitor as soon as you can.

MadeOfStarStuff · 15/04/2021 18:56

Disclaimer I’m not an expert! But if you’re worried about something happening to you while she’s still young I would suggest life insurance which would give her a lump sum if the worst happened

If you’re saving in your own name, you can control when you give it to her. Make sure you have a will although I believe if you died without one your estate would go to your DC if you’re not married anyway.

If you’re saving in her name then it’s harder to control but all you can do is try to raise a responsible person. I don’t think it’s worth worrying about awful future spouses tbh, there’s no way to control for that, once you give her the money it’s hers and nobody knowingly marries an awful person after all.

Ohcomeonitsrubbish · 15/04/2021 18:56

Gosh what a worry for you. You do sound like a wonderful mum, and I hope that you live until your DD is well into adulthood.

Definitely look into setting up a trust. The money can be earmarked to be spent in certain circumstances (house buying for example), or at a certain age and is controlled by trustees (solicitors or family members maybe). There is also a mechanism that means that the money will remain in her name, even if/when she marries or buys a home with someone else. My IFA put it thus "if your DC meets "Mr Wonderful" and they set up home together, a few years later the relationship could go wrong. If that happens and they sell the house, the money from you will return to your DC and they haven't lost anything". I DON'T know if that means the money goes back into a trust, but it does safeguard it for the future. It also means that if your DD has children, that money can then be passed down to them.

I'm afraid I don't know what this mechanism is, but it does exist and our IFA recommended it. We aren't at that stage yet (younger DC), but will look into it when the time comes.

Lancrelady80 · 15/04/2021 18:56

What about a LISA? Can only be used to buy a house or for pension, I believe. And LISA also brings a government bonus of (I think?) 25%

Original poster
Changeychange1 · 15/04/2021 18:58

Thank you all so much for replying. Really helpful and food for thought. I’m currently googling solicitors Grin

For those that have mentioned life insurance, I can’t get it as they won’t cover me Wink

OP posts:
RainingBatsAndFrogs · 15/04/2021 18:58

Saving like that is a fantastic achievement, and alongside being a the great Mum you are will be of great support to her.

I do think it would be worth talking to a legal and / or financial advisor. Probably both, unless there is some sort of all-in-one service.

You know you can name someone as a beneficiary on your pension? So given that pension funds will probably fare better than savings accounts, it might be good to save into a pension with your Dd named as beneficiary? You would also get the tax contributions. These are deducted again if the pension is paid to anyone but you (I think) but your pension would have benefitted from the yield on the tax contribution (I think).

You can also help your Dd understand that long term savings are an investment in your life. Young people can be very responsible around money, they are not all mad spendthrifts.

Currently a students own savings do not affect their student loan application.

Are you on good terms with her father? Would he be a good co-trustee of a Trust in her name? And support her with sensible advice?

ShowOfHands · 15/04/2021 18:59

My friend was v little when her mum was diagnosed with cancer and while she recovered, she knew it could come back so she saved everything she could, got the best life insurance possible and worked to leave her dc a legacy. She died when my friend was 11. My friend was and is v sensible and the money was held in trust until she had graduated. She's in her 30s now and hasn't spent all of it. She has a house (no mortgage) and travels a bit but she invests the money and takes good care of it. She sees it very much as a legacy.

You simply can't know a thing about what will happen but you can plan with hope and try and raise her to understand the value of money. You can't do any more than that.