To ask for help with financial pickle

[ShoebillStork]

In 2009 FIL had a win on the Premium Bonds. He gave us £10,000 to invest for DS (at low risk) and the money to be given to DS when he's 18.

I put the money towards a loft conversion. DS is 18 soon and I'm due to remortgage for a better rate. How much do I need to release for him so he gets the £10k plus what it might have gained in interest since 2009.

And should I encourage DS to get a Help to Buy ISA with it?

OP does need to rectify the inequity between the 2 boys.

Personally I’d give them half each.

I’ve got my DTs savings tied up in an isa which guarantees to pay out whatever I put in as a minimum on every 5 year anniversary. I just had a look at it, and it reckons 10k in 10 years time would be worth 14k (I think after fees). That’s based on the average 5% growth, could be as much as £18,600 at the higher end of 8%.

Admittedly I only opened the account in the last couple of years so no idea of how it would’ve performed years ago, and am not much of a financial wizard, but I’m pretty sure I’ve got my figures right....!

Assuming you can afford it I’d probably suggest 15-16k?

I think it was actually quite a smart way to use the money as your DS benefitted from the loft conversion, your house is worth more and he gets the investment plus interest without worrying what’s going on in the current market paid back to him.

@WeBuiltThisBuffetOnSausageRoll

A few things here. One - OP is totally dishonest and took the money from her FIL for her son and spent it as she wanted.

Yes - on him, as it happens. And he seems to have been very happy over the years with her choice of purchase with the money that she borrowed from him when he had no need for it and is now repaying with interest ready for when he does.

Nothing the OP has said shows the son having any knowledge of this investment, so nothing to be happy about. He had no choice.

The fair thing to do is to work out what the house was worth 12 years ago before the loft conversion and what it's worth now. So if it was worth, I dunno, 300K 12 years ago, and it's worth 400K now, then it has gone up by 25%. SO you give your DS 10K plus 25% of 10K, that is 125K.

You invested his money into your property. He should get back a proportion of the money you made.

[quote Twintwix]@Tiredteacherxxx so why does OP think FIL would be livid if he found out?[/quote]
No idea. Ask her.

But if you pass someone cash to invest for you, you must be prepared that they will do so in the way they see most fitting.

Honestly OP.. you should clearly have stuffed it into a tin and kept it under your bed until your DS is 18.

ANY other option would be labelled grabby, thieving, selfish etc etc by some of this lot...

Current returns on cash savings are nowhere near 5% and haven't been for some time

@TatianaBis

Yup, though I think that should have been done initially with the £10k being split and made clear to the FIL. It's a bit more complicated now.

I'm surprised the partner sat back and allowed his dad to do this. I can't imagine putting up with such unfair treatment of one of my kids. OP since your home is purely yours of course you shouldn't be expected to provide the similar amount for your step-son but I'd suggest to your DP that he remortgages a similar amount of property for his son or think about splitting the money.

SO you give your DS 10K plus 25% of 10K, that is 125K

I think you need invest some of your money in a better calculator.

I did exactly the same OP. Best thing for the kids - they got a much nicer house to live in. I moved and gave them each a chunk when they were 21. They did better financially and we had a ncie place to live. The right thing to do = savvy investment

Yup, though I think that should have been done initially with the £10k being split and made clear to the FIL. It's a bit more complicated now.

Depends on your mettle I think. I’d have no problem dealing with FIL personally.

If the account would have accrued say 5k interest in that time I’d bump it up to 20k and give them 10k each.

I think at least, the step-son should be given £10k if his brother's money isn't being split. It would be less than the son's because no interest etc but at least he'd be on the same footing as his brother was originally.

Yes, that’s fair too.

You invested your DSS gift in property. The increase in property values from 2009 to today is approx 54%, so you need to give him £15400 back.
He should be allowed to do what the heck he likes with it. It’s his money - and has been for the last 12 years,

@arithanaggerton

I think at least, the step-son should be given £10k if his brother's money isn't being split. It would be less than the son's because no interest etc but at least he'd be on the same footing as his brother was originally.

Why if the original money has come from people with no connection to them, unless his df can give him this with no financial harm to them? Sadly life isn't always fair.

Wow that was shitty of your FIL to only give money to one grandchild - give to both or not at all

Even more shitty for you DP/DH to accept this. What a way to create a divide between the kids. He should have told his dad where to shove his money if he couldn’t gift both kids

Secondly - remortgaging your home - and if you were to die during the remortgage period? Life insurance payout to cover the house would then reduces your son's inheritance?

Eh? If I were to croak DS would inherit 100s of £1000s! House, pension etc. Stop talking nonsense.

@MichelleScarn

Both the son and the stepson are the grandchildren of OP's FIL. They are both equally connected to him. He chose to give one grandson £10k and according to OP actively snubs the other. So I'm not sure what you mean.

Unless by 'people with no connection to them' you mean Premium Bonds, which I don't think is relevant.

@Womencanlift

Wow that was shitty of your FIL to only give money to one grandchild - give to both or not at all

Even more shitty for you DP/DH to accept this. What a way to create a divide between the kids. He should have told his dad where to shove his money if he couldn’t gift both kids

What, so the FIL who has given the 10k is the DGF of other child too?! That's appalling!!

@arithanaggerton have just caught up on that, it's so bizarre I would never have thought it would have been done!

Unless the OP has another FIL that is not the DP/DH (not sure if married) father then it seems like one grandfather, two grandchildren with one being acknowledged (OPs kid who is being handed a nice gift at 18 and one who is not

House prices have doubled since 2009.
£20k sounds about right.

@ShoebillStork

Thanks for link Candy but I don't know what interest rate to put in.

And can you lot stop trying to make out I've nicked DS's money. He got a cool bedroom (his words), will get £10k plus interest and will inherit the lot when I croak. Which will be very soon if FIL finds out ...

Exactly! You invested it for DS so Fil should be happy.

Ignore the sanctimonious posters on here!

Use the online calculators to work out interest rates and agree a plan forward with him

Good luck, and lucky 18 year old!

The FIL sounds horrible. Your DP needs to have a serious talk to him.

You need to also take into account compound interest if you are to give him back exactly what he is due. Depending on what sort of investment you would have used, that amount could be anywhere between £14,000-£20,000.

The value of the house is a bit of a red herring but luckily prices have gone up and you can pay him back.