Inheritance straight to GC, skipping childless DC

[Shuk]

How would you feel if your parents left money to your nieces & nephews but not you or your siblings, and you don't have DC, but have possibly had more financial support as an adult than your siblings (though not as much as their dc will inherit)

YABU - no one is entitled to anything
YANBU - this isn't fair and likely to cause considerable upset

For context it's not my parents, and I have DC who would benefit. I think this is hugely unfair.

There was a thread on here quite a while back where DGPs (OP's DPs) had left a substantial amount of money specifically for private education for OP's children. OP had one sibling, who was adamant that she was never going to have children. The DGPs died and then OP's DSis had a change of heart and did end up with a couple of children. She assumed that the money was for the private schooling of all of the DGCs.... except that firstly, there wasn't enough to pay four children's ways through school and secondly, OP's children had been specifically named as beneficiaries. It caused a huge amount of pain.

It's far from uncommon to have DGC who are born after you have died - in the above situation, additional DGCs could equally have been OP's younger children, born after the DGPs had gone, and that would have been heartbreakingly unfair.

We actually knew a family where the surviving DGP decided to leave everything split 9 ways:
DS1, DIL1, DGC1, DGC1 (family 1) - 4 ninths each;
DS2, DIL2, DGC2, DGC2 (family 2) - 4 ninths each;
DS3 (happy bachelor, no DC) - 1 ninth.
None of them particularly well off (but nowhere near the breadline).
Contrary to what you might imagine, DS3 (a very kind, generous man) thought this was an excellent idea and completely fair.
DS2, on the other hand, was furious as, rather than his family receiving 4/9 of the money, he wanted to have 1/3 (3/9) - less - but all to himself.

I really don't see any fair alternative to leaving equally between your children only, unless there are very specific reasons and everybody is in agreement (e.g. one child is severely disabled and will need lifelong financial support - but even then, you can't know if one of your other DC will have a massively life-limiting accident after you have died). If they so choose, there's nothing stopping any of your DC from passing it all straight on to their own DC if they want to.

Selfishly, I think there are certain benefits to only having one child - makes things like this far more straightforward!

Very unfair.

Each of the children's family units should get the same amount. If there were four children, each family unit should get a quarter.

That can then be subdivided amongst the grandchildren in each family unit.

So, for instance, if there were three children, then: family A, B, and C each get a third. Family A splits that third between their two (grand)children; Family B gives it all to their single (grand)child, and Family C keeps it.

Because you don't know what will happen after you die. Family C (your brother, I take it) could have two kids and they would be entirely unprovisioned under the current rules.

No one should expect an inheritance. If the GP's want to leave it to the DGC, that's their choice.

@steff13

Because it's still going to their siblings families. It's benefitting their siblings by benefitting their children.

But the parents have already given the childless child financial support directly.

But it's not as much as the GC will inherit. But it's immaterial. It's about how leaving someone out makes them feel, not about totting up a balance sheet. But say you had had two children. You gave 10,000 to one of your children. Your estate was worth 200,000. Would you give all 200,000 to the child that didn't get the 10,000?

I don't think anybody is disputing that it's their choice to leave the money to whomever they wish.

We're just discussing what does and doesn't seem fair - and the kind of decisions that will leave immense hurt and can cause family divisions as a direct result.

My in-laws have told their 3 adult children they will be doing this.

All inheritance straight to grandchildren, none to children.

Their money, their choice. Their adult children respect their decision.

I think that would feel very unfair. I’d also say the parents of the children do benefit indirectly (by not having to save for them; knowing they are financially secure) so in my mind it isn’t fair for one side to benefit massively and the other to get nothing.

In the circs of the OP, I don’t think I’d necessarily do 50% child and 50% grandchildren which would technically be fairest on all sides but would want child 1 to have at least the same as each GC if not more.

@Tigertigertigertiger

My in-laws have told their 3 adult children they will be doing this.

All inheritance straight to grandchildren, none to children.

Their money, their choice. Their adult children respect their decision.

Do all the children have children of their own?

If the kids are financially stable, then passing assets directly to grandkids is way more inheritance tax efficient

@Kisskiss

If the kids are financially stable, then passing assets directly to grandkids is way more inheritance tax efficient

It's not about being tax efficient, though. It's about a sibling perceiving that they're not being treated equally because they don't have children. If I were that sibling and you tried to explain tax intricacies with formulas and pie charts, I might be tempted to beat you with them.

I wonder whether the childless son has received more financial support from his parents than his siblings realize? Pure speculation, but that’s what I immediately assumed when I read your post.

In DH’s family, for example, I think one of his sisters has received significant financial support-I don’t know how much, but it wouldn’t surprise me if my IL’s will reflect that.

I’d divide it equally between the DCs, that is what would happen by law if one was to die without a will (assuming there was no spouse). The it would be up to the DCs with offspring I’d they wanted to share it with them.
Also I’ll it is quite likely that the childless DCs will leave their estate to nieces and nephews, so they will benefit in the long run.
Although I can appreciate that life isn’t always that easy, and if one DC was very wealthy and another very poor then that would need to be addressed personally before death if the poorer one were going to be bequeathed more.

My MIL has divided money between her three children equally and the sale of the house will go the same way. One of her children has one child, another has none and the other has three. She says that she will divide between her children and they would need to portion up their share in their own family. It us not her issue at all that one of her children chose to have three. She says that uts their problem

I dont think people should be talking about inheritances, as in who in a family inherits something, and who doesn't. No one in my family would do such a thing.

@Kisskiss

If the kids are financially stable, then passing assets directly to grandkids is way more inheritance tax efficient

In what way is it more tax efficient? In the UK?

I dont think people should be talking about inheritances, as in who in a family inherits something, and who doesn't. No one in my family would do such a thing.

If you're leaving everything equally to your children, then I agree that there's particular no need to discuss it; but surely it's better that everybody understand the reasoning behind less obvious decisions rather than families being torn apart after the loved one has gone?

If I'm interpreting the thinking behind your comment fairly, if anything, I think it's the less-close families that don't discuss money.

Others will disagree, but I believe that personal financial planning shouldn't only incorporate your own lifetime, but should also include where your money will go after you die and the effects of receiving (or not receiving) that money on your loved ones.

It always amazes me when you read on MN how many parents will do everything possible to help their children succeed whilst they're little (as you would, of course, expect); but then the very suggestion that you might want to leave behind those same (now adult) children with precious memories of you AND a fair share of your money as an inheritance to help them in their continuing life is frequently met with outrage that said children should have the audacity to hope that would be your desire.

I agree that some people are very distasteful about it and almost seem to be just waiting for their parents to die; but I don't think it's unreasonable or grabbing to expect that, once your beloved parents' assets are no more use to them whatsoever, they would choose you (and any siblings) as the people for it to pass to.

If you're happy for your legacy to potentially be one of resentment, confusion and worries that you didn't really love people whom you very much did, then never ever discuss it whilst alive; but that's most certainly not my personal choice.

I think it’s a very sensible idea. It doesn’t make sense to have to wait until you’re in your 50/60’s to have any financial help. If every generation was to do this, the family would become very wealthy as each generation would have a nice little nest egg to start their adult life with and invest in property etc.

But say you had had two children. You gave 10,000 to one of your children. Your estate was worth 200,000. Would you give all 200,000 to the child that didn't get the 10,000?

No, but that's also not what the parents are doing here. The grandchildren are individuals separate from their parents.

In what way is it more tax efficient?
In the UK?

I don't know what people's rationale for that is, but inheritance tax is charged on the estate of the person who has died (subject to the personal threshold plus that of a late spouse who has predeceased you) and NOT on who receives it - unless you give it to a registered charity - so it surely makes no difference as to whether you leave it to Person A or Person B.

I can only assume that people are thinking of potentially exempt transfers, which have to be passed on 7 years before you die to avoid IHT, that are subsequently made by their heirs. I suppose, if you leave your money to a 70yo child, they're significantly less likely to live another 7 years than is a 40yo GC or indeed a 10yo GGC, so in theory, the same money could be subject to IHT twice in quick succession.

I think it’s a very sensible idea. It doesn’t make sense to have to wait until you’re in your 50/60’s to have any financial help. If every generation was to do this, the family would become very wealthy as each generation would have a nice little nest egg to start their adult life with and invest in property etc.

A lot of that depends on how much you have to leave in the first place, though!

There's nothing stopping a 50/60yo heir from instantly handing the money over to their children if they wish/are in a position to do so; it just gets potentially quite messy if the GP does it themselves (especially when it comes as a surprise to the heirs), if your children don't all have an equal number of their own children and/or if they subsequently have more once you've died.

I think it’s unfair but their money to do with as they please, nobody is entitled to anything.
Although, I think when doing anything other than an equal split between siblings it’s best to let your children know so it doesn’t come as a surprise. Child free sibling is likely to be hurt by this with no opportunity to talk to his parents to understand why they made this decision. It’s also potentially going to cause a falling out between the siblings over whether to redistribute the money or not, which is a pretty awful legacy to leave behind you.

GP to skip dc to pass to GC are usually doing it as one last power trip in my experience. It just doesn’t happen in families with healthy relationships

I am childfree by choice.

In the event of my death, assuming he outlives me, my estate passes to my OH. Otherwise it passes to my sister, and through her, my niece and nephew.

I don't think you get to skip a generation: an estate should be equally divided between the next generation, so parents to children. It's then up to the children to decide.

GP to skip dc to pass to GC are usually doing it as one last power trip in my experience. It just doesn’t happen in families with healthy relationships

I agree. I wonder if some people do it for fear that a SIL/DIL of whom they disapprove could get half of it in the event of a divorce; but exactly the same can just as easily happen if their GC subsequently divorce.

These threads are so varied in responses.

The approach to how to do this stuff it's to do with so many factors more than right/wrong.

My parents grandparents take the 100% all get the same approach.

Imo fairer (no judgements etc) so less divisive than money/ family so often is.

My grandad was v generous with money,
He always made sure all got same, if one needed help he'd make s note reduce accordingly when giving later.

My uncle never worked, was a raging alcoholic.
Dad and aunt v v different lifestyles one of which he did not approve of.

All got same.

I can't imagine any other way fair but that's my personal opinion from family. Everyone different.

Judgement and bad feelings eg.

Person who does well gets less or none, obv feels not included because succeeded how is that fair?

Person who is skint all time and loafs about gets more help... Because CBA while I work?

With children get more... Reward for procreating?

Skip kids give to grand kids. Why not trust the parents to do right thing best for kids any money?
And yes I understand why GCs they really want to do something for. But skipping own kids entirely? And how held? Create trusts etc? Pita. Any conditions? When they get what age. 18 25 could just spunk the lot!

Etc etc etc.

I'm happy with my family way. No sense of unfairness. All get same and you do with it what you will.