To stipulate conditions on FIL's financial gift to our son

[alicet]

FIL has decided that rather than give our 2 ds's presents at birthdays and Christmas he would prefer to give them £1000 a year until they are 18 to go into their child trustfund account. Wow, how very generous thanks a lot we thought at first...

However I am now feeling increasingly uneasy at my boys getting such a large sum of money to do whatever the hell they like with when they turn 18. Initially when he started this he asked where he could put the money and we told him either the trust fund account that they could get when they were 18 or into a separate account we were opening to save moeny for them for stuff like university / first car / house deposit etc etc. And he chose the trustfund account as he wanted them to be able to spend the money on whatever they wanted.

I don't have a problem with them blowing the money if that is what they choose and they are sensible enough to realise what they are doing. But I think 18 is pretty young and boys especially are not that mature at this age. I worry in particular about them not appreciating the value of this money. I also am concerned that they will get used to living the 'high life' on it and then when its all gone they rack up massive debt as they continue to live in the same way. Dh and I had also planned to tell the boys that if they got to 21 and hadn't any points for speeding we would buy them a car in an attempt to get them to drive safely. Things like this will not work if they can buy whatever they like.

Dh agrees with me but makes the point that fil can do what he want with his money and even if we are concerned enough to not accept his gift he could open a trust account for the boys to be gifted to them when they turn 18 anyway.

Now I appreciate it's his money but I also think that as we are their parents we should be able to stipulate how it is given to them. I would be happy for them to use it as they choose but I would like to be able to give it to them when I judge them to be mature enough and know the value of money (which may or may not be 18) rather than at 18 regardless.

Am I being ungrateful and unreasonable? Would it be unfaur of me to bring this up again and request that he pays it into the other account? Dh and his father have a complicated reliationship and fil is likely to dig his heels in if dh asks this so it will have to come from me or not at all...

Thanks for reading this far, sorry it's so long, and thanks in advance for your advice!

FAQ, it is discretional. You can stick with 11/16/18/21/25. You pick. But to get the tax advantages then you have to stipulate an age I believe.

yes I know but what I'm saying is that if in the end the parents decide when the money is going to be given it could cause issues. If one sibling is "younger" that the other sibling is when they are allowed to access the money. (ie one is given access at 21, and the other has to wait until they're 25) IYSWIM

I got £12k when I was 18 - insurance money from my mother's death when I was 2. I lent £3k to my parents, which they paid back, with interest, into a fixed term bond. The other 9k got drunk/snorted and generally spent on things that I know my mother would not have been happy about. Thankfully when I was 22 and wanting to buy a flat with dh my bond matured o I was able to contribute to teh deposit. I was desperatly grateful to my father for borrowing my money as it kept at least some of it out of my hands.

But the upside of me pissing all that money away is that I am now incredibly financially savvy, some would say anally retentive. My credit rating was shot (I actaully spent more than 9k so was left with enormous o/d to pay back as well and a cash only bank account) so I had a year of being very very poor - take the tube home or eat when I get home poor - and even now that I am well off I never spend anything that I cannot truly afford.

It wouldn't be the parents deciding. It would be the FIL. His money, his decision. Life will never be equal to two siblings. They should probably realise that by 18.

So my advice would be to raise your concerns with FIL, and suggest that he set up a bare trust (and he's better off investing in growth equities with such a long timescale rather than cash) which will pay out a couple of thousand when they are 18, so they can blow it, and regret it, and then give them the rest when they are 21/25. I would also advise that you don't tell them what they have coming - from about 16 I used to yell at my stepmum that I was leaving the day my money came through and there wasn't a thing she could do about it.

Good point Prufrock. Ds2 is eligible for a CTF so will no doubt be speculating about it for several years beforehand.

Hi Alicet
I think 18K is a lot of money for an 18 year old to have access to. I would ask FIL to look for a trust fund which they could access at 25, but I would also see if he was prepared to put some of the £1000 into a different kind of savings account so that it could be accessed earlier. Eg, if they wanted an expensive musical instrument or to go travelling when they left school. That way they would have some money to set themselves up with a house (increasingly more necessary I think, i wish i'd had this), or something else aged 25, but also the opportunity to do something earlier, which he may be able to see the benefit of.
HTH

Also check the law too. This ridiculous labour Government which knows nothing about money and tax and is making a huge mess of anything on that front, changed teh law to require trusts to pay out at 18 instead of 25 unless you want nasty tax consequences which is ridiculous. I can't remember if they back tracked or not.

YANBU - or if you are, I am too.

We have the same situation w. my in-laws and have negotiated an arrangement where the children get the money at 21 - and even then it is ultimately the choice of gran (not automatically paid out as in a Trust fund).

The reason i am so sensitive is that my little bro is a drug addict - if someone had handed him a substantial amount of money at 18 they may as well have shot him.

Obviously, I really hope my children don't end up in the same position. And whilst you can't obviously stop someone killing themselves, there are situations where you don't have to help.

Thanks everyone.

I think what I would ideally like is for one of these bare trust things (sorry not very in on all this financial stuff ) that they would get at 25 years. Then if they want to do something before then like travel / uni / etc etc they could ask and we could decide to give them the money or not. Then there wouldn't be any issues with one sibling getting treated differently to the other.

Ds2 already has 2K in his CTF from FIL as he is now 2 so I will suggest he does the same for ds2 so they both have a smaller amount to blow age 18 if they choose.

Obviously need to look at all the small print of stuff like this but will do so before I chat to him as be good to offer him an alternative.

Really really hope he will go for this. Just deeply uncomfortable about them having the money earlier - as someone said they may be irresponsible and get into trouble anyway but you don't have to do anything to help!!!

I got £1000 when I turned 21 and wasted all of it...the only thing I can truly remember buying with the money was a week in Blackpool . Looking back I wish I would have had it a bit later in life (maybe around 23 then I would've been at that more mature age where I could use it towards uni or college, which I would love to go to now but could never in my wildest dreams afford the fees or I could've taken a few weeks holiday abroad or used it as a deposit on a rented accommodation. I really feel bad now lookign back because my nan worked really hard for that and was still working when she was really sick with cancer but was undiagnosed.

To answer Xenia's point, I don't think the government backtracked. So structuring a discretionary trust to pay out to children at 18, rather than 25, will have adverse tax consequences.

All I remember is being sensible at 18. I had savings from various jobs. In fact, the more I have, the less I spend. If my parents told me I was going to come into a large sum at 18, I would probably have put it aside for a property. If I had bought at 18, I would have been quids in.

Having said that, I prefer giving at 25 rather than 18 - in case of fecklessness of youth. Though dh is comfortable with 18. We have left it at 18 because of tax reasons.

I would absolutely say something

I know of at least 3 people who inherited big time when they were 18 and squandered it on partying and drugs and died (2 of heroin, one of a massive coke induced heart attack aged 25ish)

I think it is harmful to your ambition to inherit young. You should make your own way in life without relying on handouts.

I would want it in a discretionary trust until they were 30 and they could have some for uni fees/expenses, house deposit etc.

OK so have decided to mail FIL so he can have a chance to think about what I have to say and then get back to me when he wants.

Here is what I said for anyone who is interested!!!! Apologies to those who are not!

Thanks again for your generous present to ds1 of £1000 into his child trust fund.

I wondered whether it would be possible to discuss how you give this to him (and ds2 as I understand you are planning to do the same for him) in future years?

I have some grave concerns as to the effect on them of receiving such a huge sum of money at the age of 18 when many people (and unfortunately especially boys) are too immature to understand quite what this money could do for them in the future. Despite planning to bring them up with a respect for the value of money and a strong work ethic, boys of this age tend to be very susceptible to peer pressure and lack the foresight to think of the future. I am concerned that they may very well end up wasting this money, which would be a crying shame when you have worked so hard for it, and it could be a real bonus to them if used responsibly. Worse, it could lead to drug or alcohol problems, or serious money problems as they get used to living a life they cannot afford when the money runs out.

Would it be possible to look into other ways of gifting this to them? I have been advised that there are accounts whereby you can put money in trust for individuals that they would then get at the age of 25. Before then the account holders (usually the parents) can, at their discretion, give the money earlier if they wish. This seems like a good idea to me - if they wish to do something that the money would help them with that could be discussed (and with you too if you wished), but they couldn't blow it all at an age when they were too young to know better. As someone who has always worked hard and respects the value of money I thought you might be interested in looking into this?

ds1 already has £2000 from you which would be a nice amount of money to get at 18 to do what he wishes with. If you were agreeable to changing the remaining gifts to a trust like I suggest it might be nice to do the same for ds2 so that they both have a treat to look forward to at 18 while then having a larger nest egg for them when they are older and more mature. Of course, they could still end up blowing the money at 25 but I think the chances are less. Plus if they choose to waste the money then at least it will be with the benefit of more life experience and would be perhaps more of a choice rather than accident?

I'd be grateful if you could give this some thought and let me know what you think - I would be very happy to do more research into the options if this looks like something you might like to consider.

Now we'll wait and see....

great letter, let us know of the outcome.

great letter

let us know what he says

Great letter hope he goes for it.
Have to say I totally agree with you not only from the POV that they might blow the money but they will most likely have just left school at 18 and get all that money at least at 25 they may be at uni, working to help support themselves and or had a few years in the working world and have built up a better (hopefully) relationship with money having earnt and budgeted and realied its worth.

yes, really good letter, can't see how he could reasonably disagree.

Good luck!

Well I don't see how he could disagree either but fil is a law unto himself - he may be totally reasonable but he is equally likely to dig his heels in precisely because I have expressed concerns.

No reply yet but I know he will have received it as he has replied to an email my dh sent to him today....

Will keep you posted!

Message withdrawn

Still no response...

Not holding my breath. Will mail him again in a couple of weeks or else ask him in person when we next see him.

Will let you know if I hear anything!

Haven't read the thread - but actually he needs your consent to open an account because he will have to do the money laundering stuff which means that he needs certified copies of birth certificates and also your passport.

We had exactly the same issue with my parents, but from a different angle as my dad wanted to open stakeholder pensions for the boys which they could access at 55. My dad refused to talk about an alternative/ compromise - so after feeling very disenfranchised by the whole process I decided that it wasn't really my issue and I couldn't take something away from the boys all for the sake of my issues with my parents. Long, so I think you have to trust your children and importantly your parenting of them. They will know about the money long before they receive it so you will be able to discuss it with them and hopefully help them find their own strategy.

Alicet - I hope FIL understands your concerns, I think YANBU. My Dh and I had huge worries about both our boys having access to wads of money when they hit 18 so we deposited their CTF cheques and they can have those to spend on whatever they want.

We have set up separate accounts that we control for any university fees as not only do we pay into them but my PIL also pay in cheques for birthdays and christmas and there is no way I would stand by whilst my 18yr olds blew all that money.

I haven't got to worry for a while as they are only 5 and 2!!!

And let's face it £18k is a hell of a lot of money.

my parents and my brother both opened trust fund accounts for my dd's when they were born.

i think they both get about £8000 when they turn 18.

i have already told my mum and brother that the money will only be used for a deposit on a house (whenever that will be) i dont care if they are 30 when they finally get the money.

after reading the op i am a bit i never really thought about the fact that it was not my money that i was making plans with, i thought everyone would be pleased that i was doing the sensible thing but maybe it is being saved with the intention of the girls spending it how they pleased.