I've inherited a considerable amount of money

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And decided to divide it between my DCs without their knowledge.
AIBU?

I'm a single parent. 3 are uni / just finished & one at senior school. The plan is to put the money in trust equally between the 4 DC until they each turn 30.

The reasoning is, my mum died when she was younger than I am now & my dad not much older than I am. So I thought my inheritance should skip a generation & go straight to my DCs.

Is this fair?

I’ve seen people with funds released at 25 fritter it away, so I think 30 is a good age.

But have you considered provision for yourself in retirement so your kids are not burdened with your care? You’d need a pension pot of a million + to yield ~ 30k a year in retirement.

Equally, a good care home is 50k + a year, 70k+ if dementia is included. Think what those sums will be in 30 years. Selling 500k house, for eg, will only fund 5-6 years in a care home at current rates.

So yes, you need financial planning advice.

Can there be some flexibility? I mean say one of them marries young, has a baby or two, living in an expensive rented place and you wish they could have the £100k to improve their life and your GCs lives. I have no idea how trusts work but that is the thing that would make me think.

I'd want to determine what they spend it on and if they were going off the rails - I'd want to have the funds to help them - I have a friend whose son is very ill and because it's mental illness the NHS are useless - he needs residential specialist help and that is going to cost £££ - if she had the money she could offer him residential care - if he had the money he'd self medicate and drink himself to death - he's in his early 30s now - he's needed help for quite a few years.

I think £500k invested well will provide income for care for well over 5 years. You can also buy a care annuity. So yes good financial advice is important. What we've found with an elderly relative is that once you count in their pension, Attendance Allowance, and income from investment it will last for a lot longer than 5 years.

I’m due to receive £10k in the next couple of years, which is a great amount but obviously not life changing.

I have decided to put most of it into a trust for my DD as like you I am a single parent and she has absolutely no other family apart from me.

I do have life insurance but that’s only if I die obviously but I’d like her to have a bit of money just to help her out because if I die she will literally have no one to help her.

I think you have done absolutely the right thing.

If I got that amount, due to my circumstances I would have taken some out for myself but if you don’t need the money then I can see why you haven’t.

I don’t know what age this money would be most useful though.

It depends on their circumstances.
Some people mature and settle down very early on but some people are still quite immature and would waste it in their late 20s/30s.

I’d probably say around 25/30 and hope that they use it as a deposit for a home etc and not waste it but I guess it will be their money and if they choose to waste it then that’s still up to them.

Could you say they have the money for a deposit when they’re ready to buy?

Very good point!

Perhaps it’s worth looking into the will being split 4 ways if you die but you holding on to the money until then and gifting it to them as and when is needed.

Why do you need an offshore Trust?

I would keep the money in your own account and use it to help the dc when they need it. They might need it before they get to 30? One might get married and need money for a house, they might want to pay of student debt or need private health care? You could invest it and then by the time they need the money there could be a lot more?

30 is an excellent age in my opinion.

I would invest it in a very good property (singular), in a good part of the country where prices will inevitably increase over time.

A trust won’t give them such a good return on the money, and in 10 years or whatever (I don’t know the ages of your DCs), the huge amount now will be very devalued.

when I was in my early 20’s I got a similar size inheritance. My folks basically handed £10k for me to do what I wanted and then told me I had £100k towards a deposit for when I want to buy a house. My Dbro bought a B2L almost immediately but me & Dsis waited few years each until we were ready and it meant we knew we had a decent deposit. The inheritance was actually my parents and they decided to gift the sums to us so there was no question or us missing out on interest of such like as it was for a very specific purpose as & when we were ready. It was the difference between us getting on the housing ladder in the south east on lower incomes or probably still renting in our 40’s (or living in significantly smaller/cheaper property)

If you and your DCs are entirely UK based then an offshore trust is a silly idea for a number of tax reasons. If you came up with that idea yourself then you need proper advice. If someone else has suggested it to you then look hard at how you are paying them and what they are getting out of it, it is unlikely to be the best solution.

If you are UK domiciled (= roughly of UK origin, actual definition is more complicated) then placing more than £325k in a trust, onshore or offshore, will result in a 20% upfront tax charge of the excess to the £325k.

I think that's lovely and generous of you. I also think waiting till they're 30 is sensible, 18 year olds will just burn through it and have nothing to show for it. I'd have loved some extra money when I was 30!

We did this with our children when we got an inheritance. We sat them down when they were 18 and explained the situation.

We put 50k in premium bonds with the understanding that they could enjoy any winnings to do what they wanted with (the time of 1% interest rates). They never got more than £100 a month and they enjoyed the fun of it.

As interest rates changed we realised that premium bonds were not the best so helped them move their money (and added another 50k to take it to 100k each) to a 1 year fixed rate ... so they cannot willy-nilly spend it. DS opted to take his interest monthly, as a university top up (£500 a month) and because he has an expensive sport that he competes in. DD opts to add her interest to the 100k (so it is worth 105k). They also have a LISA so get 25% top up from the Government.

I am trying to get DD to spend some of her interest on travel. There is a book called 'Die with Zero' which has the premise that if you die with 10k in the bank, that is 5 months earnings that you never spent, 5 holidays you could have had, 50 meals out with family and friends...so many memories missed to just have money sitting there.

The author also speaks about the adventures you have at 20 give you memories for 60 years but as your health goes downhill, you do not have the same adventures at 60 and only have the memories to enjoy for 20 years. Have adventures whilst you are young and fit and broaden your horizons. You have years to pay off a house.

When my grandparents died I got nothing, but inherited from my parents in my 50s when I did not need the money, how I wish I had a small amount of money in my 20s.

My Mum has done this with me and my Brother.

No, you can do what you want.
Personally I would not tell anybody, especially your children because if they know they are getting money and don't have to try as hard for things like getting a house, it may influence them. I'd suggest putting it in your own trust fund for now and think on it for a good period of time. It might be that 1 child gets married and could use some, 1 child has children or a house renovation that you could help with. Or all go on a special trip to make memories rather than them potentially wasting it..

If you don't need the money yourself, fine.

I would recommend you lower the age to 25, 30 is a pretty long time and so much can happens in their 20's. I bought a buy to let house at 21 then my own home at 23, I still own both and I'm 29.

I personally would make it younger say 22, I bought my first house at 24 and upsized at 29. Simile for my siblings

It won't be honoured if they want their money at 18 (I initially thought 16, but have been corrected).

I know this because our own children have money in trust from grandparents and one has just accessed theirs for uni costs.

Unless the inheritance laws are changed, they're only going to see a fraction of all that if you 'wait' and don't do some serious financial planning in advance.

How do you think the wealthy stay wealthy compared to everyone else?

Suggests that no advice has been taken at all to me.

I'm not sure where 'fair' comes into it. But some observations:

• 30 is quite late in life. You're going to have to face up to potentially uncomfortable What Ifs when drawing up the trust.
• Someone's mentioned travel. Travelling in your twenties is something that can set you up with confidence and experiences you benefit from for the rest of your life. Consider using some of the pot destined for the trust to enable them to travel and explore.
• You and they are financially secure now, but what about the intervening period until the trust kicks in?
• Why off-shore trusts?
• Have you considered gifting each a smaller sum from the total towards a private pension to encourage the habit?
• How will you deal with the fairness aspect of each child inheriting access to their trust at different times when they will all be adults when the eldest gains access?
• Have you taken advice from a financial/tax specialist?

I think that’s a lovely thing to do. My Mum inherited 300k and pissed it all away on herself, she didn’t even set 1k aside for her children and hasn’t helped us with anything financially. Now I’m a parent myself I find it baffling.

Is the person who left you this somebody that is very close to you?
Are you grieving and worried the death has become all about money?

I say this from experience if that’s the case, wait a few years before doing anything, if your head isn’t in the right place don’t make any sudden choices.