To worry my DC will waste everything they inherit?

[ForGreenPombear]

Warning: This is a very upper-middle class mumsnet problem and may offend some people.

I'm in my early thirties with 2 DC aged 1 and 3. Me and DH have approximately £5 mil worth of investments, assets together (excluding houses, cars etc) but are very ambitious with DH trying to get funding for a business which may make us truly wealthy. I'm from a severely disadvantaged background, DH is from a true middle class background.

Now for my very first world worry... out of all the adult children from wealthy families I know, I'd say 25% are utterly useless, 70% can just about maintain it but their DC will be poorer and only 5% have the ability to pass more on to their DC.

I really feel like it is just because of natural talent which is very rare and all the private schools, oxbridges, connections etc in the world can't replace it. It also worries me that based on pure probability, our DC will not have the same natural talent and will slowly fritter away our money. AIBU to be worried about this?

You can't dictate what they will do with any money you choose to give them.

Hope for happiness not wealth growth, I'd say.

I think it depends on the parent - some actively teach their children to maintain it whilst some just spoil their children.

You can set up a trust fund under which the DC only get access to the money if they've made a certain amount of money themselves in a solid career first. That's one of the ways in which some really weathy families try to preserve their wealth, by making sure it doesn't get into the hands of people who will fritter it away.

It does feel like a bit of a premature worry, though, since they're so young and the business that's going to make you the megabucks doesn't even exist yet.

You need good financial advice. This is a problem that the rich have always had to navigate and there are all sorts of ways and means.
Or given your backgrounds, you can try to come to terms with the ebb and flow and just enjoy what you have while you have it. Give your dc the advantages you can and then let them make their mistakes. Accept that “your” money will find its way back into the economy and enable other hard working talent to rise.

My GG grandfather was worth over £50 million in today’s money and left it all to charity and poorer relatives or servants. Not his undeserving sons as he said they had made enough from the family business.

Spend it or leave it to good causes. If you want yo
motivate them, tell them to make their own money.

Honestly who cares? All my family money went to paying off the authorities to turn a blind eye to fraud a few generations ago. Bring up your children as best you can, divide it fairly and go to the grave knowing it's out your hands. Unless you come back as a ghost. Then you can haunt them.

This is much more interesting than the op! Tell us more, or start an AMA 😊

You need to bring them up properly. That's all there is to it and there won't be a problem if you do that.

Married to upper middle class set up as well, OP.
I absolutely intend to squander my inheritance one day, as well. I'm 45, no children myself.
Once your adult kids inherit, they will do what they
please and after a long time, we all gonna die.
No offence, either.

Adding, if you have siblings who are less fortunate, it's nice to remember nieces and nephews in your wills. We've made some provisions for ours.

Also, your kids can understand they're quite privileged and be allowed to enjoy their upbringing without really knowing they have a large inheritance. I don't know where you live, but the odds are that as they go through school they'll come across people both much wealthier and with much less, try to encourage them to make friends across the range.

Just enjoy your children and if they squander it, there’s not really a lot you can do.

I think you are mixing up class and wealth though, it sounds like you are wealthy working class and your husband is wealthy middle class from your description. Upper class usually involves inherited wealth and titles!!

Once you are gone you are gone. Hopefully they know the value of money from your time here (far more important is what you teach them!). Just as if you gift someone something/money you cannot decide what they spend it on.

We all make choices based on the best info we have at the time. If they decide that is a new car rather than a house deposit, that is their choice. They may well be thinking ease of getting to regular income is more beneficial than worrying about home renovations/repairs and that they'd rather put those costs on their landlord. You simply cannot dictate it.

Do you want to adopt me?
I'll look carefully after any inheritance. (Probably)

You could give them a limited amount - say a house deposit, funding for further education and a car? That way they’d be comfortable but still have to work eg pay a mortgage

You can’t stop them becoming a drug addict who uses their money on partying but most people don’t turn into that kind of person so the odds are on your side and with people like that, there’s probably signs before they are adults.

Not many people do make £5m by their early 40s or found businesses that will cause them to be very wealthy.

Most talented, hard working, happy fulfilled people who make the people around them happy and a good contribution to society are not making millions.

I am less well off than my parents, my Dc are set to be better if than me. We all know the value of money, and the value of more important things.

Support and encourage them to be the best that they can be, don’t steep them in privilege, don’t pressurise them to follow in your footsteps. They may have a passion for medicine, caring, teaching, animal conservation…. So be it. Be proud of who they are.

They are 1 and 3. You have no idea what life has in store for them. This could be the least of your worries.

This. Absolutely batshit. They are 1 and 3. Who knows what the world even will look like when they are adults. Worry about the environment, AI, world war or cancer if you have to worry. Their future will very likely not look like anything you can imagine. So live now.

I inherited early (23) - not millions by any stretch, but half a house, and a decent amount of cash. Your kids may surprise you - I'm very careful with what I count as "my parents money". My mum grew up on a rough council estate and my dad in a slum before it was knocked down. I'm very aware how hard they worked to improve their lot, which filtered down into my life growing up. I do distinguish between my parents money (careful with it) and money I have earned through hard work (occasional splurge).

I don't have any children and there are none on the horizon sadly. I'm spreading my estate around when I die - to people and causes that have mattered to me. It doesn't all have to go to your kids.

I believe that you can create trusts with stipulations. I remember that one of the dragons den guys Peter did it. He stipulated that going to university and graduating with a degree got x % of the trust, if they went into public service careers etc they got more. Things like that.

I grew up in a good neighbourhood where people had a lot of money and gave their children everything (we were not part of this group). So may of the children dropped out of university, are giant wastes of space now etc. You are thinking about it logically and are actually doing them a huge long term favour. They might not see it that way, but I firmly believe that your gut is right on this.

That is quite a lot of money. My 5 adult children have all had school fees paid and then university costs including fees fully funded including post grad and had a fairly substantial sum towards a first property for each. My view is that after that massively helpful start they are then on their own. I will have substantial inheritance tax when I die as my allowance is only £325k tax free.

So your 5m - 40% will be going to the state unless you move abroad etc etc so that only leaves 60% of it (obviously you will need to take tax advice on all this from experts though to avoid lawfully as much IHT as possible). The UK is a bit of an outlier on this. In the US there is no IHT until you reach about $13m and about $26m for couples and Sweden has abolished it entirely. yet int he UK it is tax tax tax.

I would start by paying for a very good education for them and fund university as that cannot be wasted by them. My equal gift to each of the 5 was only for a first property not for anything else. I suppose they could sell the house right away and gamble the money but they are very sensible and it is their choice if they do.
I don't know your political views on private education but if you might want to fund school and university for them and possibly your grandchildren your solicitor could draw up a trust perhaps to protect the money in there BUT there are annual taxes on trusts these days and I have not bothered other than one I had for my pension fund at one stage.

Your children are 1 and 3 so any worries are really just for the future. Also if the sum left is "just" 5m before IHT plus the home that is about 3m after 40% IHT and only £1.5m each (more including any home you have). I don't regard £1,5m or even £2m as being corrupting. It could just mean they have a house in outer London but still need to earn a living. However if they got £20m each after inheritance tax then it might be different.

I wouldn't worry about what happens to your money when you're dead, but I would worry about the effect on my children of knowing they would one day inherit so much money that they would not need to work, or having a trust fund that paid them enough money to never need to work. I have a friend in the latter category and I fear she wasted her talents because she just had no drive or need to use them.

We are comfortable, not rich, but even so I plan on giving my kids bare minimum to get through uni etc. I want them to work, I want them to learn the value of money, to have the satisfaction of achieving things for themselves. To run up a credit card and have to find a way to pay it off. To save up for things they want. I may help out eg with house deposit but only if I see them put the graft in first.

I think you can use the money to give them the best start in life - education, travel, opportunity - but then they need to fend for themselves. And when you see the adults they become you can judge what to do re inheritance.

There's no pockets in shrouds and it's not your money when you're dead. If you don't want your kids to inherit will.it elsewhere

You should also not "pin hopes" on all of that still being around when they are adults. If you and your DH separate finances may change, one of you may become ill and need to pay for care/not be able to work.

Really you cannot worry about things that far ahead. Financial planning is one thing but this sounds quite like an anxious spiral starting?

What is the point of this? You don't seem to be seeking advice on how to avoid what you're worried about (and not trying to make any more money/ leaving it all to charity don't seem like very likely options anyway). Whether people agree it's worth worrying about or not is unlikely to change what you will do. So what's the point of your post if it isn't just a (not-so-humble) brag?

Your kids are still young, enjoy them and think about money later.

The world is so uncertain. There could be a worldwide financial crash and you'd have to take your 5 million in a wheelbarrow to the baker's shop like in 1930's Germany.

Or, Britain could be turned into Airstrip One like in George Orwell's 1984 as the 53rd or 54th State of the USA after Canada, Greenland and (possibly) Mexico

Or, Russia, China and the BRICS nations could take over and you'd have digital roubles to play with under a social credit score...

I know this sounds alarmist but those people with their multi million dollar homes in Pacific Palisades, California thought they were quite comfortable, didn't they?