To take the money??

[Clobberdobber]

I feel a bit conflicted. My eldest has just turned 18 and my sister (who I am very close to) has presented us with a large sum of money for him, and I’m conflicted about whether I should take it.

The background is, without my knowledge, she set up a trust for my family years ago. Over the years she’s added to it and the investments have done well so it’s now a large 6 figure sum. It’s not in the kids’ names (I also have a daughter, 16), it’s for me and my husband but explicitly to use for the kids. She has done very well in life, she sold her business for quite a lot and put some of that aside for my kids. Her own kids have trust funds and things (I assume much more than for my kids) and have been privately educated etc. She offered to pay for private school for my kids but we said no.

We don’t come from money or anything so no inheritances for either of us. Not sure that’s relevant but bigger picture as to why she wanted to share something with my kids who she is very close to.

Anyway the money is in my name because she thinks (probably rightly) giving a stack of cash directly to an 18 year old could be a bad idea. So I can choose to keep it invested for later (he can buy a house) or use it to pay his uni outright (no debt). Or I can give it directly to him (he’s sensible but still so young so I am against this idea). Daughter will get the same in 2 years. Trust stipulates use must be for kids so I can’t take it for myself, not that I would.

I’m worried about it all, maybe needlessly. It’s making me stressed that I hadn’t expected it, and also she doesn’t want to tell the rest of the family in case of jealousy. We also have another sister who doesn’t have kids but she always feels she’s left out because of this and would definitely want to know where ‘her’ money was. Sister says if Sis2 had kids she’d have put money for them too but she doesn’t want to give handouts to a grown adult who has already made their way in life. She also hasn’t told her husband / my brother in law. The way she saw it was the money came from her business, it was put in a trust (not marital assets). He would definitely be funny about it - he doesn’t like the idea of sharing their / her money (their household money has all come from her business, again relevant only in that she hasn’t taken money off him to give to me). Not close to brother in law, I don’t like him, he’s a bully and unpleasant, but it still feels like something that could cause problems one day.

Basically any thoughts. Am I unreasonable to take the money?!

She also hasn’t told her husband / my brother in law. The way she saw it was the money came from her business, it was put in a trust (not marital assets).

This bit is very troubling, legally. Your sister doesn't get to decide what are marital assets, or not.

Selling a business and secreting some of the money into a trust for someone else doesn't mean that money wasn't a marital asset.

I'd definitely accept, as I wouldn't want to offend such a great sister - IMHO, generosity isn't just about giving - there is also a generosity in accepting a gift as well, particularly from a loved one. It's also below the family radar, so there's no sibling politics to navigate.

The money will make a difference to their lives materially - your kids are at a time when big outlays are on the horizon - first car, university, perhaps property ownership - and the only thing that appears to be standing in the way is your pride, which, although admirable, I think is misplaced. If these instructions were written in her will instead, would you feel any different?

Sort of. My husband and I are named as the beneficiaries, but the terms of the trust are we can only draw the funds for the purposes of the kids for adulty stuff after they are 18 like uni or house. Technically I guess I could lie and run off with it but I’d never do that of course and my sister knows that.

Definitely accept!

Take the money! I think she would be incredibly hurt if you don’t. She has given her own children fantastic opportunities through private school and wants to share a bit of that with your DC.

Do not use the money to cover student loans for tuition, that way lies madness as a huge chunk of petite never repay it. Absolutely take it and use it for home ownership deposits.

Oh come on , who turns down money . If your kids found out you’d turned down a large sum for them how would they respond . Think we can imagine .

I don’t know, I’m not a lawyer. She had a lawyer and financial advisor sign off on the arrangement which is complex for this reason. I’ve spoken with the advisor who talked me through how it works. BiL is a dick and I know she wanted to keep certain things out of his radar so if she died he wouldn’t get his hands on it. Not healthy, I agree, but my telling her what I think of her marriage over the years is part of the reason BiL and I don’t really speak (other than to be polite) and she’s her own person.

Anyway as I said in earlier posts the secrecy does worry me and something I need to think through. It’s not a ‘requirement’ just more she’s asked me not to mention it but it feels quite a thing to not mention.

Your sister sounds awesome!

I would probably put it in an untouchable account until they are 25. That way it could go towards a home. The only issue is how you explain it to them and that they keep it secret from their uncle.

Presumably you can withdraw modest sums from it for now. I'd use it to pay for university costs to avoid student loans, then once your children have both graduated split the remained between them for the purchase of their first properties.

The money is your children's. I think you should consult your sister as to what she thinks would benefit then most - clearing student debt or remain saved until they each want to buy a property.

I would absolutely take it. It’s an incredible opportunity. It could pay for uni. Driving lessons, school trips. So many other potential things.

Imagine how cross they would be if you didn’t take it on their behalf.

I literally wouldn’t even think about it. Take it then you can gradually decide what the best thing would be to do with it.

One of your kids might want to do something expensive job wise. This could be literally anything. Eg become a pilot or start their own business so the money could be a deposit on a premises.

As for your sister without children being unhappy I think that’s odd. The money isn’t being given to you for you. It’s being given to you for your sisters nieces/ nephews. That’s not the same thing at all.

Agree with this ^

I know she wanted to keep certain things out of his radar
...
and she’s her own person.

Yes. But she's also a person in a longstanding marriage, who has hidden marital assets from her husband, horrible as he may be.

The lawyer and financial advisor have taken your sister's instructions to set up the trust. I doubt very much that they advised her to hide money from him, that would be separate.

All I'm saying is, this is all going to blow up, big time. Quite possibly your BIL could apply for the trust money to be returned to the marital pot, when he finds out what she's done.

So, imo, this is a poisoned chalice. Your other sister will find out one day, as well.

I'm not saying don't take the money. That's not your choice anyway. Just be ready for it all to kick off one day.

It sounds more like you are the trustee and the kids are the benficiaries.

Ergo, legal ownership and control sits with you but it’s only legally to be used for the kids.

That would be the sensible setup anyway to avoid it affecting your personal finances.

Agreed. I am worried by how little the OP seems to understand the situation. She calls herself a "beneficiary", when she isn't. She and her husband are trustees, for the children's trust.

OP also says this:

My sister has presented us with a large sum of money for him, and I’m conflicted about whether I should take it.

It's not yours to accept or decline, OP. The trust has been set up for your children. All you can do is accept being a trustee. Which I assume you agreed to at some point?

If it’s for your children, take it and make their lives easier. It’s incredibly generous of her and your children may never get this chance again.

I wouldn’t be thinking twice or needing to post on MN.

Its great that your sister has saved this money for your children to fund their university studies or a deposit on a house. You cant really say no to money for them. Accept it gladly.

So there aren’t any strings. Take it. Its not your money to refuse. You’re only s trustee in a sense even though you’re a named beneficiary. Lovely sister!

Her marriage, and its communication, is their business. Your children are your business and this is life changing money for them. I'd be kind and gracious and leave the rest to her.

OP, I'm worried that you don't seem to understand the actual set up of this trust. Are you a beneficiary, as you said earlier in the thread? If so, you need to be taking your own tax advice.

And if you're not a beneficiary, but think you are, then I think you need the financial advisor/lawyer/your sister to talk you through it again.

Being a trustee to such a large trust comes with financial and legal responsibilities, and everything will have to be scrupiously noted. Your children will need to apply to the trust when they want money for something, and you then agree or not. There's more to it though, so you really need to read up on this.

This 100%

Honestly, discretion with financial matters is the norm.