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?!

I wouldn't decide myself how it should be spent, I think you should discuss with the children. Mine took control of her account at 18 and has been adding to it ever since.

This is going to end in a family upset, the more people that know about this - the more likely it will end up in a family row.

If you give the money to your children bit by bit - fgs don't tell them about the trust

IF OP is a trustee to a trust then deciding how it is spent is literally her duty.

It's a trust, not a bank account.

Surely it depends on the date the trust is to be disolved and when the young person takes control. I doubt at nearly 18 he will appreciate his mother deciding how the money he is about to come into is spent.

Don’t let fear of how other people might react affect your judgement. For a long time your sister has invested money for her niece and nephew, this isn’t a recent decision. Accept the money graciously and allow your children to have some financial security from an early age.

But that is the role/duty of a Trustee - to decide/approve how the money is spent. Until the money is given over to the beneficiaries, the Trustees are in charge.

That's literally their duty 😆

https://www.lawsociety.org.uk/public/for-public-visitors/common-legal-issues/trusts

Are your kids close to their uncle and wider family? The only thing that would bother me is what to tell the kids about where the money came from, as you wouldn’t want them to have to keep a lie or anything if family members directly asked them.

I don't really see the problem. Presumably you like and get along well with your sister?
She's done a very kind thing for your children, and has obviously been thinking about this for many years. She certainly didn't have to. It was done with love for you and your children.

I'd keep the money invested, and then it's a lovely house deposit in 5-10 years. It's probably better spent on something that will increase in value, than in university that is just a flat cost.

For what it's worth, I also have secret savings accounts for the 2 children of my best friend (we grew up together and are as close as sisters). They are still a long way off adulthood, and there's currently only a couple of hundred quid in there. But I'd be really sad if my friend turned around when the children turned 18 and went, "nah".

If you refuse to take it because you find it stressful, you are depriving your children of a massive leg up in life. If I found out my parent had done that, I’d find it extremely hard to forgive them.

This!!!!

without knowing how much it is, this will give your kid a huge leg up in life - clear uni debt, represent a large flat deposit amount (you say 6 figures).

Does nobody on this thread understand how trusts work? OP cannot "refuse" or "accept" the money on her children's behalf. A trust has been set up for them by the settlor, her sister. OP can only decide to accept being a trustee, or not. In which case other trustees would be appointed.

Acting as a trustee

A trustee is responsible for managing the assets in a trust and fulfilling the purpose of the trust.

The role of a trustee carries a lot of responsibility. It’s recommended you get advice from a solicitor before agreeing to be a trustee.

Trustees must be willing to put in the time and effort necessary to make sure that the settlor’s wishes are carried out, and that the assets are managed for the beneficiaries.

If you’re asked to be a trustee, talk to the settlor about their expectations of you, and who the other trustees are (you’ll be expected to work with them in the future to manage the trust).

Read about trustee tax responsibilities on GOV.UK

It may be a shock but surely you’d want your children to be able to afford a deposit for a house or uni fees without all the stress that come with it usually. Of course they’d still have to work hard and earn their own money but why would you not consider taking this help for them? Unless you can say you will give them the money from your own pocket then YABU. Their auntie has done a kind and generous thing, what sort of parent would deprive their child of that generosity?

People probably do understand how a trust works, they also probably read what Op said. The trust is in Op and her husbands name, it’s not in the children’s, the money is in OPs name with the intent the money is for the children.

Yes. Because the OP and her husband are the trustees. Who have to administer the trust on behalf of the Settlor (OP's sister) to the beneficiaries - OP's children.

That does not mean the OP is a beneficiary, or that she can refuse the money on behalf of her children. She can only refuse to be a Trustee.

ETA: I do not actually think that the OP understands how a trust works, from what she has written here.

They are not the trustees they are the beneficiaries (that’s what OP said).

What an amazing sister. How incredibly kind, generous and loving of her.

Of course you should take the money. Leave it in the trust to grow and then when your kids are saving for a deposit for a house tell them that you’ll match whatever they save. That way you don’t deprive them of important lessons around striving, sacrifice, saving and discipline.

Paying undergraduate uni costs outright at the start is generally a bad idea - the money will be spent and isn't recoverable if the student dies (most unlikely but can happen) and the same if they end up being unwell and unable to work (student finance is only repayable when you're earning more than about £21-£25k a year).

Funding for extra uni costs / a house deposit is likely to be a better use of the funds.

Yes, but I do not think that OP understands how a trust works. Sure, she has ownership of the money, as a Trustee, but that money only benefits the beneficiaries, ie her children. And she has to follow the wishes of the Settlor, her sister. Who will have had the Trust written accordingly.

The beneficiaries legally are named as OP and her DH, with the expectation the money is given to the children. So whilst the children are the ‘beneficiaries’ it’s not legal that they are. Op could take the money and walk because she is named as a beneficiary not as a trustee

If they could go to Uni and be debt free that is a wonderful advantage.

Conversly, it's not her money to refuse!

It is so sad that you are in a dilemma about a gift lovingly given.

I'm sure the Workshy of Mumsnet would have no such qualms.

It is so much better for your DCs to receive this windfall as they are starting out on their adult lives when they need it, rather than in their DAunt's will, when hopefully the wont be in such need of the money.

No, I think OP has misunderstood the legals. She says this:

Technically yes, sort of. Only my husband and I can release it but when we release it we have to show what it’s for and it must be for the kids in some form and after each one is 18. It’s a trust not just a pot of cash in our account.

Which is basically, that they are Trustees on behalf the Beneficiaries, their children. The trust having been set upp by the Settlor, her sister.

OP is not a beneficiary, although she controls the money.

Keep it invested for a house. I wouldnt waste it on uni fees & living costs. What if they drop out/don't do very well with their degree? The money has been wasted then.
Keep it for a deposit for a house.

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.

She does say they are named as the beneficiaries but she may have it muddled up