has anyone grown up independently rich or received a big inheritance in teens or 20s?

[trustfundkids]

My dc have just inherited a lot of money - in theory to be theirs when they reach 25, but in practice they will probably have to be told about it when they are 18/16 respectively.
I am really troubled by this as I feel it could be really damaging to their motivation at a critical stage in their lives and have a really negative impact on their relationship with us. I have no idea whether they will be troubled teenagers, into drink and drugs, or fine responsible young people. Even if they are the latter, the temptation of such a large amount of money might prove irresistable compared with going out and getting a job. They could easily use it to bum around for 10 or more years.
We as trustees could try to spend some of it before they get it, or put it into a form it will be less easy for them to access (house each??). However, I feel terribly uneasy about this as do not want to sow the seeds of conflict with them in their teenage years - what if they feel we have tried to control their access to the money, squandered their rightful inheritance, or used it in other ways they are unhappy with? After all it is not our money but theirs.

Its a complete minefield and I feel very upset that dh and I have essentially had very big decisions about our dcs completely taken away from us. What on earth can we do??

I got a bit of money. Enough to buy a house outright with but equally not enough to not have to work. I should have had the money when I was 18 but my parents didn't tell me till I was 21 and had finished uni. Infact I think they only told me after I got my first job.

I think if I'd known at 18 I'd have lived it up big time at uni and regretted it later.

I know someone who inherited several million on his 18th birthday. He decamped to Mexico and spent a lot of it on coke :( He's reformed now and married with a son, but he lost a lot of years.

Your children are very lucky and I think the most important thing is to let them see how lucky they are, and to realise what a powerfully positive thing it can be for them. My friend in Mexico went a bit bonkers because I think he felt it quite a burden to inherit so much money rather than the liberating thing it should have been. In the end he bought a hotel with the money and created a life for himself, but it was a very long road.

headfairy, that's the kind of scenario we'd like to avoid
Viva, were you angry with your parents for not telling you about the money?
We have been told that we HAVE to give the children the income from the trust at 18, and the capital at 25 - although we can (for a price) arrange for some of the money to go into a discretionary trust which we will have a lot more control over. I'm not really sure which is preferable to be honest - on the one hand I am not really keen on controlling another adult's money, on the other hand, I want them to grow up believing they have to earn a living (which, in the longer run, they will have to, because it isn't enough for a life time of bumming around!)

In my work I see the impact that wealth has on children, and there is no single answer. Much depends on the nature and upbringing of the children. Some have become drug addicts and trashed houses bought for them with trust money. Others have used it to nicely supplement productive and fulfilling working lives. The worst cases tend to be where the parents were themselves trust fund babies. The best thing about trusts (as they were) is that you as trustees know the children and what is best for them and can be flexible. In 2006 the previous Government, which didn't like trusts as they thought they were only for tax avoidance, decided to change the tax rules to penalise wealth going into trusts, or staying there. This has resulted in the 18-25 situation you describe. Apparently because as an 18 year old can join the armed services and die for the country it is sensible to force trustees of a probably very different 18 year old to pass £ms to him.

I assume you've had advice from a good trust lawyer about this, but perhaps the best thing would be to limit the trust income (by investing for capital growth rather than income) - enough income for the college fund. Hopefully by the time they are 25 they will be establishing themselves in their careers and be quite sensible.

this might be a bit late in the day but i used to work within private wealth and this is a constant problem for many wealthy people. There are ways to deal with this and how to handle the money and yourself- coming from someone not a parent but clearly experienced and helpful and on the parents side is very useful. also they can explain how to grow the money or use it properly. I do not advise walking into a high street bank, you need specialst help to avoid paying tax you don't have to, which your kids won't thank you for, as it could be substantial.
I think you are very forward thinking btw! just about to pm you with more details:)

I inherited a fairly significant amount as did my brother, 4 years ago. Life changing but not enough for me to be typing this from my 3rd home somewhere hot and sunny!

Looking objectively at our spending and bank accounts now, reflects strongly our personalities and attitudes towards money.

I've always been a spender. Always. Through Uni I had a job, mum and dad helped me out but i was also at the top end of my overdraft. I cant count the number of times my card was reused in shops or at the cashpoint. I was not frugal! My brother on the other hand has always been a lot more financially sensible; a saver not a spender.

We both are homeowners now, due to our inheritance but he looks healthier financially ( he has no DC yet though! )

Being financially sensible has come to me very late. I have needed to learn, independently, and away from the support and safety net of my parents what i can spend.

If i were in your position I would probably try to force that financial sense whilst the monetary amounts are not so great. Let them fail a few times, and you not be there to bail them out. Would that work?

Nice to see a few other responses, interesting to hear from people with experience. I think we will just have to educate them well over the next few years!
I can already tell what their financial personalities are like - one is sensible and cautious (like me!) while the other can't have 20p in his pocket without it burning a hole in it (like my brother). The spender ironically is probably more likely to do something potentially creative with the money - build a business or allow him to pursue a creative vocation - if only he doesn't recklessly fritter it away first!

I don't know how you go about building financial skills in a natural spender. I think not bailing out is important. My brother is actually doing ok with money now (as in, he is not in debt and is a home owner), I should ask him how he manages (he'll never be a saver and will have an impoverished old age, but he hasn't got himself in a pickle. And he is very generous, which is lovely).

Hi, I've namechanged as this is a bit of a personal topic!
trustfundkids (and others)- you all sound very sensible and I've found these responses useful for our own children.
DD is two and DS is five months. So they are happy with the odd Cbeebies magazine and umlimited access to mummy's boobs respectively.
DH's best friend grew up in a very wealthy family (they are a Chinese family, where culturally I think that the money is considered family wealth, rather than belonging to an individual). He works very hard as a doctor and he employs someone to manage his day to day financial affairs. I'm not sure that there is a magic answer but he is not especially materialistic and is very hardworking. All of his family work (his grandfather, aged eighty, still delivers babies!) and they have high expectations of their children in terms of education and being 'useful' in society. I think if children grow up with the expectation of hard work and success then they will probably rise to that, regardless of their financial position.
Anyway, our friend is also godfather to our children and he has kindly given them gifts shortly after their births of large sums of money in investment funds. There are no conditions attached but it is suffient to pay school fees, university fees and probably to buy a first house as well. They are very lucky children. I hope that seeing how hard their lovely godfather works (through choice not necessity) will help them to realise they should put the money to good use. Time will tell I suppose....