If a family member wanted to leave a large amount of money...

[Jill1320]

...to your children (and not you) - is there anything you would want to say/do about it?

Apart from the obvious THANK YOU

I have some concerns about the children inheriting large amounts of money without any regulation from dh and I. Dh and I have a friend who inherited £20,000 aged 19yrs. By 20yrs old it was all gone. This is a lot more money than that.

With any luck this won't be for at least 20yrs (dc will be in their late 20s).

The family member in question has asked for our input btw, not being a money grubbing death watcher.

It goes without saying we'd like to keep this family member around for as long as possible. They are fab.

I think that children's ability to manage money well happens through childhood. I can't comment on your friend's money education except that whatever it was, it seems not to have worked.

My DC have all gained access to the trust funds their grandmother started up for them at the age of 18. So far 2 of them have turned 18 and they are being nothing but entirely sensible with it. DS has not spent any and in fact refuses to even dip into it for university, preferring to use only his student loan like all his friends. DD1 has spent some on her tutorial college fees (she needs to do a further A level to meet certain university matriculation requirements) and a little on driving lessons but she works in a temporary catering job and earns a decent amount for a teenager still living at home.

We've never had masses of money sloshing around but neither have they ever wanted for anything (although we've never bought them what they wanted all the time- only what we felt they needed). I don't know what the answer is tbh. I suspect that good financial education and learning deferred gratification early on in life count for something though.

I would say thank you. Then spend the next 20 years educating your DCs in financial responsibility and passing on other values that mean they are less likely to waste it when the time comes.

I assume this is so there won't be double IHT when you die.
Could it be put into a trust until DC are of appropriate age (25?) or to be used for a specific purpose (house deposit / education etc?)

My children will inherit some money eventually,(hopefully not for many years) But the will was drawn up to leave to them in trust until the are 25, the realitve i question asked me what i thought and i said that was fine

I would have it put in Trust till they were 25. I have two cousins who each inherited an eye watering amount of money on their 18 birthdays, whilst they have not burnt it all neither has ever really had a job.

Thanks all. The trust idea was the one we suggested too.
Yes, lonecat - that is exactly what we want them to avoid.

I'd specify an age. Twenty five is the age I think young people are old enough to be sensible if they inherit a large amount. Though I do realise some people would never be sensible no matter what age they are and others would be sensible at eighteen.

It could be put in trust with the family member and perhaps yourselves as co-trustees. Talk to a solicitor about the terms of the trust - you could put a particular age (like 25 as mentioned above) as the age at which the children get access to their money.

Or it could be left to the judgement of the trustees - so they could disburse funds when they felt it was appropriate.

Definitely put it into trust until 25. My db had nearly 40k inheritance. He now has absolutely nothing left to show for it :(

We inherited a modest amount - in trust til 21. It went on a house deposit because I am very sensible and boring

By we, me and my siblings. Must not assume mind reading skills

I would thank them but make it clear you won't expect anything as lots could change from now to when they pass way.

Trust with provision for university/other training fees from 17+. I'd rather a lump sum went on a brilliant holiday than overspending in top shop. Think a trust would give flexibility to allow sensible plans.

From experience I suggest a trust until 23 years.
Both my children inherited the same amount. It was invested for both of them but one at 18 years, being an adult, was able to get access to the money and when he needed it for a deposit for a house having met the love of his life had nothing left. It had been spent on unnecesary things. How he regrets that now. My other child never touched it and used it towards a deposit for a mortgage.

Remember, children change as they grow up, get in with the wrong crowd, enjoy recreational habits etc. etc. University loans can always be repaid with the money when they have access. Play it safe.

Lots of sensible advice has already been given but how about suggesting to your relative that he or she writes a letter to each of your children that he or she intends to leave money to suggesting that it is his or her wish that the money be spent on something which will make a real positive difference to their life such as university education or training or the deposit for a house rather than frittered away. This will not be legally binding but can be expressed as a wish which I would think will have some sort of effect on most grateful recipients. You sound very sensible and hopefully you will have a good few years to sew the seeds with your children about how they may be wise with money.

I would like to think you can choose to put it in a savings account for them. When children inherit large amounts of money, it's a fantastic life lesson for them.

Put it in trust and do not tell them until they are of age. Also add some provision for the extension of the trust should they not be in the right place to be given a large sum.

There are costs to putting money in trusts, and it can be quite restrictive.
If the money is more than £250k I think I would want to put it in trust until they were 30, with trustees allowed to authorise expenditure on education/house purchases before that.

If the money is less than £50k, I don't think I would jump through the hoops of trust setting-up. I like the idea of writing a letter. That would have had an effect on me, aged 18.

In between the two, I would think about it carefully. You need to look into trust law. Bare trusts are the simplest, but they have to end at 18, I believe. Others can be very complicated - there was a change made by the last government that means that they tend to have to pay tax at the trustee's rate, which is hugely punitive for children who would be likely not to have to pay tax on the money if it was straightforwardly theirs.

Mignonette - I don't think you can keep it from them legally - neither the knowledge, nor the money. It's not quite that simple!

I didn't say that at all Hop. You have misunderstood.

A trust can be kept secret from them until it matures because i was the subject of one such trust. And conditions were attached to it too-I had to be in work or study.

Was that recently Mignonette? A trust was wound up for me about 5 years ago because of changes in the law, which made it much more restrictive and expensive to have any other kind of trust than a 'bare trust' which has to be wound up when the child is 18.

I inherited a bit of money when i was 18. On the one hand it was great because i wouldn't have been able to go to university without it, learn to drive, buy first car, deposit on first home. On the other hand I could have done with a lot more guidance as a lot of it was wasted and i was taken advantage of by some ex boyfriends.

I came from a poor background though and my parents didn't have a clue about that sort of thing and had never had any money of their own, so didn't have much experience. I think they also thought i was more capable than i was!

At least i did something useful with a lot of mine, my sibling spent theirs on holidays, cars they never owned and fuck knows what else!

If your kids aren't likely to inherit it until they are in their late twenties they should be fine.

hopskipandthimp is correct that it is expensive tax wise to have a trust beyond the age of 18.

Not recently no. So clearly my advice is a bit dated .

My parents have set up stakeholder pensions for the kids - they put £3000 in every year.