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Original poster

Inheritance for (very) young adults

53 replies

starsorwater · 28/04/2017 14:30

My dcs (Over 18 but not yet reached the stage of reason) are due to inherit a sum of between 5K and 10K from gps. The money actually comes to me and dh, but we were asked to split it between dcs and of course we will. Don't want it in our accounts- it's not ours in any sense but name. How can we put it in their names for 5 years time? And could this possibly be done without them knowing? Can you buy bonds? Shares? Gold?
If they have it now it will vanish on bits and pieces and booze and parties. In a few years it might be really useful. Please, any advice?

OP posts:
poisonedbypen · 29/04/2017 10:35

Put it in a LISA? Then if they use it for house deposit later they get a 25% contribution from the government. It's a good incentive and might encourage them to save further when they can (!)

CrabbyJo · 29/04/2017 10:36

You know the maturity of your children, everyone is different. Could be that you feel they're ready in a couple of years, or maybe longer. My DP bought his first house at 18. He's always been good with money. I was the polar opposite until I was around 28/29. But I think you'd be doing the right thing for them to not give it to them yet.

Southeastlondonmum · 29/04/2017 10:40

My father has made investments for our two DCs (4 and 6). He has made a lump sum payment and we invest monthly on top. He is retired, well educated and has loads of time and so manages it in our behalf and it's doing ridiculously well. I expect they will receive £50k ish each at 18. HmmI asked if he wanted to put any restrictions on it for what it can be used for and he said 'he has every confidence that they will make good choices '. Our strategy is following- only ever talk about it as a uni/college fund, nothing else. Obviously a house deposit would also be fine. Allow them to blow £500-1k of it on whatever so they have a sense of ownership. They are vvvvvv lucky

Original poster
starsorwater · 29/04/2017 10:43

Thank you. I think will have to just put it quietly aside. If nothing else, DC2 would give it away. They are a target for every charity, and having just moved to London from small town, find it impossible to not help homeless people for instance. That and love of parties would see it vanish in no time. I thought when I first posted it was a large sum, but I see from the replies that it is pocket money to many dcs. It would have been a wonderful bonus to me at any age. Never had a penny from anyone.

OP posts:
TotallyEclipsed · 29/04/2017 11:06

Mine both inherited very young, we were always very clear that granny would turn in her grave if it was spent on anything other than a significant purchase (car/house or the like). Luckily they've both respected that in spite of not knowing/remembering granny. However it is a definite risk, one of their friends (in similar circumstances) has pissed £20k up the wall and their parents don't even know. Oh wait, I guess I might not know if mine have too...(fairly sure about one and the other has made their significant purchase already, so hopefully all ok)

cozietoesie · 29/04/2017 13:49

Put the money in your own account(s) and let them have it when the time is right. (I speak from experience here - don't try to be over-elaborate.) Oh - but make sure that your will(s) reflect the earmarked sums.

lemonfool · 29/04/2017 15:07

It's a good idea to keep the money in your own name rather than your dcs. If your dc ever need to claim benefits in future, savings over £6k will reduce the amount they can get, and any amount over £16k will disqualify them entirely. Obviously you might not anticipate them ever needing to claim, but redundancy and illness/relationship breakdown can happen to any of us. So it could end up having to be spent on every day living rather than a significant purchase.

On the other hand, if you keep it in your name and you need to claim benefits in the future, then it will be considered your money and you'd be expected to use it to live off before claiming anything. Obviously that's only an issue if you don't already have lots of assets that would disqualify you from claiming anyway.

cozietoesie · 29/04/2017 15:14

Good points. I forgot about the potential issue of claiming.

HatHen · 29/04/2017 15:20

I would keep it in my own savings account until they turn 25 and then give it to them. Don't tell them about it, they won't work hard and will think they've got something to fall back on.

Note3 · 29/04/2017 20:29

Could you buy them premium bonds with the money? I just got told by my parents I had premium bonds and it was only when I was in my early 30s and money was tight that I looked into cashing them in (til then I just literally saw it as a lifetime lottery ticket).

bouncydog · 01/05/2017 14:32

We set up a joint account - Mr and Mrs BD re Miss BD with any 2 of the 3 of us to sign. Miss BD is in her mid 20's, can see the account on her online banking. She is happy to leave it like this until she needs the money for her house deposit.

TittyGolightly · 01/05/2017 15:15

If you have a wayward child that could seriously damage your own credit rating though.

Jng1 · 01/05/2017 15:45

"If your dc ever need to claim benefits in future, savings over £6k will reduce the amount they can get, and any amount over £16k will disqualify them entirely."

Ermm... isn't the point that benefits are a safety net, and if someone has savings they shouldn't need to claim them?

I suspect the Inland Revenue would take a dim view...

Icequeen01 · 01/05/2017 20:53

Also be careful, if you keep the money in your name you may be liable for the tax on the interest! That's why we put our DS's money into his own account as we would have had to put it on our tax return and as we had savings of our own we were being taxed. DS doesn't get taxed as he only has a Saturday job!

TittyGolightly · 01/05/2017 22:31

Also be careful, if you keep the money in your name you may be liable for the tax on the interest! That's why we put our DS's money into his own account as we would have had to put it on our tax return and as we had savings of our own we were being taxed. DS doesn't get taxed as he only has a Saturday job!

If they earn over £100 per annum in interest on money given by you you should be paying interest on it anyway.

RTKM007 · 01/05/2017 22:41

You could put it into PREMIUM BONDS with any winnings to be reinvested

that way it could grow and no chance of losing the investment

I don't know how you could do it without children knowing

But you could just say it is being invested

It can be got out but will take at least couple of weeks so not instant access, so might avoid snap purchases iyswim

Original poster
starsorwater · 01/05/2017 23:21

Thank you.
I don't think you can buy Premium Bonds for other people though.

No one is claiming benefits, still students who work in their holidays.

No one was planning to do anything of which the Inland Revenue would take a dim view...

OP posts:
Icequeen01 · 01/05/2017 23:32

Titty I think it's gone up to £1,000 interest earned before you pay tax now but I'm no expert 😀

TittyGolightly · 01/05/2017 23:56

Nope. Still £100.

www.gov.uk/savings-for-children

user1491572121 · 02/05/2017 00:03

My friend got 50 thousand when she was 19. It was the early 90s so you can imagine that it was a lot...she could have bought a house outright.

She spent it within a year on nights out, clothes and trinkets.

Icequeen01 · 02/05/2017 00:07

But isn't money gifted from grandparents and relatives exempt?

C0RAL · 02/05/2017 00:23

My two siblings inherited the equivalent of about £70k each when they were in their 20s. One of them put it into a house and has done very well out of it. Becaus his mortgage was low, he was able to go back to university and do another degree which has helped him earn a lot of money. He's now in his late 40s and is able to support a wife and 4 kids even though he only works part time.

The other frittered it away and struggled to get onto the housing market, only being able to buy in her late 40s. She was caught in they trap of spending all her money on rent so not being able to save for a deposit.

I bet she wishes her dad had kept the money for her until she was more sensible.

You are doing the right thing OP. I also note that GP thought the money would be useful to buy a house, so clearly they intended it for a long term benefit rather than taking some mates to Ibiza on holiday or buying a car they can't afford to insure.

cozietoesie · 02/05/2017 01:22

Grandparents etc can sometimes think that they're leaving considerably more than they really are - they might, for example, sometimes think of their own lives and what £X would have meant to them - the actual purchasing power of the money may no longer be nearly as significant.

They have said '25' though, and as youngsters are entitled, without getting into the issue of trusts, to access money when they're 18, the OP has little option but to keep the money herself and hand it over when the time is right.

denverblue · 02/05/2017 13:59

No inheritances yet but we have saved regularly for our DC since they were born. They have fairly healthy JISAs, funded from £100 pcm each from us and an annual £1K cheque from one set of grandparents for birthday/Xmas. DC1(13) is aware that this fund is his 'college' fund or even his 'house deposit' fund and it isn't intended for generic expenditure.

Presently, let's say that a 3 yr course at uni will cost say £60K and the interest rate if your DC took out loans is 4.6%. We have 5 yrs to go before DC1 reaches that stage and I suspect that £60K figure might very well mushroom to a much higher figure. I'm afraid that even a £50K lump sum will only dent that potential student debt. Let's not even consider any postgraduate degrees/diplomas.

I don't have huge concerns over my DC accessing relatively large sums at 18 since it'll mean that they either have lower student loans on graduation or a property asset to show for it. I'm just going to be optimistic and trust in my parenting/brainwashing skills in the next few years.

Jng1 · 02/05/2017 17:27

But isn't money gifted from grandparents and relatives exempt?

The problem is that the money hasn't been left/ gifted directly to the kids - it's been left to the parents with an informal agreement that they will pass it on when the time is right.

Have you & DH maxed out your own £20,000 ISA allowance OP? If not, then you could invest the DCs money in a specific fund within a S&S ISA and just 'designate it' in your own minds as belonging to the children for the future. Then there would be no issue about tax being due?