Considering leaving our money only to grandchildren

[parsagadae]

Hello,

Just wanted some quick advice from people on here. My husband and I have been retired for some time. We are fortunate to have lived financially secure lives due to buying at the right time, inheritances, etc. My husband headed up his 3rd generation family business, which he sold on for a pension pot (it was no longer really profitable by the end)

We have two children, both put through private schools, university etc. DD1 lives abroad and is a house wife due to ill health/ husband's (very lucrative) demanding job.
DD2 lives nearby and opted for the simple life.. modest house, old cars, nothing flashy etc but lots of time for her allotment! She's going to retire early.

We have four grandchildren, two from each daughter (they are approaching 50 so no more coming!)

We are considering leaving all our money to our grandkids. If we did this, it wouldn't be gazillions but probably about £300k each. They have it so much harder than we did (no really!). House prices anywhere decent are ludicrous, and they will be leaving university with huge student loans.

Has anyone else's family had this set up?

It's nice to pass on a bit of something but you're talking a decent amount of money there. Do you feel you've enjoyed your money over the years? PIL are sitting on huge pots and if it doesn't go in tax or on carehome fees then DH and SIL will get it, and enjoy it! PIL have never left the county and live on the cheap. Seems such a waste.
I don't believe in bypassing a generation. Circumstances can change quickly. My DC are my priority and most important to me, not any potential GC. Their turn will come and it may prove counterproductive if gifted a huge pot in their 20's.

Which country do you live in?

In Scotland you cannot disinherit your children, they have a legal right.

It is such a modest amount so why bother? I think it would probably make a small difference to the lives of your children so why would you deny that? It really is not life changing for your grandchildren so why upset your kids?

Please don’t do this. My mum tried to do this and it really upset me. It was like she didn’t trust me to provide for my own children. The money should go to your children equally and then it’s up to them to share with their own / make provisions. Otherwise you are just creating really bad feeling.

My mums will wasn’t legal in the end for various reasons so after she died I contested it and as an only child it all came to me and I used it to pay off my mortgage, which I wouldn’t have been able to do if I’d given it to dd as she would have wanted - which seems crazy as dd benefits from us having a mortgage free home! Eventually the house will be split between her and ds anyway. Mum left ds completely out of her will but that’s a whole different issue I had!

One daughter is a low earner in poor health and one daughter is financially dependent on so wine and they live abroad. Both these girls sound quite financially vulnerable actually.

Do you not think that your children would help their own children with house deposits etc. if they were to inherit? I think I would make an assumption that my own parents thought i have no financial sense and that i'd be too selfish to spend any on my children.

I think it’s a good idea. If both your children are financially stable in their own ways, it is the GC who will need a leg-up.

FWIW, as an only, my mother is leaving all her money to me (nowhere near as much as yours!), but as we are financially stable, I will pass it straight onto our children.

My parents looked into doing this with my brother or leaving the inheritance or his kids instead of him. It's very complicated so please get proper advise.

You cannot disinherit children (biological or adopted) from certain things. With regards to money you can will to leave it to whoever you wish but property and other items like that (vehicles and shares for example) they have a legal claim over and can take their case to court and be awarded their share pretty easily if they so wish.

Obviously its up to you but as others have said, its something you need to discuss with your children. I don't believe its a good idea to skip a generation, it feels like a negative message to your own children. Leaving a substantial amount of money to children gives them the wrong impression that money is easily come by, not for most of us it isn't. If you leave the inheritance to your own children, is it likely they won't help their own children? We put enough for a deposit on a first house in accounts for our children after my mum left us a small amount (small in comparison with the OP idea of small). They were told the cash was for a house deposit at a future date, not for a new car, or for travelling. Fairness to them they kept to that and now both have a first house (and child) . My mum would be delighted. If she'd left the money to them when they were students, Im sure they would have used to for travelling or similar. Great fun but they would still be renting. I'm not having a go at renting but in this country we don't have controlled rents or security..

My mum has made her will so that my two DC will get half of her estate. Other half will go to my sibling which is nice as dear sibling has had a very hard life in comparison to me.

My mother originally wanted to split the estate between me and my sibling but I feel that I am doing okay in life.

I actually happen to know that one set of my grandparents have written their will in this way. To us 4 grandchildren rather than their 2 children. I only know because of an odd way and my parent doesnt know. He is fully expecting inheritance from his parent and it makes me cringe. Maybe talk to your children first or it could get uncomfortable if they are planning for the money

Your money but it may cause hurt. Half each?

It seems likely your daughters rather than the grandchildren will end up responsible for you in your last years- organising care if not undertaking it. You might consider that when planning- it takes a toll on middle-aged people’s earning capacity and life.

Skipping a generation is generally sensible for tax planning purposes where the children are "comfortable". Nothing clever, just avoids getting hit by inheritance tax twice relatively quickly.

Are your daughters financial secure - does DD1 have the independence she needs to escape her marriage if necessary? Does DD2 have an adequate pension? talk to them first, you may find they really need the money.

And the one resentment I have with my own mother is the way she left her money, which advantaged the one grandchild she didn't have much of a relationship with at the expense of the daughters who had been her carers and the grandchildren who had grown up with her.

I don't think this is all that unusual. It makes sense to me. If you discuss it I'm sure it will be fine.

The risk of money going to children to be passed straight to grand children is that there's 7 years before the gift is "safe" from IHT again.

Beware. My friend's mum did this - but then had dementia for years, heavily cared for by her daughter, most inheritance gone in care home fees and the small amount left didn't go to my friend who had run herself ragged working full time and trying to care for her mum for years but instead to her children, who were happy, carefree students.

Life is long and you may end up leaning on your daughters more than you can ever imagine as you become older and vulnerable. Leave it to them and trust them to look after their children.

I don't think you should do this. You said your daughters are in their 50s, hopefully they have many more years to live and a lot could happen in that time. Illness, disability, divorce, death of husband/partner. I think you should leave some money to them and give them the choice about what to do with it; they might choose to give some their children. I would suggest leaving £300k to each daughter and £150k to each grandchild, in trust until they turn 25. That would still be plenty to help each of them get on the housing ladder (which is what I would have done with it).

Absolutely your choice, but please do tell your daughters in advance. As pp have said, they may read into your decision a whole host of reasons and be hurt if they don’t know before your will is read and they can’t then ask.

Another only thing to think about might be a smaller bequest to your daughters, but the bulk split between grandchildren. So children aren’t ‘left out’ and can use a small amount of money to treat themselves to something they might otherwise not prioritise for themselves

Talking about it purely in IHT terms completely ignores the point.

Saying “it will be taxed twice” is assuming the money will just sit in a bank account unused rather than potentially being a safety cushion if the DDs need it (as many people have pointed out, circumstances can change so don’t assume they will be in the same position as they are now forever). The DDs can also use it for house deposits etc for the grandchildren anyway but it allows them to be certain they are financially secure before doing this.

Planning for just in case your DDs die within 7 years of gifting it to their own DCs is ridiculous - what if the grandchildren die? You can’t plan for all eventualities.

The IHT angle also only makes sense if your children already have estates that are big enough to attract IHT

My parents did this. My mum had six figures in the bank of her own money. She told me that the money and her share of the house should pass to my dsis and me, she didn't believe in missing a generation. It was an awkward conversation and obviously I said it was up to her what she did with her money. She hadn't make a will.

She got dementia and during this time dad brought a solicitor in the house and got her to sign a will. The will left everything to the 3 grandchildren (my 2 dc and my siblings ds).

We could have challenged it but who would challenge a will against their own children? Not going to happen.

After they died the money went to the children years later at age 18. Such a waste, we could have helped our children so much with that money with opportunities, education and schooling with a bit put aside for their futures (and maybe even ours). They would have had a much better life.

Instead they had a tough upbringing and the money has destroyed their lives - ds is in his 20's, doesn't work because he doesn't have to and is wasting his life without even having started a career. Dd is not yet 18 but likes to do things to the extreme which includes spending money, I hope she'll be sensible but it's not looking good.

Our parents ashes still remain in the funeral store, nobody wants them. Years later my sister resides in the house that's fallen into disrepair and is probably not worth much more than the land it's built on. She refuses to move even though it belongs to the gc.

Nobody was helped by what they did.

I might consider leaving the GC enough to get a manageable mortgage, which will obviously depend on their location and income. 100k each? Then leave the rest to your DDs. It could send the message to your DDs that you don't trust them to look after their DC and help them with the money when they need it.

I just noticed you say will be leaving university with huge student loans

So they are still very young? I definitely wouldn't leave them the lot if that's the case; they may be years of being ready to settle and buy a house (which is what you seem to want them to do with the money), and the money could be frittered.