18yo big lump sum – how to handle?

[stealersmealdeal]

My DS turns 18 soon and we have about 5 grand to give him that we've been saving since he was little. He's vaguely aware there is several thousand on the way, but not the exact amount.

I just wondered what others have done to approach this, in terms of making sure he doesn't fritter it away? Have you put conditions on how your DC spend something like this, or just let them loose and hope they were sensible with it? Have you made suggestions they have taken you up on – eg partly investing some of it – or have they ignored advice and bought themselves a fast car?! 😱He's working hard at the moment, and will go to uni in autumn, but live at home, so no accomm costs, at least.

Any genius tips gratefully received.

The DCs have JISAs with c.10k in. Currently planning to change to saving our own money for them, not in the JISAs. May divert post when they turn 18 depending on how sensible they seem!

Technically, even if it's in your bank in your name, if you've been saving it "for him" that creates a bare trust, which makes it his and at age 18 he can ask for it.

There is mechanism to keep money in trust until someone is 25, they gain full rights at 18.

LISAs are great, and you can put £4k in per year (has to be in DC's name and they have to be 18+). Although you can withdraw the cash for other things, doing so loses the 25% top-up from the Government.

One concern that some people on MN have is that they can only be used for a certain maximum value of property, but that would only be an issue if you're looking at London/Home Counties.

My son has just been through a similar situation.
So we sat down worked out a budget. Opened an isa and instant savings account and another current account.

One current account is for daily spending. The rest is all put away.

I hope he hasn't spent it all!

We have both our sons 6k on their 18th birthdays. We said it was money for a car, but obviously couldn’t enforce that. Son 1 did indeed used it to buy and insure a car. Son 2 has yet to spend it, in fact it’s sitting in my ISA now as he gave it back to me when he went to uni. When he’s ready to buy a car the money is there, plus interest.

Sorry what?

If the OP has been putting money aside that she has mentally been planning for her DS that doesn't make it his!

OK, maybe if it was money gifted to the DS that the OP then bunged in her own account, but not money she has been putting aside quietly by herself. Surely?

Yes it’s cobblers.

Saving money with the intention of giving it to them doesn’t make it theirs

Give him a grand to go travelling. Don't tell him about the rest but hold it until he is thinking about buying a house and give it to him towards a deposit.

I saved a similar amount for my DD. When she went to Uni I gave her £200 a month for living expenses, paid towards her accommodation, and bought her a MacBook.
The money lasted until she finished Uni, and was enough to pay her deposit on her rental house.

How does that work? Does he have to take her to court for the money, somehow prove her intentions to a judge

No actual person is going to do that for £5k surely

OK, whatever.

You're wrong, but it doesn't matter. As I said "technically" and saving it "for him" (it doesn't matter what account it is in or whose name, in fact the whole point of a bare trust is that the money is held in the name of the trustee). Noone is going to enforce it. But bare trusts can easily be set up by mistake and people not realise. But of course, nothing can happen if noone knows. I was just pointing out trust law.

Of course nothing will happen.

Yes, he could take her to court to enforce the trust. It's civil law so the court would only need to be satisfied on balance of probability, he doesn't need to "prove" it, he's not the police. The court would only have to believe him more than her, on balance.

I was only pointing out the law, not suggesting anything would happen as a result.

And of course noone would do it for £5k, but the law isn't different for £5k or £5 million.

I had this when I was that age, and the relative in question took a different approach between me and my sibling.

I was very clear it was going to be saved for a house deposit and what I was going to do with it - so the money was transferred on my 18th birthday and I was left to it.

My sibling was less reliable (at the time, totally fine now) so theirs was transferred a bit at a time directly into a 30 day written notice account that they set up between them (in my sibling's name) expressly for that purpose.

Obviously if they'd really want to blow it all it wouldn't have prevented it, but it prevented thoughtless frittering, impulse purchases, drunken bright ideas, which was all that was really required.

I’m keeping my kids savings until 25. I would have been way to young at 18 for that type of money and would have totally wasted it.

If you hand it over you have no say in how he spends it and unless he’s particularly mature it’s all getting wasted.

I think people saying that 5K is a lot of people are really rude. I’m the north 6-7K could easily be half of a deposit on a house (if buying with a partner). I’d say speak to your son OP about it and if house buying is one of his goals then put it in a LISA for him. Then the 5K will become 6,250 that he can use for a deposit later.

*not a lot of money

Can you direct me to the bit of either legislation or case law where this set out? It seems pretty unlikely to me, I thought almost all trusts had to be set up expressly and it was very difficult to accidentally set a trust up, especially one you didn't want.

Agreed!

DS's lump sum was in his CTF so no choice to 'hand it over '. He put 80% in a S&S ISA as long term savings (& has been cursing me ever since as it has gone down) and 20% in premium bonds which can be accessed in a few days and used to top up his Uni expenses. 2 terms in and he hasn't touched it yet so I think he is being fairly cautious 🤣

We keep everything for DC in our own account and only put things directly gifted to them legally (like inheritance) in their personal account.

OP, in your case, I would give him free reign over 1k, to enjoy in the now, and together discuss how to invest the other 4k. A LISA would be a good idea.

*rein, ugh

Our dcs have always been told not to waste the money they get at aged 18. Eldest bought a car. Youngest hasn’t had his yet but I’m confident he won’t waste it.

Well at a minimum he’d have to know specifically that the poster has been saving this specific amount of money for him and that it belongs to him. None of which is apparent.

We've got 2 savings accounts for DC set up by GPs in their name. They know they have them but don't know amounts and don't know it's in their name - for all they know it's in our savings accounts.

However, we have all the details / log in / passwords etc so I am planning on hanging onto it until I think they're ready for it / drip feeding it over etc. How else would they get hold of it?!

I know that legally it's theirs once they turn 18 but I'd like to think it's a highly unusual that an 18 year old would have such a terrible relationship with their parents and yet at the same time have the maturity / resources to engage the legal system to force access to that cash?!

Surely it's reasonable to expect that in most (not all, but most) families the kids would have enough respect / gratitude to accept whatever terms their parents put in place to access the pot?