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.

I'd also like to see that, I saved money for my children but ending up as a single parent meant it has to be used for other things. My situation is different as I never told anyone but I'm sure other people might be affected

£5k is a lot of money, and it certainly is when you're 18. And it can also buy a pretty fast car, so I'm not sure why some posters are being dicks about this.

I'd keep the money in my name, and see how he gets on, and whether he needs money towards any big purchases at some point.

I gave my 3 children money towards deposits when they were saving deposit money to buy a house. My youngest son is in the process of buying his house now. He got more help as house prices are higher now.

Following with interest, I have a child trust fund for dd which is now a large amount (£10000) she turns 18 next year and I'm trying to work out what to do with it.

Dd is generally quite sensible with money but it still makes me nervous that she will have such a large amount...

Yes, of course he would. I didn't say anyone was going to bring any sort of case or that they would have enough detail to win any case.

I merely pointed out that, technically, if you set money aside for someone else it creates a bare trust.

You kind of don't have any choice if it is in a CTF it legally becomes theirs when they turn 18.
You just have to hope.

I'd give a smaller amount and see how he deals with it.

DD is currently 8yo, I have 2 accounts going currently, a JISA which will automatically transfer to her, that has small amounts going in monthly and an ISA in my name which should (hopefully) have about £18k by the time she's 18. That will be mine to either give her or hold back till she's a bit older.

Parents are, of course, very protectie of their children and want the best for them. But in some ways I do think it is quite sad that so many pp's don't think their DC's capable of managing their lives. Be there to guide them, for advice, but don't run their lives. They are adults, they need to be given responsibility. Waiting until 25 seems excessive, to me anyway. Lots of people (me inc) are married, have a house, a responsible job, children, go to war etc etc etc by that age.

https://www.evelyn.com/insights-and-events/insights/trusts-for-children-explained/

"Nominee accounts are a form of trust similar to a bare trust. If a person invests in their own name with the intention of holding the money for someone else (perhaps their grandchildren) and they can prove their intent, then HMRC will usually accept that a trust was created. It is important that the investor does not"

https://www.keystonelaw.com/keynotes/accidental-trusts-and-unexpected-tax-bills

"Creating a trust "by accident" is easier than one might think. A trust can come into existence in several ways, without the words "trust" or "settlement" being used, and with the minimum formality."

Just a couple of references.

The key case for trusts to be ended at age 18 if the beneficiaries are all 18 or over and have capacity is Saunders v Vautier. So no, you cannot create a trust that cannot be accessed until age 21, or 25, etc. Even in a will.

How is it legally his money? Its the OPs until such a time she chooses to gift it. She may change her mind.

The actual solution would be for him never to have known about it. Then when he chooses uni, or travelling, or whatever else he fancies in life, you say "here is our contribution".

Advise him on financial incentives like LISA and help him understand the benefits of compound interest.

@BernadetteRostankowskiWolowitz the OP implied it was in his name, if it is in hers then it is not anyone else’s money at all. It is hers.
I misunderstood her original post.

Don't hand it over for a few years. Leave it until he's older and not likely to fritter it.

I wouldn't give it to him at 18 unless it is needed for something specific as he is bound to waste it.

Of course it isn't. Op can keep it for herself if she chooses 😂

Exactly this! £5k is my current day to day savings. It’s a lot of money to working me never mind an 18 year old. But yeah this is mumsnet where everyone apparently has trust funds and huge inheritance by 18. 5k is such an insignificant amount of money to gift their child.

In my world I got £100 and bought a mobile at 18. When they were very new!

We talked to both children about their savings accounts, not CTF because we never paid extra into those, we wanted to control their spending if they were not sensible.

They know that the hardest thing for their generation is to get on the housing ladder. Ds1 is already at uni and has money in a LISA for a future house deposit. He pays in £4k and the government top that up by £1k. He is already planning to get it up to another £4k after he works his summer internship job this year and when he graduates he he will top up his LISA again to get it to £15k and then any other ISA he can pay into. He started with just over £5k in savings all for him. We saved up separately to cover him and his brother whilst at uni which is just in a general savings account in our name.

Talked to Ds1 about it. The money coming to him that we had saved, and his CTF. Explain that we expected him to be very sensible with this and never to waste it, but to use it for something constructive, like for example towards a house deposit. He agreed. I don't think he's the type to fritter it away. But if that's what a child chooses to do..... But you can at least talk about these things.

I got a £10k inheritance whilst at uni and it was all gone within the year. My dc have a fairly sizeable trust fund (not millions but house deposit size) & it's completely locked until 21 then between 21 & 25 we control it - so if one decides to do some vastly expensive but worthwhile or highly lucrative degree we could release for tuition fees but don't expect to release until children are more mature & hopefully ready to buy their first house.

If he's expecting some money but doesn't know how much, give him £1k now and accept he may well fritter it away then save the rest until he's 21.

Thank you, really interesting!

ds is the same. He is working PT and at uni (commuting so costs are low) and managing without a maintenance loan so far (enough that he can even afford a lads holiday abroad this year!)

So far he has put 2 x £4k into his LISA and now has the rest sitting in premium bonds until he can feed more in. He will be at uni for 5 years and says he doesn't need the money just now so his plan is to put in £4k a year into LISA while he is at uni. Think he is attracted by the £1k bonus and the thought of moving out as soon as uni is finished.

But if he changes his mind and spends some on travelling or living costs because he works less in later uni years or moves out I would have no problem with that either.

My niece was also give £8k at 18. She saved and added to it until she put a deposit on her own house at 24.

Not all kids will spend it frivolously. I have heard more being sensible with it than not.

Wow, sensible kids! Good for them.

I think part of it is he always knew it was there, he knew how hard we saved for him, he knew it was saved to give him a kick start for his future so appreciated it wasn't easy money that appeared from nowhere.

Ultimately it is his choice what he does with it now, but the other part of it is he understands a bit about once its gone its gone. We chose to give him free reign with pocket/birthday/christmas money in the past to let him learn from his own mistakes. He unwittingly spent hundreds in app purchases when he was about 13. It was just £5, £10, £15 here and there, but it was a light bulb moment for him when we showed him them added them up to hundreds and how little he had actually achieved so little from the money and talked about what he could have done with it instead. I am a great believer in letting them make and learn their own mistakes and it seems to have worked for him.

I’m saving for my kids hut for specific purposes - university and a house deposit. There is no way they can get their hands on it otherwise

why not teach your child money management?