How to give money fairly to children

[PetaMatt]

Following my mother's death I have inherited a large sum and I want to use it to help my children onto the property ladder (I am taking advice about varying the will).

I am due to receive about £800k. Where DS1 lives, a decent one bed flat costs about £250k. Where DS2 lives it would be more like £350k. I know they are both keen to buy a flat.

WWYD-

1. give them each the price of a one bed flat (£250k and £350k)
2. give them each the price of a one bed flat as above plus give DS1 an extra £100k
3. give them each the price of a one bed flat as above and reflect the £100k difference in my will
4. give them each £250k and suggest DS2 gets a mortgage for the difference
5. something else?

I don't need the money myself although I will appreciate the security of having whatever is left.

Give them precisely the same amount of money. Choosing to live on a cheaper or more expensive area should not result in less of more inheritance.

Realistically, if you give them the price of a one-bed flat, they will probably not buy a one-bed flat. If the flat is £250k and you give them that, they would probably look at a 3-bed house for say £425k and get a £175k mortgage, or whatever amount corresponds to a bit less than they're currently paying in rent.

And that would probably be a smarter decision. If I was younger and earning and currently paying rent, I wouldn't think "Ooh great, a 1-bed flat and no more rent ever, £800 a month to spend on holidays". I'd be thinking about the future, and that probably involves something with more than one bedroom.

So by all means give them whatever amount you want (hopefully the same each), and you can certainly condition that on it being for a property purchase (the estate agents and/or solicitors can draw up a very simple document to formalise that — it's what they did when we gave DD some money for her deposit), but don't be surprised if they don't buy something small for (almost) cash.

Equal money it's up to them how they spend it/where they choose to live

Give them the same amount of money. They've made choices about where they live. And one or both of them might move to either a cheaper or a more expensive area.

The one who lives in the more expensive area can get a mortgage - the loan to value of having 250k cash to borrow 100k will be very good - he should get good loan terms.

The only fair way is 50-50 to each child. You can't base it on the cost of housing because they presumably have chosen to live where they are.

We've passed money onto our children (some from a grandparent) and they received 1/3rd each we kept a 1/3rd.

We've also given them each a 6-figure sum (from our savings) and although 1 child is in London, and the deposit won't go as far, this was the fairest way to do it.

We also made sure that whatever we gave them as uni expenses (ie loans and accommodation) was equal (one did a Masters and we paid that fee, so gave the other child the same as part of their house deposit.)

You also need to consider your own needs long term. Our FA suggested we ring-fence at least £200K of savings for care in older age.

I would divide it in three and give myself the same as them. Not sure of my logic really but that's how I would handle it.

Equal amounts of money, but only release to a solicitor for a property purchase. Or put in a lifetime ISA (but I'm still unclear whether you can put £ direct into someone's else's lifetime ISA, rather than transfer via their current account - I keep meaning to look into this )

Maybe £250k each and then £300k for yourself. Or £200k each then both have to get a mortgage. It's nice to have a mortgage free gift but I think it' good life experience to have one.

I'd also suggest that it's not great to buy them a property outright (or rather give them the means to do it) because it can stop them from budgeting and basically 'growing up' with a good work ethic.

I've known parents who were very generous and it has perhaps held their children back in terms of their careers and work ethic.

It does children good to know they have to learn to budget and save (but you know that you are there as a back up if they get into dire straits.)

What our children were given has not bought them houses outright but has bought them a slightly nicer house in a nicer area, but they both still have big mortgages needing both their incomes.They live in the most expensive parts of the UK.

Whatever you give them, they should both get the same. I agree with a PP that if they have any sense, they’ll put it towards a more expensive property.

Honestly this feels a little too involved. Give them both the same amount of money and support with tips on buying a house but accept they may spend it on a round the world trip. It’s a lovely gesture, don’t let it cause a strain on your relationship with them by insisting it is spent on a flat. They may want to get a mortgage and get a house or a narrow boat.

Give them an equal amount and let them put it to a property of their choosing. You can't do anything but that otherwise it's not fair. I'd probably go 200 each and keep a share for yourself, unless you're already exceptionally wealthy

Give them the same amount.
Inheritance amounts should not be based on location.

I'd give them £100k each and keep the rest. Having a mortgage will add a sense of responsibility. Getting it for free won't.

I seem to be the only one who thinks that an equal split isn't necessarily the right thing.

It's not necessarily true that they could just up sticks and move. There may be good reasons other than personal preference for them being where they are. For example, their jobs might not exist elsewhere, their health may mean they need to stay close to a centre of excellence, their other responsibilities (or those of their partners) - there must be many more.

Ultimately I think you have to accept that unless two people are in exactly the same circumstances and have exactly the same needs, there will always be a tension between giving them the same amount ant meeting the same needs. There will always be the potential that one of them will think that it's fair to do it by amount and one will think it's fair to do it by need. Do you know what each of them thinks? I would be having an open discussion with them both to find out.

You absolutely cannot do anything apart from give them all the same amount!! I can’t believe you’re even asking the question!

My parents gave their four children the same in our twenties despite the fact that some of us lived in London and some of us lived in much cheaper towns.

absolutely zero resentment from the Londoners - everyone really grateful for their generosity.

I would reframe it to yourself as making an equal financial gift rather than trying to achieve equality of outcome. Where they choose to live and how they choose to spend their money are ultimately not your choice!

I’d give them £200K each, then they will both need to get a mortgage. You can help them out in other ways such as furniture or a bathroom/kitchen renovation each or the cost of some decorating. £200k is still a significant amount towards a £350 flat and they still need to pit in the hard work of paying off a mortgage.

I would give them the same. No one is being forced to live in a more expensive area after all

I echo what everyone else says- doesn’t matter what you give but you always give the same.

even if one of a millionaire and the other isn’t- always the same. Never punish a child for making different life choices. You love them equally - you treat them equally.

I'd say equal money OP. It doesn't sound like there's a hugely different standard of living between your children at the minute, which would probably be one of the only things that'd make sense in terms of gifting money differently. I wouldn't necessarily be taking where they've chosen to live into account, unless there's other circumstances at play.

How old are your children?
As you've mentioned them both getting one-bed flats, I'm assuming still fairly young adults? I'd suggest, like others, that it may be wiser for them to get mortgages, and buy bigger flats or houses, rather than one-beds, as that would set them up a bit more for their futures, and give them a possible source of income if SHTF (renting out the other bedrooms), as well as meaning they did still have to learn to budget and save. Obviously this is up to you/ them.

I would give each child the same amount, but you need to be aware of the IHT implications.

Regardless you need to engage a solicitor.

Another vote for give them the same. If that means DS1 is able to get a terrace house and DS2 a flat, then that’s just a function of where they chose to live.

You must give the same unless you want to drive a wedge between them.

This. I’ve given my children money towards a flat, it’s MUCH less than you have to give. They all got exactly the same amount, it was the only fair way IMO.

Ive read terrible stories here of parents who favoured one child they thought was more “ worthy “ for various reasons and it always works out very badly.

Personally I would say I have 250k to gift you each towards a home - let them choose the place if it’s below the 250k gift the excess to them and if above they get a mortgage on the remainder - let them choose.