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.

In my view it is crucial to be scrupulous in treating both the same and giving identical amounts to each.

Give then the same. Always

@QuinionsRainbow You can change the grandparent's Will to a Deed of Variation (mentioned by OP without using those words.) That way, it bypasses the parent.

This means the money is coming directly from the deceased grandparent, not the parent (where the 7 year rule would apply re. inheritance tax.)

OP can 'just write a cheque' but if she dies within 7 years, the gift would count towards IHT- part of her estate (and the rat
e of tax is proportionate to the number of years she lived after gifting it.)
It's a different situation compared to yours.

Yes give them the same. Ds2 could move to a cheaper area in future but would still have gotten more.

Give them the same but not enough to buy outright - £100k each. Having a mortgage to pay teaches good financial management.

Give them the same, they either keep or bridge the difference with a loan, however much you decide on. Personally I'd give £250k each then reserve the rest to keep or potentially give at a later stage.

When all is said and done, that is the investment that will "pass down the generations". Living in a cheaper area often means not as good an area for employment and income opportunities, amd they will both be left with that sum when they sell.

I say this as someone who lives in a more expensive area. If it were my parents, if expect total equality.

Give them both the same amount, where they live is not important.

As someone who has already been told by their parents that their siblings are going to inherit a larger share of their future estate, I would advise to share equally.
Unless you want you tarnish your kids memories of you.

We’ve always given them exactly the same.

And most of my (older) generation have passed much or all of legacies to our own children without deeds of variation - we were told that in such circs. this was allowed.

A D of V was needed however when one of dh’s brothers was left out of a will for a reason which was no longer valid by the time the person died. So the others had him officially reinstated.

Very important you give them both the same amount of money. Otherwise you are playing favourites.

What if the one that currently lives in a cheaper area wants to move in the future to a more expensive one? Can they come back to you for the balance?

Whatever you do, and you are doing a brilliant thing for your children, give them the same ££ at the same time. It’s the fairest way to do it.

This.

I would give them each the same amount, it isnt fair to give one more because they chose a more expensive place to live.

But have you considered the tax they will have to pay on a gift that large?

It is an enormously generous offer that you are planning to give your children. you are more than generous.
I would be inclined to give them both the same on the basis that when you’re gone, you don’t want there to be any resentment or fall outs between them. The one in the more expensive area should not have a problem getting a mortgage, as it’s not a huge amount as mortgages go.

Give them both £350K

one will end up with a “bigger” flat but you can’t help it as they both live in different places. One might get more value for it in time too…and you can’t help this too…

the gifting needs to be equal then make it clear that it is their choice what it will become.

I’ve not read the whole thread, has inheritance tax been mentioned?

You can put money in someone else ISA as long as you don’t go above the limit which is much lower than what the op suggests.

Whatever you decide you MUST MUST MUST give them the same amount whether its 250K or 350K.

Definitely give them the same amount, How they choose to spend it is up to them.

What a lovely thing for you to do. If you know you won’t need the money in the future I’d say £300k each.

No tax to pay.

Only potentially inheritance tax if OP gifted the money, did not survive for 7 years and her estate was large enough for inheritance tax to be due.

But OP has mentioned varying the will that left her the money so it goes to the children direct. Inheritance tax may be due on the estate but the adult children won't pay it. Inheritance tax would need to be already settled based on the size of the estate before they receive anything.

I’d give them both the same amount too, whether it’s £250k or £350k. Down to each one how they proceed from there.

You absolutely have to give them the same. (The flat price is irrelevant.) So option 4- £250 each, but without ‘suggesting’ that DS2 get a mortgage, what they do is up to them.

In general I agree to give each the same amount. You don't give any details of their situation. With my two, one is single and going on 40 living in a very expensive area. The other lived with fiance in a much cheaper area and bought a 3 bed with partner for same price as the other single one's 1 bed flat. Everything is a lot harder on one salary. We wanted to give them the same amount, although a lot less than you are talking about. However the one in cheaper area with a partner didn't want to accept it all. So now we are all aware as a family that one has had less and will give more towards a wedding or other things in the future to even it out. As I say we are not talking the same scale of money, one had approx £20,000 more.

As others have said, I think you should give them both the same. An injection if £250k will make a huge difference to their lives.

And, and this is important, keep a significant sum for yourself. You'll be retired a long while - my financial advisor says we should all plan to live to 100 - you may need that money.