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.

A friend of mine was told by their DM that the £10k the sister was given would be given to them when they required help in 6 months time. The DM died unexpectedly and the will was 50/50 and their sister refused to relinquish any of their share. The siblings have not spoken since!
Give them equal money to buy whatever property they want. Do not cause resentment due to unequal treatment.

If you do decide to give one sibling more you can always give the other more later. For example, when we downsized we helped all four four DC to buy properties, in different areas and at different prices.

Later we helped one when they moved and renovated. Another DC lived in a much less expensive area, mental health problems and living on benefits, we regularly help them with cash for living expenses but their property cost less. We helped another to buy a kitchen and help another with very high service charges.
All DC are different, live in different places, have different needs and can be treated differently. We believe that, over time, we've been even-handed with them all.

There is certainly no law against treating children differently. My view is equality. So they had the same sum for a first property each and it was all given within a relatively short period (I even helped the twins buy at university stage so I had helped all 5 children before I was too old to be able to afford it etc.). So we felt it was fair even if inflation had gone in between year 1 and year 4 of the 1st and last gifts.

The legal side is dead easy. The conveyancing solicitor (and the lender if there is one) just wants confirmation it is an outright gift and the solicitor will need to know where the parent got the money - earnings etc. I expect to live about 20 or even more years after making the gifts so inheritance tax is not likely to apply either as I will survive 7 years.

I think it is a good idea to keep a record so the children can refer back later - just a typed note of what was given when. I keep that in my own records on paper and on my computer

That’s a life changing sum. 250k is more than I have saved in my 50 year lifetime. More than I would get as a lump sum for 30 years of pension. Personally, I would think long and hard about giving this amount to my child even if it I had it and could afford to. Unless I was elderly myself, I’d be thinking to give them a deposit only and let them take on a mortgage. You know your kids best but for some it would be a licence to not strive in life. You can control whether the money goes to a house purchase but you can’t control the house being sold to liquidate funds and you can’t control it if the funds that would otherwise gone on a mortgage are being frittered away. Personally I would give the deposit and invest the rest which would leave the sum available to me or the kids if they then needed it at some point. Just an alternative view point and obviously never give more to one than the other!

I'd give them £150k each and make them work for things. Having too much handed to you doesn't do anyone any good. Leave the rest in the will.

Unless you are in Scotland I wouldn't buy a flat. The property is never really yours, it's the leaseholders. You are also a prisoner to their service charge/ground rent, which they can double overnight if they so wish.

You need to get advice about how to protect the money you give them. I would not let a husband, wife or partner walk away with half of this money from a property sale in future in the event of a relationship break up.

Also it's important that they both get the same amount of money at this stage.
I would give them both £200-£300k and keep the remaining part of the funds for yourself. Future proof your house or perhaps consider moving to a house in town near public transport ect that will suit you better as you age.

Unless you do it this way your going to end up with potentially problems in the future. The one that gets less money will be resentful and rightly so. Then you need to consider your own long term relationship with your kids and you need to keep this good. You may need help in the future and having 2 adult children who get on with you and each other should help in this situation.

There are so many variables and situations are so nuanced that it’s fairest to treat them the same - whether that’s giving them pots of money or nothing at all.

Adult offspring may appear to have quite differing needs but you simply can’t know all the decisions and choices that have led to that. Eg one might only work part time in a low stress job and earn a low amount because of anxiety, but the other might have equally poor mental health and also managing a tougher full time job. Or one may have dossed about, dropped out of college, or made poor life choices along the way… as a parent it’s essential if you want to maintain a good relationship with your children (and them with each other) to not end up ‘compensating’ or ‘rewarding’ the child who is more difficult, or who messes up, or just doesn’t want to push themselves to be more independent.

Of course in very clear cut situations such as a severely disabled child who is physically incapable of living independently, you would expect the parents to make appropriate provisions and you’d hope that would be done early on. But probably 99.% of cases aren’t like that. They’ll just be families where the adult children have different jobs, likely live in different parts of the country and each have their own set of circumstances, and they shouldn’t be rewarded or punished for that

I’ve been in this position. I gave them both the same amount. No point in arguments erupting if one feels unhappy at getting less.

As someone who sadly has lost a parent and therefore recipient of what my other parent decided - my sibling and I were given the same amount even with differing financial situations

same thing all our life including wedding gifts - always means no favouritism

I'm not sure that @PetaMatt is that interested in our answers as he/she has not returned after the opening post!

However, fwiw, I would give them both the same but no where near £250k.

I'd prefer my DC’s to work hard and value the money they earn.

Are they married? Likely to? Will you safeguard the inherited money in case of divorce?