How can I protect my son from a large inheritance at 18?

[Awkward718]

NC for this as it’s quite a sensitive issue.

My DM is in her 80’s and I have a pre-school age DS.

My DM has told me that she has written in her will that she is going to split her assets between her 3 children, me and 2 siblings, however my share will go direct to my DS as she considers DH and I to be financially secure and not in any need. My 2 siblings have no DC of their own.

The amount my DS will receive is likely be somewhere around 300k-400k.

I have no direct need for the money so am not at all bothered that it is being left for his benefit however I do have a huge concern that handing such a significant lump sum to my DS at 18 could have catastrophic consequences for him. He’s far too young at the moment to know whether he’ll be a responsible 18 year old or someone who could ruin their life if handed such an amount at a relatively young age with no restrictions.

Is there anything I can do to alleviate the risk? DM is adamant she’s doing a really nice thing for DS so won’t entertain changing her plans despite me highlighting the obvious risks.

Can an inheritance handed to a child for them to receive at 18 be deviated or not? I suspect it can’t. If so what other options are open to me as I don’t want to live through his teenager years terrified that he’s going to be handed what will then be a huge sum after investment growth on his 18th birthday.

If it can’t be deviated could we do something such as invest in joint assets with him as a child where both parties have to agree to a sale?

Failing that are there any other options? I’d honestly rather not have anything going to him than have this arrangement in place. He’s an only child so will inherit plenty from DH and I at a relatively early age anyway as we are both older parents.

The good news is your son is a pre schooler. You've got plenty of time to work with him and give him the best possible chance of being in a suitable position to receive that money at 18. He may well be a sensible chap.

I'd suggest you make sure he knows it exists early on. This gives you time to cover the concept of "stewardship"; explain how you are an exceptionally lucky family because you'll have two generations worth of wealth, which if carefully managed means the family can remain financially stable indefinitely. That this gives a responsibility to manage it sensibly and use it in a way that preserves it for the future and that helps the family overall. Discuss examples of what good uses would be - it might be buying a house upping, and then using the money saved on a mortgage to pay into the pension but also to enjoy a wider range of trips than he otherwise could have afforded.

Obviously you can never know the outcome but you've got a long time. I inherited some money at 18 and my only response was to think about what ISA it should live in until I wanted to buy a house. My brother had the same and he was somewhat more inclined to spend it but it was explained by my parents how important it was to preserve it for the future, how hard good grandparents had worked and what the expectations of him were and he then ultimately proceeded to chuck it into an ISA as well.

How old are they both?

If she dies before he’s 18 it will automatically go into a trust, so as trustee you could invest it for him in something where it takes a few days to get at the money, then when he’s 18 it will be harder to spend on a whim if he has to wait for a withdrawal, and if it looks like he won’t be sensible with it you can just ‘forget’ to tell him he has the money until he’s matured a bit. He won’t be notified in anyway at 18 that he has the money unless you or someone else tells him.

Would she agree to him having say a smaller amount at 18 and the rest in a trust fund until he is 25?

I don’t think most 18 year olds are idiots. Adults fuck up money all the time and you have every chance of producing a financially literate and sensible child. He has cash to open a business, buy a house, to invest to make his first million. We never did pocket money or encouraged that stage where they buy endless sweets or games but we did focus on what money is how it is a resource. Our children get things paid for but actually they save well. They get generous birthday gifts and my parents have given them a few thousand each (their version of a big inheritance). The kids have it all in stocks and shares ISAs and understand about compounding, global diversification and not pulling out money in a bad market. Any of mine would lock it up and use a compound calculator to predict what it could be. And if instead he back packs round the world and spends three years surfing or skiing or dancing too much and being a well funded fool - what fun!

The really bad choices happen irrespective of income.

Lots of children inherit large amounts at 18 and manage it successfully without either frittering it all away irresponsibly or going mad.

They are educated from birth about money and financial affairs. Given pocket money and taught that some is to spend and some is to save. They are taught about the difference between income and capital.

They are taught that if they spend all they have on one thing, there’s no more coming until next pocket money and told to think about what that would mean to the household if parents did the same. But, at the same time, the odd splurge if thought about is fine.

As they get older, their parents explain about the cost of living in terms they can understand- when you own a house, you have to pay a mortgage, buildings and contents insurance, council tax, utility bills etc , car costs etc etc This is what my job pays me but see the government takes away this in tax and this in NI, This is what I have left and the bills have to be paid out if it and I also have to save for pension ( and what pension is for) and other savings. These are the tax efficient savings ISAs etc..,We take financial advice from an independent financial adviser now we’re older not one tied to a bank etc. She helps us plan for our old age etc etc. ….

My lovely dad could be a crashing snob but he did us a favour when he said frequently “only peasants spend all that they earn”. He had had very little but always went without if necessary from the day he started earning to save a little. He is very comfortable in his old age and generous with his grandchildren. He’s always given them cash in hand to spend ‘on fun’ and cash in bank to save on big birthdays.

I understand your fears but as others have said, a lot of 18 year olds would be absolutely fine to manage this. I would trust my 18 year old with a large sum - sadly this is not likely to happen! I like what others have said about financial education and feel this will
give your DS a great start in life. How incredible to be able to e.g. buy a flat in London and live there rent-free or have the income from rent!

Would she allow a slight change where if she died before he was 18 you could access and spend the money on his behalf? My children inherited (less than your son will but a significant sum) and the will was written in quite a permissive way where parents could spend on behalf of the child as long as it was for their benefit. You could then potentially use money for private education As it happens we locked most of it away for when they are 18 but we have used some for school trips, musical instrument purchases. We also put some in a junior SIPP.

I too share your concern but we have been quite open with the children that their relative left them money to support them with a house deposit when they’re older. Now there is no guarantee they will spend it wisely but I see it as my job to educate them about finances. My two primary aged children have very different attitudes to money. One a saver and one a spender. The spender is already starting to learn from some of her mistakes and I believe learning to spend money is just as an important lesson as learning to save it.

You misunderstand what money "in trust" is. If it has been left to him and he is a child then it is automatically in trust, there doesn't need to be a stipulation for one in the will. The term just means "money that has been left to a child and must be kept for them until they are 18". So your son's money is in trust and the same laws apply to any money that is in trust, I e. that you have to keep the money safe for him but you are legally obliged to hand it over when he turns 18. The OP (and you ) can't decide to do anything differently just because the money is physically in your hands.

I echo comments about education, and also the reassurance that most kids are sensible.

I have some experience as such a kid .I inherited £40,000 when I was 18 from my late grandpa. This was 30 years ago. I had never had more than about £500 to my name at any one time, so it was an insane amount of money to me. Luckily my parents had taught me about financial issues, and we came to a view together about what best to do with it. We agreed that I would take out 10% for something wild and fun (in my case a trip for my then boyfriend and I to Australia) and invest the rest. That £36k grew over six years in an investment account into quite a lot more, and when I was 26 I used it to put a chunky deposit down on my first house. I was exceptionally lucky and remain grateful both for the inheritance and the advice I was given. Good luck!

As an executor ask a solicitor if you are able to make a change to the will after your mother dies. You might be able to put the money in trust until your son is 25

I'm pretty sure that wouldn't be allowed - an executors responsibility is to carry out the instructions in the will exactly, regardless of whether they agree with them or not.

This happened to our DCs. Both are in their teens. Same amount of money. They get the money at 25 (although one is disabled and the trust we set up with legal advice gives us the option to extend it to a later age). It was specifically written into the will that they get the money at 25 as 18 was just too young.

Then we invested the funds with a financial company.

We have a trust accountant. a trust lawyer and a trust financial adviser to help us with all the required reporting. We actually pay all of those fees although they can be paid for out of the trust but we prefer to not deplete the capital in any way. DS1 may never live independently so we need to consider that. Ds2 is quite savvy and when he hits 17-18 we plan to include him in our annual finance reviews with the financial adviser.

They both know they have been left money but not how much. We emphasise hard that it's not to be thrown away, that they have been very lucky and our role is to protect it for them, and their role in the fullness of time is to also protect the money and use it wisely. DS1 will need support, but I feel reasonably okay about DS2's personality being such that he is fairly sensible. [Fingers crossed!]

Your son is in a very privileged position.. I wish my children had rich relatives to leave them money. They both work on socially responsible jobs that help society but they also struggle financially.
He won't have to worry about being able to afford to go to university if that's what he wants to do, he can choose his own career without worrying about how much it costs or whether it will pay enough in the early years, he won't have to worry about being able to afford a mortgage or pay the bills
Trach him how fortunate he is, teach him to be financially responsible (but don't be so stringent that he will go crazy when he does get some money). Talk to him about how some people struggle , if you bring him up properly there is no reason why he will be irresponsible. And if he is that will be a lesson on itself.
I think you are seeing problems that may never happen.

An executor can't change a will. That isn't their role.

I think you being unreasonable to be honest. Unless he’s 16 and wreckless now which doesn’t seem to be the case. You can control the situation around this that he will get an inheritance but it is exprexted that it will be spent on x y z. Yes he could ignore you but I have a 17 year old who would absolutely listen to this. It is hard for the youngsters now and having an amount if money to get a car, learn to drive, set up a business could be the start that he needs at the time. Not sure why you’d want to deprive him of it. If it’s a case of protecting your mother’s money then that’s not your role she’s made the decision so if he chooses to piss it up A wall then so be it.

Tell her again how unwise this is. I know somebody whose parent was persuaded against this by being told the young person might meet somebody unsuitable and get married. The thought of some stranger being entitled to their fortune put them off the idea

Even if he gets the money until he is he could get married then and be in the same position so I don't see how that argument works

That's a good idea. A second cousin of mine came into over £100k on his 21st birthday. Spent it all on holidays, booze and "mates". He's now nearer 30 than 20, living at home with his parents and working part time.

I know this isn’t your question, but I would actually be quite hurt in your position. You say you are financially secure but still, no one knows what the future holds. What if you become unwell and need expensive care? What if your life remains fine but you want some luxury? Two siblings inheriting and a third sibling being told they are overlooked in favour of a grandchild seems wrong to me. Of course it’s great to help out a young person. But in my view, unless you are a multimillionaire and genuinely don’t have any need then all three siblings should inherit equally and it should be for you to decide how much or whether you share that inheritance from your mother with your son.

Fair play to your Mum for knowing what she wants to do with her money. It’s a bit dramatic to think that your son receiving this money might ‘ruin his life’. Even if he wastes it, which I imagine is highly unlikely, it would be extremely unlikely to cause him any harm.

My kids all had decent pots of money available to them at that age and all of them are hardworking and responsible with their money. We’ve always treated them as adults and as being responsible for their own decisions. We have never given them money with conditions.

I think you have 2 years to very a will. Maybe do it once she’s gone. Let him have a bit of fun money first.

I’d be worried too, but it sounds like you’ve tried to talk sense into her. Giving to him at 25 is a much better idea, keep trying to tell her this. Try and come up with anecdotes about why 18 is not the age to do this.

Start making him watch homes under the hammer now!

I received a fairly large lump sum at 19, didn’t spend a penny of it and bought a house at 22. He might be as boring as me.

I would arrange an appointment for him with a good and relatable financial advisor as soon as he receives it so he knows his options and the potential.

will she not even consider a discretionary trust? I can understand her thinking of not wanting to tie it up completely until 25. But if she did a discretionary trust, you retain control - but can pay out eg for uni fees/gap year/car from age 18. Ie anything you agree is not problematic.