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.

Just to say I got a (much much smaller) gift at 18 and waited and used it for a house deposit. Husband got the same amount and pissed it up against the wall. So I can understand why you don’t want him to have full control at 18.

I would ask her what she sees ds using the money for. And then ask how realistic it is that an 18 yo will use it for that.

I would suggest it's left in trust with you as guardian so you can either use it for things he needs in future eg uni fees, big school trips, first car etc, but then hold back on the rest until there comes a point where you feel he's mature enough to make good financial decisions with this money.

At the same time I'd be working really hard with ds to ground him make sure he's got a good solid work ethic, I'd have him doing volunteer work so he's clear on how others have to live and put him in touch with a financial advisor when it's coming close to the time where the money will be actively his so he can actually sit down with someone and think about how he wants to use it.

Thats not true an executor can adjust the will - make a deed of variation - or add additional recipients if all beneficiaries agree

Beneficiaries can do a deed of variation, but an executor who is not a beneficiary cannot. You can’t do a deed of variation which will detrimentally affect someone who is under 18, even if they agree.

Just don't tell him.......wait until he's of an age he will actually benefit from it. Let's face it he's not going to be mad at being handed 400k from the sky is he ? !

At an appropriate age you can tell him that this will be coming his way. And then you can discuss some of the sensible ways it might be used to improve his life in the long term (e.g. property etc.), whilst recognising that there might be shorter term things that he could also reasonably do with some of it - pay his university or college fees etc, travel while he is young and fit, invest in a business that he is interested in developing.

There is a long while to go, and plenty of time to make sure this is all part of the family discussions in your home over the years so that he understands the options.

He may go mad and buy a Ferrari - in the final analysis you will not be able to stop that - but if you have kept communications open and made sure he knows what the options are then you can hope he will make good decisions - but they need to be his good decisions.

I honestly think you need to stop telling your Mum what a bad idea it all is and thank her for giving him this opportunity when he is setting out on life.

I wish I could do similar for my GC!

I agree with this. The idea that it will ruin his life is silly.

The most likely possibilities are that (a) he will use it for a house purchase, sound business opportunity or similar, and it will hugely reduce the amount of time and effort most young people have to put into taking care of just getting by, thereby greatly enhancing his life.

Or (b) he will spunk it all on booze, drugs and holidays, in which case he'll have a few years of a damn good time and then be more or less where other young people are anyway, having to take care of life's essentials through his own effort.

Do you maybe mean not that it will ruin his life, but rather that it will be wasted and won't improve his life as much as it would if it were passed down more carefully and sensibly?

In which case, at the end of the day it's your mum's money and you can't do anything about what she chooses to do with it.

if you can’t get her to put in a trust I would educate like others have said and show the power of compound interest and investment. If he gets a job and career and invests it be a millionaire age 35. Hopefully then he could use some of it as a property and keep the rest for back up savings that will only grow. He could the. enjoy his income, instead of having to save big chunks of it or pay a mortgage.

There are no guarantees in this life. Your mother is in her 80s. She might be one of the lucky ones, she might not. Live in carers and care homes (decent ones) are not cheap. Look at how much they cost per week. Money soon disappears.

This is what we did:
It's school that will ruin him and peer orientation unfortunately. You need to teach him the value of keeping it in the family such as looking at someone showing off a sports car and saying something like "that's not how we do it in our family", letting him see that people who throw it away are dysregulated, getting him to understand how to use his money to create money. And controversially, spending time with people who also have money and therefore don't need to show off etc.

I mean, he might well be annoyed that his patents broke the law.

How can someone ruin their life with 300k? You seem to have decided your preschool child will be a feckless 18 year old undeserving of the money. This would have been very positively life changing for me as an actual adult at 18. You’ve plenty of years to work on educating him to use money the way you think he should. No need to waste wonderful teenage years worrying about it. TBH I think it’s not really your business what DM does with her money

I don't think you can do much because he's an adult then, other than tell him at 18 and encourage him to spend wisely. I wouldn't tell him before that though because he may just not try so hard at school/college. Uni flatmate was in a similar position from grandparents inheritance and he fritted it away, forever buying stuff.

Bottom line is though if they spend it unwisely, nothing you can do. They have to work harder when they finally want to buy etc. Just make sure you don't sub!

I would share your worries. I don't believe in young people having a lot of money. I think it does them good to struggle a bit and learn the value of work and money.
However, it is what it is. Let's be positive.
Let's assume that he is a sensible lad. This can be a great educational opportunity. If he hasn't got a junior isa get granny to contribute to one and tie up some money there.
Once he is 18, get him to open a LISA and contribute as much as possible. Every year. This will build towards a house deposit and can't be touched otherwise.
Try to encourage him to buy a decent second hand car. Explain the insurance costs of a high powered vehicle. Plus depreciation of new cars.
I would encourage him to pay uni fees if that is his chosen career choice. That will be the millstone of student loans removed from around his neck.
Also look at premium bonds and other tax free savings.
Make an appointment with financial advisor.
My next worry would be gold digger girlfriends. But that's a whole new thread

At 18 he can open a LISA, perhaps you basically coach him when the time is right and say look, you're getting an inheritance from your grandma and its stipulated that x amount is for a LISA, x amount for education, x amount for travel etc. It's a bit of a fib but stops it being wasted. He won't know any difference?

Depending on her age and health, your DM could live 15 years plus. Care at home can be over £30 ph and care homes over 5K pm and your LA will expect you to sell her home to pay for care. Then by the time you have sold the house and settled the estate, the expected inheritance could have dissipated somewhat. If all those that inherit agree, there could be a deed of variation. I have heard that those under 25 challenging trusts are being increasingly successful if they are considered to have sound understanding. If the money is his, you should tell him so he does not commit fraud by claiming means tested benefits inadvertently.

I totally get your concerns. However, your could have the same concerns if he was 25 or more. I had these concerns in a simimar position but legally the money was mine so I could see how he behaved when I gave him x, before I signed over a larger sum.
Just work on teaching him about money, being careful and investments as he grows up.

You could redirect it to me if you’ve genuinely wished there was no money I can help you with that 🙄
I’ll suggest you just don’t tell him until you think he’s responsible enough
She will be dead, so she’ll have no control over it

I wouldn’t anticipate a family that can pass on £300,000 without batting an eyelid to be claiming benefits in the future if they even exist by that point
But more to the point if he advertently commit fraud, it would be fairly easily explained away and immediately repaid.

I’ve known people who actually did knowingly commit fraud and they just explained it and repaid it over 20 years without consequence

Deed of variation

I don't think your DS will necessarily ruin his life with an inheritance at 18. However it is up to you to financially educate him. I wouldn't tell him about the money until he's secondary school age. Then he will be old enough to understand what this money could mean for him. For example, if he wants to go to uni this can cost tens of thousands of pounds per year so having this money will mean he can leave uni debt free. Or buying a car and driving lessons. Deposit for a house or even buying a property outright as it's so hard nowadays for young people to get on the housing ladder.

If she dies before he is 18yo you would be trustee until he is 18yo. At that point I’d get legal advice.

I have a friend whose child received a very large compensation claim, which was held in trust until 18yo. She managed to arrange the purchase of a property in his name but in trust. She had to apply to someone to do this, had to be approved, had external oversight that had to be paid for and legal involvement that had to be paid for. I don’t know the finer details but that it was rented out and the rent went towards maintenance, council rates etc, and the remainder went into the trust account.

At 18yo the child was free to take the money in the trust account and do whatever they wanted with the house. At 18yo they took a gap year travelling overseas with the money, then moved out of home into the property after finishing uni, and then after several years, sold it and purchased another property in an area more to their taste, job location etc. Maybe get legal advice to see if something like this is possible?

My oldest is one of the first dc to get a child trust fund from the government. We didn’t add to it so she just got a modest amount. Every single one of the eighteen year olds I know, either friends of dd or dc of my friends went wild with it at eighteen. None of them kept it to put it towards a house or anything like that because they were 18. Ibiza featured strongly.

But that would have to come from the OP’s son. If he’s so feckless at 18 that he cannot be trusted with the money, it seems unlikely that he would ask for or agree to such a deed of variance.

My son inherited much less at 18 (around £16k) and I don’t really know how much is left of it! 🤣I’ve tried to advise him carefully but there isn’t anything I can do due to the specifications of the will.