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.

Mum wants jointly owned assets. Hence my comment.

Interested in how it reduces inheritance tax. Are you able to explain further?

Ah so it was to OP, not me. Your quoting me confused me!

If she won't listen to changing it to him being 25, can she put some kid of clause in that he has to buy property with it?? If he's given that amount of money he should definitely be spending it on a house, but at 18 you're not wrong to be concerned that he might be daft with it!

Or can you as his mum, talk to him about it in the run up to him turning 18 and explain the importance of spending it wisely?

Also has she thought about other potential children? Has she left it to 'your children' or to him specifically?

Imagine if he gets married and divorced young. Kiss goodbye to the money honey.

Sorry for confusing !

You are right to be cautious- a school friend of mine got a similar amount at that age, partied all through uni (paying for everyone else to party with him and living in a huge apartment in the fanciest street of an expensive city), failed the course and had nothing left by the time he was 20

You can't put it in trust when he's 18 so ignore those suggestions.

You could try to revisit the trust with her - ask her to set up a discretionary trust until he's 25 where he can ask the trustees for money for particular purchases e.g. education/car etc from age 18, then he gets the full balance at 25. The solicitor should know how to set that up so that he can't just demand the full amount at 25, possibly there could be a discretion for you to also ask for funds until he reaches that age or similar.

Because it’s only being passed down once instead of twice so only one lot of tax instead of 2. Quite a popular choice these days for larger estates as we’re all living longer and people don’t really need to be inheriting large sums in their 60s or even older.

Thanks that makes sense.

It wouldn’t usually be your problem really - it would be worded in the will it’s set up as a trust there as your mum wishes. Depends what she’s agreed in the will though. Perhaps suggest to her she does this to avoid an issue as it’s really between her and your son. I agree what others have said - the wording needs to be it’s for any of your children just in case you have more kids down the line. It’s not rare the money stays in trust and payouts made as and when required with trustees agreeing. Trustees would be you, a solicitor and your son as you can add future kids down the line. That way people always have to agree it’s ok. Its often done because it’s then not technically counted as his by taxman, benefits, inheritance tax etc. all this likely ongoing costs though so you might just want to get your mum to write it’s his at a suitable age - perhaps 25 or 30 as 18 quite young nowadays.

Yes - as you and @LydiaFunnyGums say, the whole lot may go in care fees, be that at home hourly, live in carer, nursing home
or Care home.

teach him to be money savvy for the sake
of being money savvy, not to manage a gigantic inheritance that may not manifest.

You absolutely need to get her to change her plans! My son was 18 when he inherited a few thousand, it was literally gone within weeks, buying drinks for people in the pub and lord knows what else! It was a learning experience for him for sure and he’s now in his 20’s and very different. But it’s something you can’t go back on once it’s gone it’s gone!

Strange on 2 accounts, firstly that she sees fit to exclude you from her will and not to trust you to make decisions for your own child, secondly, that you do not trust yourself to be able to guide your son in the future or trust your son to make wise decisions.

I find it very strange that parents choose not to share their wealth with their children (expecting them to stand on their own two feet / expecting them to be grateful for their own wealth and not to benefit from inheritance) while leaving vast sums to the subsequent generation as some sort of grand gesture.

(Mine are a bit similar... wanting to leave money to their grandchildren in full knowledge that my sibling and I are sacrificing a comfortable retirement to support our children through university while we were expected to stand on our own two feet... so our kids win twice.. from us and from our parents and we feel overlooked by our parents and taken for granted by our kids - not true... our kids are very grateful but slightly true.. as they have always expected this to be the case.. not the GParents inheritance, but our financial support..)

I know a family where the son came into £50,000 when he was 18. He squandered the lot as a student on drink and drugs. He’s never had a proper job. Now his parents have arranged for the rest of the money he will inherit to be put into a trust with trustees who have to approve all expenditure.

One issue is when someone has said 18 is quite young these days.
It is the same age as it always was. Exactly the same age !
The suggestion being that people aged 18 have become less mature over the decades. Remain children longer.
If that is true I would suggest it needs to change. Lest we end up with 18 year olds more like 12 year olds.
And people need ensure their 18 year olds are a bit more grown up.

How do people get away with controlling the money of adults with capacity like this?

I think you will be having to educate your DS about the value of money from a reasonably young age, and certainly if your DM does not live until he is 18. If your DM cannot be persuaded then I cannot see there is much else you can do, as from what you describe there is no question of coercion or being of unsound mind.

I agree with her decision as to who to leave the money to, just not at aged 18.

Friends son inherited a figure like this at 18. Bought a house, couldn't afford to run it so sold and blew the money. He's 40 now and could kick himself. 18 is too young

I expect changed wills from those who will make bequests.

No that’s not what I meant. I meant how can it be legal to leave someone money when they are an adult with capacity yet stipulate it goes into a trust where trustees have to approve any spending.

Am afraid the bottom line is that at some point the young adult has the money.
And others cannot manage what happens to it. They might be able to influence.

Some young adults will be competent and indeed capable of managing money. Some will start their own businesses and become very able at accumulating it.
And do it better than their parents.
Some won’t. Some will take risks, lose money, have businesses that fail. Have houses in negative equity, lose on the stock market.

There is only so much control you can or should exercise.

Could you convince her to do half and half for 18 and 25?
frame it as making sure gets a pretty decent amount straight away but the other half is still working for him and available once he’s ready to buy a house.

hopefully he’ll be sensible with the 18 release and could obviously buy a house but just in case there is back up at 25

My friend was skipped in her inheritance and it went directly to her kids. She divorced and is herself utterly broke and renting. Both kids appeared to have spent the money on nothing within two years. Nothing to show for it. It's a shame that x proportion can't be set aside for property. I'd not even leave my own kids my inheritance at 18. If I die before they turn 25 it would go into trust to be managed

Definitely would be better if she'd agree for it to be put in a trust, but if she won't then all you can do is try your best to educate your son about good financial sense. I'm trying with my DD, who inherited 50k when she was 7 and will get access to it in a few years. I doubt she would squander it on drink and holidays but I can imagine it just getting used up during university years so I've been talking to her about compound interest, and how if she invests that money once she's 18 (I'm going to try and find out if its possible to invest before then, we're not in the UK so I'm not sure what the rules are exactly) she can have so much more money in the future that she could use for a house deposit.

Presumably because it’s not his money yet. If he earns his own money no one would be controlling it.