11 year old has inherited a lot of money

[Jessica8282]

Hi there,

I can’t quite believe the position we’re in, which I know is incredibly fortunate. I feel bad for even feeling it’s a problem.

However my son has just inherited a large sum, we won’t know exactly how much for a while, but at least £150,000, possibly much more.

Rather than this being amazing news, I’m now worrying a lot about how this will shape the person he becomes.

My background is not an overly prosperous one, in-fact I spent large parts of my 20s and 30s in considerable debt. So I’m finding it hard to process this news and the impact it will have on him.

My questions are, can I postpone telling him until he’s older than 18 (I.e 25) or do I have to tell him once he’s 18? I can’t see how having lots of money can positively impact his growth as a person.

My second question is, do I tell him soon so he has time to process it and let us instil in him what that money will go towards, i.e a house (and it not feel like a huge money splashing celebration when he’s 18). Or do we wait so that he has at least has some time in his life of having to think about how he’s going to make something of his life without having loads of money?

Also, just any general advice on how to handle this situation to ensure he still grows up to be a nice hard working person is greatly received!

I just keep thinking how being a poor student really taught me the value of money, and how he’ll miss that experience. Which is crazy, I should be over the moon for him!

My 2 nephews inherited £400k between them when 1 was 8 and the other 5. My sister got financial advice and invested the money into property on their behalf as she was trustee. She was also a bit gutted as thought her DH was going to inherit something but all left to their DC. They put back £20k each for when they were 18 which went into ISAs. It has not spoilt them. They both grew up worked hard at school, went to uni with their £20k. When eldest was 25 he wanted to buy a house. The property was sold for over £650k. Money split between both with eldest taking £250 towards house. He left some invested. His brother still has his invested. Both sensible boys always told Grandad wanted you to be able to buy a house to live in when you grow up.

You can’t withhold information regarding the funds once he is 18 and you certainly can’t withhold the funds themselves unless they’re in a trust that specifies that is what must happen.

But really there’s no need to panic. My DC have been given access to various funds at various points during their lives. They’ve know it was coming/available and so far have been perfectly sensible.

Couching it in terms of money for university/car/house is sensible although ultimately they could have a wild year and spend it all on parties.

Are there any stipulations on the inheritance? It could be invested in property for when he's older or keep some aside to fund driving lessons and a car which could help him with getting work.

I had an appointment with a Retirement/Legacy Planning Advisor that was arranged through my work this week. She said that as my own children are in their 30’s anything they would inherit would go straight to them as they are already adults but as my grandchildren are minors I can specify an age at which they inherit. Also if one of my daughters were to pre decease me and I want her percentage to be split between her children I can also specify an age that they could receive it.
Perhaps the person who has left this to your son has already done this and the solicitors letter hasn’t gone into specifics at this stage.

@Noisyprat

I would go with not telling him and investing it in his name. When he gets to 18 they will send a letter telling him about the account bla bla bla. I would intercept this letter and not give him the money until about age 25 or when you can see is sensible.

In the meantime have a quick look at some of the threads on here about out of control teens.

I know other posters will now come along and tell you that the above is illegal. It probably is and I guess there's a risk that he will not be happy however you have to weigh this up with him getting the money early and possibly blowing the lot.

Isnt that illegal?

Usually money left for children is in trust until they reach a certain age stated in the Will of the person who has left him money. I personally wouldn't tell him now and tell him when he's older. Otherwise it will be, I want this, I want that, I've got money, I want to go on holiday or that school trip etc etc. It's a great lump sum to help set him up for the future, house deposit etc. When he reaches the age specified in the Will tell him it's for a house, so he doesn't assume he can spend it all over next 5 years travelling or down the pub 🤷🏻‍♀️ that's what I would do anyways x

He is 11 I wouldn’t tell him now if you do you will spend the next 7 years in constant arguments over when he gets his money. Tell him when he is 18. Invest the money,
spilt it up ,house ,car, driving etc. I’m pretty sure you hold it on trust till he is 18. When he is 18 you have little control over what he does. I would definitely lock some away till he is 25.

I would think it breaches the fiduciary hence legal responsibilities that the trustee has, if they don't communicate when the minor turns 18 and follows their instructions if they are the sole beneficiary of the trust. Whether the OP's DC would take the OP to court but I vaguely recall there is precedent in case law.

Hi
My opinion is he’s too young to understand the value and maybe even at 18 wouldnt quite understand but if you were to invest for him at the moment and wait until hes 21 for example the money will not only have accumulated for him but it will also be spent more wisely… ie on a house or invested for his future.. I hope this helps x

Could you invest the money in a property, that will earn an income that can be reinvested into the property and when he is 18 he can choose to live in it or carry on renting it out. And just encourage him as he grows about the value of money. I would do that if that happened to us.

I inherited a similar sum in my late teens. I put it towards funding a law conversion course and invested the rest. Best decision I ever made. I qualified as a lawyer and had a very successful career and became independently wealthy because of my career choices.
If he knows about it but knows it’s to be invested / spent on education/ spent on a house then I think that is a good seed to sow

I feel sad that so many here are thinking not teaching a teen about financial decisions and how to invest/save is the only way to ensure money is not blown.

I see it the exact opposite. Even if you can get a trust established until 25, why would an adult who never had to learn about the money and how to safeguard it/make informed decisions, not blow it on a holiday?

Teach your children, show them how money grows and how to decide what's best when he can access it.

Obviously an 11 year old may not be that interested in shares and funds but over the years it will come.

DD is now 14 and will get her hands on money when she is 18 and she starts now to look into it, she learned that part of it is invested in sustainable funds and this is very interesting for her.

What’s your son like? My parents gave my sister and me money for a flat deposit in our 20s. I put it straight into one. My sister said can I use it to go travelling for a year (they refused). She’s 50 now and bloody glad she bought the small terraced house instead.

It really depends on the person and a risk you don’t want to take - I wouldn’t tell them personally.

I would tell him now. I would take him to the financial advisor and make sure he understands what investments are out there, what the benefits are of each etc. You can obvs "encourage" him towards the option you like the best.

He is young enough not to be in close reach of 18, so much more likely to make a wise choice. 7 years feels like a life time to an 11 yo, so he won't have yet feel attracted by things like the ability to pass it all up the wall or snazzy cars.

My children are about the same age as your son and have inherited money from their father - albeit in trust until 25.
They know about this but to be honest I don’t think it means that much to them. I don’t think they’ve told anyone but I’m not worried if they did.
The way the money is to be inherited will be set out in the Will so unfortunately can’t be changed.

It’s so much tougher for kids these days. I’d tell him at some point between 16 and 18, so he can start planning life. I didn’t go to university because neither I nor my parents could afford it and not getting in debt had been drummed into me from such an early age.

I’d definitely try and get it written into s trust he can’t access until he’s 25 though.

@Jessica8282

I need to speak to the solicitor, but the letter he’s had doesn’t mention a trust, or seem to acknowledge that he’s a child. I also had a letter, and it was phrased the same.

As for the comment that it’s not that much money, sure it’s not not never having to work kind of money, but it is own your own home in your 20s kind of money. Which is a very privileged place to be compared to most.

I’ll definitely be getting financial advice.

I’m interested in those opinions of telling him sooner rather than waiting until 18. My gut was that I didn’t want him to know for as long as possible, but as I’m starting to get my head around it I’m now wondering if that isn’t the best approach.

Also, I know lots of people inherit money as kids. I also know lots piss the whole lot away in early 20s and regret it later on in life. It’s a once in a life time opportunity to get set up well that I don’t want him to waste.

I am in total agreement with you. It is a lot of money and knowing it's there can shape people very much for ill.
I knew a family for many years who knew they would be very rich indeed "when grandma died" and honestly it took all the aspiration out of two generations. I think your view is very sensible: rejoice for him, talk to the solicitor and see if it can't be invested in something that doesn't mature until he is 25 (which is the age I have stipulated in my will for my children to get their hands on my loot). And don't tell him. He might dream his teenage years away

@Dontwanttolivewithmylover I’m not talking about the nature of the tenants (mine are lovely too). I’m talking about return on investment. You will know that changes in tax treatment of profit from property means the returns are diminishing. A similar if not better return can be gained from a reasonably aggressive investment approach done with good management/advice.

I inherited some money when I was 18 and knew about it when I was around 11. I didn’t know how much it would be and shortly after I was told, I more or less forgot about it until just before my 18th birthday.

When I was 18, the amount I got was, at the time, enough to buy a house with, a small house, but a house nonetheless. I was never advised as to how to invest or spend the money so I spent some on a car, had a foreign holiday and eventually put what was left down as a deposit on a house, when I was 24. By then, house prices had shot up and the house I bought cost more than 3 times the amount I’d originally inherited.

My point is that your DS will need advice, he doesn’t have to take it but he’ll need it. Property is always a good long term investment but it might not be what he wants. Over the next few years, maybe discuss these things with him and get him to think about what he thinks would be a good way to invest it. As he gets older, he may change his mind.

In the end, I don’t think having a lot of money changed me, I still got a job and worked hard because it wasn’t a life-changing sum.
I do wish I’d bought a house though.

If the money is put into trust, it’s up to the trustees when it can be accessed. The trust deed would stipulate the terms. There is nothing illegal about that. Trusts can be written with wide ranging terms that only the trustees can change, or the courts can override.

I wouldn’t tell him the amount. There are no guarantees of what the trust would be worth in 7 years, so best to say he’s been left a small sum for say a car or uni etc. teach him the value of money in the mean time. When he’s of age, have him meet a solicitor/financial adviser to discuss options.

A plan would be to allow him to have some toward life goals, and the rest for saving / a house.

It could easily buy a whole house where I live, never mind a deposit. We bought in 2020 a 3 bed terrace in a small town in the Midlands for £145k

Tell him, but present it as money for buying a house when he is an adult. It is all about how you "market" it to him.

How is investing money in property batshit. Depending on where you live, it is actually a good idea.

@Islandgirl68

How is investing money in property batshit. Depending on where you live, it is actually a good idea.

Investing isn't batshit. But investing money that isn't yours into property is. The sole person who gets to decide what happens with the funds is the son. When he's old enough. His parents can't go investing for him. That's theft.

You would have to talk to the solicitor about if there are any terms to the bequest, if it is to be put in trust or if you have control of the money until he reaches 18.
If you have control I would seriously consider investing it for him under a trust, depending on where you live you can still buy a house for £150,000, if it was let out, it would bring an income to be put aside into the trust.

@Islandgirl68 @peboh

Investing in buy to jet does not give as good a return on capital these days after recent regulatory and tax changes.

Where capital is held for a minor it will be held on trust until they are 28 or older friending on the terms under which it was bequeathed. The Trustees have a legal obligation to maximise returns. Which means property will often not be the best option. Investing is not theft Peboh it is an obligation in this context