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!

@BreadInCaptivity has the right idea IMO. You need to be honest with him that he's inheriting this money and instill some guidance. If the money can be kept in your name until he is 18, then I would do this.

Im busy pulling a goldfish face at the people saying 150k "isnt that much money" its "a nice car" "its a deposit"

150k is the value of a perfectly respectable 3 bed terraced house in quite a few areas of the country - mine included!

No advice op except that I think you are being very wise to thoroughly consider the best options.

I think you should tell him that “dear departed X” has left him money which he will be able to put towards a house deposit and travel amp.theguardian.com/food/2020/aug/01/casa-do-frango-portuguese-recipes-falafel-grilled-cauliflower-piri-piri-chicken-pastel-de-nata after uni when he is older.

£150k is great to have but i can’t see how knowing he has it would at all impact his life ambition or make him spoilt?

Day to day won’t change and as a working adult, having that in savings doesn’t mean you can’t work anymore - if anything it makes you work harder/take more interesting career risks as you know you could fall back on a healthy emergency fund if needed.

I would 100000% get yourself financial advice however, because the really issue/tragedy here would be if you just put it in a bog standard savings account for him and the money 1. Didn’t grow and 2. Actually massively decreased in value due to inflation and crazy house price increases, so that by the time he can access I t it’s worth enough for a 5% deposit on a cupboard under the stairs.

Much better to get it invested into a low fee ETF for him, if you have control of the funds.

Omg that random link was by accident 😂 great recipe though!!

@Oneforthemoneytwo

My kids have each inherited this. The eldest is over 18 and he knows about it. I’ve also told him it’s only for a home or for masters / law school or similar. Whilst he has asked for a bit to buy a new MacBook I’ve simply said to him it’s not there for spending. It’s invested via our financial advisor and he won’t let him have it randomly either

The other 2 who are younger know they have some money for a house deposit but not a clue how much. Again, although they would theoretically be able to touch it at 18 in reality as it’s invested and they would need to go through our investment manager they would be hard pushed to get their hands on it easily.

Neither you nor the investment manager have the right ( or ability surely) to control his access to the money. Or, are you saying you have taken his money and invested it for yourself? This is illegal.

Unless it has been bequeathed as a trust, The money is legally his. You can't deny him access once they turn 18.

What you can do is make sure they are prepared and skilled at managing money. He doesn't need to know how much he will get, but you have many years to "indoctrinate" him into seeing this money as "his house deposit" or "university fees". He also needs to know the realities of how expensive adult life is. Don't hide bills from him.

In the meantime, make sure he has a bank account with a saving and current account element and get him used to having short term and long term aims for spending the money he has now. This will help him manage his inheritance in the future.

@jeannie46 of course I haven’t invested any for myself. It’s all invested for him and he was part of that process and yes, of course if he really wanted the money he could have it but we would heavily advise against it and point out the perils of doing so. Luckily he’s sensible and happy to be led by professionals advising him

I didn't inherit, but I was fortunate enough to have a trust fund. My parents told me about it when I was about 17, though I couldn't access it until I was 25. I am glad I couldn't as, although I was a very boringly sensible young person, I might have been tempted to spend it on silly things. As it was, I put it towards a house, which is the best investment I have ever made by several miles. My siblings did the same.

I actually think it's important that you DONT let him know / think he is set for life.

£150,000 doesn't go super far these days, or in 7 years time when he can get it. Can't even buy an average home with it outright, the average home being £275,000.

So the money is a big help but it is not him "sorted".

I'd impress upon him that he needs to work hard an exams and school and he needs to develop a career to support himself.

Not read whole thread but I inherited a considerable amount at 25 (kept in those trusts that mature and build over time). I was told as a child (9) I’d inherit but had no idea how well it would do or what was invested. Yes I went mad with some of it, but also invested some too and added it to my house deposit money when I was about 30. Upside is I have a mortgage but on track to pay it off within next 5 years.

You could suggest what he could with it. Eg he may not have a job to get a mortgage but you or someone else may be a guarantor for a mortgage. I had no idea about guarantor mortgages or my stepdad and mum would’ve done that when I was 25 as I didn’t earn enough for a mortgage and didn’t have a partner to buy with.

Be careful re financial advisors as mine told me to invest in medium risk funds and I almost lost a lot of money during Iraq war. My uncle had good advice. Don’t invest unless you know what you’re doing otherwise just save it.

@sofakingcool of course nobody will stop him but they can advise him to keep it until he needs it rather than wants it.

You will hold as his parent until he is 18 for his benefit. At 18 he is able to hold it for himself and he will need to know because then he will need to sign his own tax return. If it was not left to him in trust you cannot now decide to defer his entitlement to a later age - it is not your decision to make and the court has held previously that if there is no evidence someone will spend it very unwisely then they won't allow entitlement to be deferred. Take financial advice and look at investing it in something that is not easily accessed so he cannot just sell and buy a Ferrari - buy to let maybe that you co-purchase? Something like that

I came into money - 5 figures rather than 6 - when I was 19. I used it to get through university without worrying about money (wasn't excessive but was able to have all the experiences I wanted) and bought a house when I was 24. Not all young people are irresponsible with money and in my case keeping it from me until I was 25 would have meant I was renting for longer while house prices went up. You need to make sure you are giving him a good financial education and he'll be fine.

Oh my DB inherited more than me at the same age and sadly blew a lot of it with his then GF and wife. He managed to buy a small flat that thank god he put in mum’s name as otherwise his grasping wife would’ve got half that when they divorced.

Take legal advice, but if you can invest in something relatively safe but giving better returns (stock and shares junior ISA etc). If he keeps it 7+ years it could be much more substantial sum.

Obviously I have no idea what the conditions are with the inheritance but I would be tempted to buy a flat with it for him, let it out and save that money. When he comes of age he will then have a nest egg from the rental income plus the equity in the flat.

My DC are 5 and 7 and have just inherited around half this amount between them.

My DM also inherited and is executor of the will. It was her aunt who died. We have an extremely complicated family set up and my DM wanted to ring-fence her inheritance from her aunt to my DC too. (I have lots of step siblings, I was going through a divorce and I lost out on inheritance from my father when he died because my step mother sued me for it and won) Anyway, my DM has bought a house in trust for me and the DC to live in with her inheritance and the DC's trust fund and I pay a peppercorn rent to the trust. It was set up by a solicitor. It's a much better option financially than the money just sitting in the bank. I already tell the DC its their house but they don't quite understand. If they want to sell when it comes to it I'm not sure what will happen but I'll deal with that when the time comes.

You need to contact the solicitor and ask if the money was left to your son outright or through a trust (and I hope it was left in a trust until he reaches 25)

Given the letter so far, I presume it is outright. You will need to take legal advice about setting up a trust and investing this money for him until he is 18.

I wouldn't tell an 11 year old about it - or certainly wouldn't give many details and definitely wouldn't tell him he is set for life - he isn't with that amount of money. I would start educating about investing, security of having your own property etc.

I know not everyone goes mad with money at that age (my own 3 each got 20K from grandparents on their 18th birthdays and all 3 invested it all) but age 18-25 is an age where you may not think about the consequences and could bitterly regret spending it on stupid stuff. If a 30 year old wants to take an inheritance and go around the world/pay for all his friends or whatever - well they are making a decision they will probably be happy to live with. An 18 year old might not be doing that.

I would talk to a lawyer and financial planner about the best way to invest the money and set it up. I think you should always be straight up with your kids though so they don’t lose trust. I’d tell him that he’s been left a small amount of money by XYZ who loved him very much and wanted him to be financially secure in the future. He can’t have the money till he’s older because he needs to learn about how to make it work best. Then start drilling into him all the ways to make that happen, explain about debt and credit cards, teach him about investing and finances, teach him about how not to spend beyond your means, how inflation erodes the value of money of you just leave it in the bank. Get him to do some volunteer work with you so he starts to realise how careful you need to be. Basically treat it like he doesn’t have the money but he learns how to manage a large amount so when he does get it he knows how to use it.

Definitely get some advice-£150k is a lot of money but it needs to work to make him some money. I would have a look on money saving and find some decent interest children’s accounts. Sadly saving isn’t greatly rewarded - otherwise use the 150k to buy a house and rent it collecting the rent to pay the mortgage. At 17 your son could make the decision to sell and have his money or keep and earn some money... he will need to be aware of this and legally included at 18.

I'd tell him nothing until you know the exact details AND until whoever is in charge of this money knows your son is a minor.

Then I might tell him some of the details, but make it clear its not cash he can spend now, it has conditions on it like reaching a certain age, or to be used for a specific purpose (uni, house, etc) before he reaches whatever age it is he can have it, IF that would alter what he plans to do - say if it would change the college or university courses he might do.

Ultimately you have to do what the law says, if its to be given to him when he is 18 then thats what has to happen, but if you know that in advance you can at least model good financial habits, get him familiar with setting up savings, how investments work etc etc before it happens.

@Gonnagetgoing I’m sure your uncle meant well but that really isn’t good advice, there are lots of excellent resources out there and investing in well diversified low cost funds is more accessible to people than ever before.

Women should understand how to invest rather than be afraid of it as cash that you don’t need sitting in a savings account is losing you a lot of money over time vs the alternatives.

I would recommend the book “how to own the world” by Andrew Craig as a good start to learn more about investing.

I would get it invested for him and then cross the bridge at the right time eg when he’s thinking about buying a house, it would be a great surprise for him.

I would put off telling him until 18.

In the meantime maybe speak to a Solicitor and get some financial advice regarding investments.

This is wonderful for him with regards to being a student, buying a car and deposit for a house.

I agree with getting legal and financial advise and keeping it quiet until he is 18.

Years ago I knew someone, relative if an in-law, who inherited 10 million plus high end properties in California when we 12years old. His grandmother didn’t put it in a trust, it just went straight into his name. Due to divorce we lost touch with his DM so I have no idea how it turned out.