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!

Tell him a year before he turns 18
That gives him a year to think about what he wants to do with the money

I would discuss it with my 12 year old. However I would be pushing her towards buying a flat in trust for her until she reaches 18, letting it and investing the income for her in long term medium risk investments.

I would suggest keeping £10k for fun stuff like school trips, car , driving lessons and invest the rest.

I wouldn't tell him now- not that I'd deliberately hide it either. It's just that at 11, there is no way he is mature enough for this level of significant information and you've no idea what he'll do with it (the knowledge). It is a life changing amount of money even if there are people who don't think it's a lot.

There's lots of time to teach him about money management before it's his. Hopefully he won't, but if he does piss it all away as an adult- well, that's his choice to make and not yours.

‘ The money will likely be put in a trust fund. My friend inherited A LOT of money, he wasn't told about it until he was 18. The money was in trust until he was 25 but he could ask the trustees to take some out before then.’

This sounds very sensible & eminently workable.
No-one else can have use of the money & he has access to it from age of 18 through request to the Trustees.

This allows for a managed investment plan for growth & a different liquidity once he reaches 18yo.

I also think it's unfair to expect an 11yr old to handle the responsibility of keeping it a secret, too.

It's a lot of money but easily spent. Could you encourage him to invest a large chunk of it it in his first flat when he leaves home?

Understand why you're nervous.

I inherited some money when I was 18 and was told it was 'enough to buy a house' and then I was left to my own devices. Because nobody told me how to buy a house, or why that would be good, I didn't and rather held onto it with the idea that I could maybe buy a house in the future. Well, it was quickly only worth enough for half a house, then a tenth, and then...you can guess the rest. I now have a comparatively tiny amount in savings and no house. Make sure you really educate him on how and when to do it.

I would buy a flat and rent it. The money from rent I would spend on the child's education or saved for future University fees. Once he/she is out of University, I would give the keys to flat.

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.

I knew from when I was about 10 or 12 that I would inherit a trust fund. I also knew that it was in trust till I was 25 (in case of a predatory marriage mainly). But then my family is one where trust funds are normal for several generations. We were used to thinking about capital, and weren’t scared of it. Weren’t scared of debt, either which is another privilege of affluence ….

So I’d say it’s about how you frame it to your son, and having a grip on your own attitudes to the capital amount. Get some good financial advice, and be quite matter of fact about it.

I think what helped us was that when I was growing up, we were always capital rich but cash poor. I never had money for lunches or sweets or cash pocket money. I had access to money, but was trained by family ethos to be sensible (my father’s family famously stingy over small things - it’s how you stay rich for several hundred years). Money was something that worked for you and could do good things (horses, a boat) not to be frittered away. We were not greatly into consumption and “designer” labels, flashy cars and large television sets were regarded as naff and unnecessary.

So when we came into our trusts, we all used them to buy houses basically or in other fairly sensible and useful ways to maintain our standards of living. I think that was because in spite of being seen as wealthy we did not live an obviously wealthy life style. Quite the reverse really - I didn’t have a lot of the consumer stuff that those around me had when I was your son’s age. This was the 60s and 70s though. I think it’s harder to do that now (and I come from relatively “old” money, so it wasn’t a novelty).

But if you could introduce the topic in quite a matter of fact way, with no sense of a “get rich quick” and a sense of prudence and care for his capital, so he can do something meaningful with it, then he (and you) should be OK.

No way would I be telling him. Not at 11.

I would take paid for, independent financial advice on how to best invest it.

I'd give him some of the interest each birthday/Christmas from the person and I'd consider using any interest to fund opportunities he'd otherwise have to miss out on.

I'd tie it up any legal way possible, until he's as old as you can.

@moreismoreandmore

I would buy a flat and rent it. The money from rent I would spend on the child's education or saved for future University fees. Once he/she is out of University, I would give the keys to flat.

It doesn’t work that way. He will be liable for tax in rental income and all expenses as soon as he is 18.

I am astonished dhow many people think it is right to keep this secret from their child. If the money is theirs outright you defraud them. All bank won’t talk to you about any accounts, only your son. Any solicitor worth his profession wouldn’t transfer funds to an account on your name anyway.

How about actually buying a small house or flat with it (depending on prices where you live) - can you put a property in a minor's name?
You could let it out and invest the income so he'd have a cash windfall as well as a property.

It would be a better investment than putting in a savings account - and then there's no argument about pissing it all away when he's 18.

Keep it quiet till he is 18. I inherited money and my mum told me in high school. When I knew the money was there I used to badger my mum to use it to buy me stuff I wouldn’t normally get. Rather then saving it for something I spent it. Wait till he’s 18 and ask. I’d be hoping he save it for uni and then a property .

Definitely get some financial advice about what to do with it so that it doesn't lose value. But I'm thinking differently to most -

I am very much for telling him now, and telling him how much it is. The value will probably mean nothing to an 11 yr old so put it in context for him "e.g. this is how much your uncle earned over 5 years".
Bring him up with a really good financial education so that he can understand, appreciate and manage money without thinking it flashy or exciting. And I would also continue to remind him of what he has, show him annual statements, so that it's not a big surprise again when he receives it.

I commented on a very similar thread last year, to explain a benefit of knowing the value earlier rather than later. I had a particular career dream, something I loved the idea of from a fairly young age. When I got to mid-teens I steered myself away from the dream because it seemed I wouldn't earn a high salary, instead studying other subjects and pursuing a career I've never enjoyed but pays decently. If I had known I had that amount waiting for me as an adult I would have studied the relevant school subjects, pursued the dream job and used the money as an annual salary top-up. Knowledge and appreciation gives choices.

@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 think telling the child he will have money is important, at this stage the amount won't be important.

I would also explain that money is bet discussed and it will enough for a good start in life. I would be thinking of a few "pots"

Car
University
House

And get advice on those timelines

If you can access it sooner, buy an investment property now as an investment - you can make some money on the rental income as well so it’ll be a bigger amount when you do want him to have it

Cal always sell the house and buy what he wants

It doesn’t work that way. He will be liable for tax in rental income and all expenses as soon as he is 18.

Is the a tax break on being under 18 then?

Surely you get your tax allowence of 12500 like everyone else?

And buying a property for £150k the yearly rents not likely to be much different from £12.5k

@D0lphine

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.

I agree and this is what DH and I did.

It is a lot of money, but not enough to slam the door on having ambition and a good work ethic.

This amount of money can change your life wrt to getting on the property ladder sooner but that also has to be backed up by being able to pay a mortgage and having an income to fund living costs.

As such it's a waste to blow the opportunity in both directions - by spending the money on rubbish or squandering the opportunity of good career.

We always felt the sum involved worked in our favour in that regard insofar it was a good middle ground. Too much to fritter but not enough to be set for life.

OP you know your own child's temperament, but I agree with posters saying it's wrong to hide this money from him. It's his money after all....

Also a op made an excellent point that at a young age DS was willing to engage/trust/listen to us about it and not assume he knew better.

That meant he had years and years of of being guided into good decisions that set a pattern for when he was 18.

If you "surprise" him when's he's older the assumption that he'll be mature enough to listen to you may well be untrue - he's perhaps less likely to take advice at that age.

I personally think the key is to tell them at a young age BUT only on the basis you are prepared to put the legwork in re: explaining the value of money, how it's being invested, that it's only life changing if spent well and in conjunction with a good career and generally fostering the principle of prudent financial and life responsibility.

I don't see any reason to tell an 11 yr old. It can't do him any good to boast to jealous friends, demand to buy every new game, etc.

By the time he's approaching 18 he'll perhaps be thinking of going to university, getting a flat or a car, and have more clue about what to use it for. Plenty of time to tell him then.

let him get into the habit of saving, learning and understanding money, and educate him on the importance of pensions/mortgages/obtaining and appropriate use of credit (which is important in terms of getting a mortgage etc) and how much a house/education costs post-18....... I think you have to let it unfold naturally in a way. A time will come when it feels 'right' to say it. But don't do it now. To an 11-year old £150k sounds like a golden ticket, even to the most sensible of children

I mostly agree with this about raising a child who is aware of and sensible about money. At his age, I knew I would inherit something, but as I’m also one of several siblings (larger than average family) I knew it wasn’t a “never have to work” amount, such as my father had. We didn’t know the amount as it was mostly shares … but it was a matter of fact given in our lives.

I think the main thing is about your attitude to money and what it does, or what you do with it, as a parent. He’ll see that, and absorb it.

There's no way I'd tell an 11 year old they inherited such a vast amount. They are nit emotionally mature enough to understand it's implications. I would however, motivate them to continue to study hard and achieve as much as they can academically. Then after they have finished their education (without the possible distraction of being financially secure), I would break it to them then. This has the potential to backfire in a very unpleasant way and become the dominant factor in his life. Let him have a normal life until he's at least 16.

You can make his decisions for him, in his best interests until he's an adult.

Money, and the control of that money, doesn't want to be the cause of arguments.

@CharlotteRose90

Keep it quiet till he is 18. I inherited money and my mum told me in high school. When I knew the money was there I used to badger my mum to use it to buy me stuff I wouldn’t normally get. Rather then saving it for something I spent it. Wait till he’s 18 and ask. I’d be hoping he save it for uni and then a property .

Respectfully though isn't that more a reflection of your mothers approach to this issue rather than your own?

The fact she gave in to your badgering rather than explaining the benefits of saving it for something meaningful isn't your fault, nor perhaps that you might have made different decisions had she done so.

Or perhaps I'm being unfair and she did and then you have to live with the consequences of your choices.

Do not listen to anyone telling you to buy a property with the money. Stupid advice. It’s not your money to spend. Get proper advice and keep all paperwork safely so your DS has access to it all when the time is right.

@Jessica8282 Actually, it might not be up to you to do anything, in which case you're thankfully free of the responsibility of doing much about it. With that amount of money going to a minor, it's highly likely that the testator/testatrix has left the funds in trust with named executors/trustees who'll administer the fund until your DC comes of age and can access the capital. As PP has said that might be 18, but it might well be older and/or come with restrictions on spending (eg. yes to house deposit/education but no to speedboat/cocklodger, etc). In the meantime, your DC can access the income or allow it to be reinvested as part of the overall fund. You need to see the will and contact the executors. Your DC doesn't need to know. I'd keep it from them (or at least the amount) until they're approaching the 'big' birthday when they can access the capital.It gives you plenty of time to get them clued up on the value of money generally, and investments.

@AgathaMystery

Because most people don't seem to know or understand investing!
It's utterly bonkers.
Op you could start to learn about investing and drip feed it into a junior isa for him, stocks and shares!
Thing's really snowball when you hit 100 grand.

I would do what I did with my dc who had far far smaller inheritance.
. Put some into a cash isa.. Where it does nt grow much but that's for a car, lessons... Uni buffer costs etc... Fun... Holidays.

Their second amount is double and is in stock and shares isa.. This will be presented as towards a house deposit.

They also have a few hundred in bank account for everyday/weekends etc.

Ie "hurdles" to learn money to hopefully teach them to protect their nest egg. But one dc is great with £ and one isn't.

I would also open a sipp for him op. Self invested personal pension.
He won't be able to access it until he is in 50/69s...but imagine how ten grand would grow.
. I wouldn't keep it soley in a lump sum

Definitely don't leave it uninvested.

Put some into junior isa.

Sipp.