A young man in possession of a good fortune

FinanciallyPerplexed

Trust me - the financial position is as stated in the OP. Plus as stated, under Scots law he can access the money in four months time, not a couple of years.

My wife and I were estranged (still married, with no separation agreement in place) and my children are the beneficiaries of the will, inc. lump sum paid out to my wife on retirement with cancer, and nominees for the remainder of her pension. (I get a small spousal pension). On the house - when my wife was diagnosed I signed a disposition to evacuate the special destination of the title so that the children would retain half.

What I'm after is concrete suggestions as to how my son should best manage his money.

He is an extremely mature and intelligent fifteen year old (his mother's genes!) and is already, unprompted, talking about cash ISAs and putting himself through university. (Cambridge - so dearer than local institutions). I'm just being the cautious father, after any further advice that anyone can think of.

Look - worst case scenario. Grieving for his Mum and blows it all on substances. It could happen.

How do we hedge against that? And how do we make his money work for him?

zcrat41

I’d put it in a trust to only be accessed age 25+.

However responsible he is at 15 that might not be the case at Uni.

JayJay100

You're right; it could happen, and it's best to be sensible. I would suggest taking him to talk to a decent financial advisor, and talk about long range plans; sometimes hearing things from a third party has more impact. There could be ideas there that you haven't even thought of. When I took my stepson to one, the advice was to invest in property, which he did. The beauty of that is that it's difficult to make snap decisions or impulse buys. We did have one iffy moment where he desperately wanted to buy a brand new car, and he worked out that he could get a loan, secured against the property. We talked a lot about the small print, and that he could lose the lot, if he missed a few payments. He did the usual 'I won't miss any payments', but we were lucky, and he decided against the car.

DigForVictory

Definitely find him a financial adviser, or failing that, the daughter of one, who has heard the horror stories.

Months? Bet him he can't read selected threads on this site in under 24 hours? (Then choose them carefully - like not lending to family, not buying a property & renting it to family, & a few "just say no" or scrambling out of drink drugs & gaming hell threads?) He just may not be aware of the downside of hefty wad, yet.

Does he drink, smoke, get a taxi when the bus is late currently? (And/or do his friends?) Have you suggested a policy of Keeping the Trap Shut about money to family friends etc as frankly he has more useful things to learn at 16 than learn to fend off parasites?

Finally (loving mother here) have you considered making a bet with him, ensuring you win & hold the money for a bit longer. and spend your own on a life insurance policy to ensure it doesn't kick the stuffing out of your estate should the unexpected befall?

It's blinking tricky. Wishing you & the in-many-sorts-of-ways poor lamb well.

SunnyCyprus

I would start very simply, by asking him to write a ‘wishlist’ if anything and everything he’d like to do with this money..
pay to go through a top Uni, driving lessons, deposit on house, couple of lads holidays, fancy clothes etc...
anything that comes to his mind, big or little. Short or long term.

Then work together to cost each thing, one by one.
Uni £9k fees plus living
Driving lessons poss £500
Holiday £1000

Etc etc. Come back to the list after some thinking time, prioritise what’s on there, then speak to a couple of financial advisors.

Give him the chance to see that any amount under £100k is actually very little in this day and age, and then he can make informed decisions. Reevaluate the wish list, cross some things off, edit and change things. Meanwhile hold the money in a trust fund until he’s ready to make his first spend/investment.

I’m a very straight forward person who likes to plan ahead and I love a ‘list’! So this might not work for him, but I know for me to spend it in my imagination first would definitely help!

Kim_13

FinanciallyPerplexed wrote: »

I understand my son is set to inherit when he reaches 16 (in June). Is this a difference in Scots law?

I inherited at 16 (not Scotland though,) as this was the age specified in the will.

Scotland do consider a person to be an adult at 16 though, rather than the usual 18, so it would be logical if this were the case.

This article may help your son see where he can best deposit the money: https://www.moneysavingexpert.com/savings/which-saving-account. Some accounts won't be open to him until he is 18, but he could earmark them to open later if they are still available then. As he will have inherited a share of a house, he won't be able to open a Help to Buy ISA and would only be able to open a Lifetime ISA in the future to save for retirement.

Premium Bonds aren't usually the best place to save money but they are open to 16 year olds in their own right and with a larger sum he would be much more likely to get a return that matches or beats the 1.4% prize rate.

The Financial Services Compensation Scheme only protects £85,000 per institution, so he may well need to keep money with several different banking groups in the future.

As student loans are only repaid for a limited time and when earning above the threshold, paying fees/expenses upfront may not be the best option, so do take time to consider both options if he chooses to go to university.

JayJay100

SunnyCyprus wrote: »

I would start very simply, by asking him to write a ‘wishlist’ if anything and everything he’d like to do with this money..
pay to go through a top Uni, driving lessons, deposit on house, couple of lads holidays, fancy clothes etc...
anything that comes to his mind, big or little. Short or long term.

Then work together to cost each thing, one by one.
Uni £9k fees plus living
Driving lessons poss £500
Holiday £1000

Etc etc. Come back to the list after some thinking time, prioritise what’s on there, then speak to a couple of financial advisors.

Give him the chance to see that any amount under £100k is actually very little in this day and age, and then he can make informed decisions. Reevaluate the wish list, cross some things off, edit and change things. Meanwhile hold the money in a trust fund until he’s ready to make his first spend/investment.

I’m a very straight forward person who likes to plan ahead and I love a ‘list’! So this might not work for him, but I know for me to spend it in my imagination first would definitely help!

This! Definitely this! I'd forgotten, but we did sit down, do a wish list and calculate what each item would cost, when my stepson was looking at career options. At the time, we were trying to convince him to revise for his exams, but he did refer to it, when he inherited the money.

LilElvis

You would be best consulting specialist wealth management IFAs. Our daughter has a couple of trusts set up by her grandparents - my parents set one up through their specialist advisors of a similar value to your son's inheritance and the growth per year has been extremely good (the investment vehicle is actually administered by Old Mutual and is spread between a variety of funds which are actively managed to maximise growth). The trust set up by my MIL via her IFA has hardly increased at all as it simply been placed in "high street" accounts and bonds - annual increase in value is in low single digits as opposed to the double digit growth of my parents Trust.

Keep_pedalling

zcrat41 wrote: »

I’d put it in a trust to only be accessed age 25+.

However responsible he is at 15 that might not be the case at Uni.

It’s not the OPs money he cannot do that.

Keep_pedalling

This is not really the right forum for this sort of question ask over at the savings and investments forum.