Advice on kids inheritance 27 May at 11:21PM in MoneySaving Dads 8 replies 641 views

IUnknown

Hi all,
My children's mother (ex-wife) unfortunately passed away last year.  Long story short, I became administrator for the estate and as of this week the final piece, the house, was finally sold.  There was no will so all monies go to them 50/50 and with it all collected in now, they have around 60k each.  They are 14 and 16.
Currently I have created a separate savings account in my name where it is all sitting.  What is the best thing to do for them?   I'm reluctant to just put it in a savings account in their name for them to have instant access to it at 18 as I don't believe that they will be responsible enough at that age to appreciate the head start in life this will give them and scared they will waste it.  I would like to keep it safe for them and they ask for it when they need it, say for a car, deposit on a house, a holiday etc with there coming a point sometime later that they are in a position to have the lot (hopefully when getting married or buying a house with someone!).   I'm not sure where the best place for the money to sit is.  I'm aware that legally the money is there's and at 18 they can ask that I hand it all over.  I will of course try to get them to be as responsible as possible but if they insist then I will have to give it to them.
I'm going to be sitting down with them at the weekend to let them know how much they will have.  So far they don't know anything about it.  They are both very sensible kids but they don't have any real appreciation for money at the moment.
Any thoughts appreciated
thanks

Savvy_Sue

I could be wrong, but I don't think you've got any real choice but to put it into accounts in their name - you certainly shouldn't just leave it in your name. And yes, that does give them access to it at 18, so making sure you give them a sound financial education and example is probably your best protection. Not sure what age you can start the kind of ISA they'd get a bonus on if they bought a house? And have they got JISAs?

Having said that, yes £60k does give them a great head start, but it could be so much more: what I mean is, it's not the kind of amount that they'd absolutely never be able to get their hands on again, IYSWIM. 

IUnknown

Hi Savvy_Sue,  thank you for your reply.
They have JISAs yes, there is a couple of k in there. They also have around 6k of premium bonds.  I was thinking that maybe I should put it into the Premium Bonds, or at least a good chunk of it.  The one thing that scares me is them having instant access to it and I know how easy it would be for them to spend it if they don't really have an appreciation for it.  The eldest already had a little pot of savings when he turned 16 and although he's not gone mad with it, I do see it decreasing slowly as he keeps spending it on online gaming.  One day it won't be there and he'll have nothing to show for it.  
I am uncomfortable with it all being in my account though too so I feel like i'm in between a rock and a hard place.  Looks like I'll have to bite the bullet and put it somewhere that gives them full access at 18 and just hope that I've taught them well enough to be sensible with it when the time comes.

Fireflyaway

I'm sorry your kids lost their mum. The page below looks as though you can set up an account where the money can't be accessed until age 25 ( half way down page)? I see your concerns. At 18 I know I wouldn't have made sensible choices but I guess everyone is different. 
https://www.gov.uk/trusts-taxes/trusts-and-inheritance-tax

IUnknown

Thanks for the kind words and the link, I've been taking a look at it.  Not sure that I can set up a trust like that as such as there was no will.  There was a mention at the bottom of the page about the parent dying intestate (which is what this is) and the share of the estate being held in statutory trust so going to look further into what that means.   

pphillips

IUnknown said:

Thanks for the kind words and the link, I've been taking a look at it.  Not sure that I can set up a trust like that as such as there was no will.  There was a mention at the bottom of the page about the parent dying intestate (which is what this is) and the share of the estate being held in statutory trust so going to look further into what that means.   

A statutory trust is created when a child under the age of 18 inherits because they cannot legally acknowledge receipt of their inheritance. Without a discretionary will trust, the money is legally theirs when they turn 18.

Sibz

I understand your concern, and like another poster I am quite sure that I would not have made the best use of such funds at 18.
I have no idea of the legalities, or your relationship with your kids. But, I would be tempted to split each share in 2. 1 part that they could access at 18 easily should they need/really want to and another larger part placed into some saving account that gives incentive to leave it in there (but obviously still the option not to if required).

theoretica

How easy is the money your 16 year old is spending on online gaming for him to access?  It is sooo very easy for money in a current account or one with online access to find itself spent without attention.  If there are still accounts which you need to phone up, or fill in a form and wait to transfer money out then that little step really adds to the thought and realisation of whether the spending is a worthy use of the inheritance. 

When I was 18, my parents arranged for me to go and talk (without them) with a financial advisor which was useful and interesting.

Malthusian

Pointlessly bumped thread from May.