Inheritance for my Children

Eco_Miser

Invest987 said:

Once again thank you, all advice gratefully received. I guess I am passionate about them making thier own way in life before relying on this inheritance. Both of them respect money already so it should not be a problem. Super advice and lots to clarify 👍

In my opinion, a great way to generate resentment is to let them struggle through life for seven years, then say, "Oh by the way, here's £200k your great uncle left you eight years ago".

mark55man

good luck and you seem to be doing things for the right reasons.

I would agree with eco-miser that it is a really hard time for young adults at the moment ( I have 4) and I think they should know about it at least - even if they agree with you to maybe delay gratification


For example - if they were at Uni and had to struggle by possibly even working to get some extra cash then I would expect them to be a tad miffed to find out afterwards.  In those Uni years and early 20s - having a but more disposable can really allow opportunities to be taken that won;t come round again.

I think you have to trust your parenting here, in terms of releasing the cash to them.  In terms of the investment, there are plenty of way to be cautious with the investment yet provide opportunity for growth - there are many capital preservation funds (often investment trusts).   you should profile the money so some might be available in 5 years (low risk, premium bonds, ....) and others in the 5-10 where it is sensible to have more varied assets

theoretica

I agree that there are some life choices that might be made differently if they know about the money - funding higher degrees without worrying about debt, for instance. 

It will of course be pretty near impossible for the two of them to learn about the money at the same age - if the older knows the younger will presumably too.

sweetsand

Good and informative thread.

Don't forget that if rented out, there may be CGT. Location is the key and if it is a good one then keep it. Selling and investing, look what Covid did to the stock market.
Rental routes via good letting agent is worth the cost and take out rental income insurance but more importantly legal insurance just in case you meet morons who don't pay any rent, sublet then trash your property and by the time you get them out they have easily cost you 20k - but go via the route I said and in even a worse case scenario you will be protected to a larger extent but as anything there is a risk - property vet the renters, have no no pets, no smokers, no one on benefits or even self employed people - just decent hard working people with a good track record of savings and honest work.

ATB

Invest987

Eco_Miser said:

Invest987 said:

Once again thank you, all advice gratefully received. I guess I am passionate about them making thier own way in life before relying on this inheritance. Both of them respect money already so it should not be a problem. Super advice and lots to clarify 👍

In my opinion, a great way to generate resentment is to let them struggle through life for seven years, then say, "Oh by the way, here's £200k your great uncle left you eight years ago".

Yes I can see that. I would hope that our communication already enstils in them that if they come to me with a plan we will always try and find a way to make it happen regardless of this inheritance. But for example my Uncle travelled the world and always told me it set him up as a man going forward with other dreams. I can at descreation make things like that happen without them knowing what else  is to come. The money is for "growth" be it personal development or actual financial growth. I love all input. I am listening and its helping me think outside the box. Thank you. 

Invest987

sweetsand said:

Good and informative thread.

Don't forget that if rented out, there may be CGT. Location is the key and if it is a good one then keep it. Selling and investing, look what Covid did to the stock market.
Rental routes via good letting agent is worth the cost and take out rental income insurance but more importantly legal insurance just in case you meet morons who don't pay any rent, sublet then trash your property and by the time you get them out they have easily cost you 20k - but go via the route I said and in even a worse case scenario you will be protected to a larger extent but as anything there is a risk - property vet the renters, have no no pets, no smokers, no one on benefits or even self employed people - just decent hard working people with a good track record of savings and honest work.

ATB

Great thank you. I have asked two estate agent rental departments to get back to me for advice like this and neither of them called back 🤷‍♀️. So thank you. 

Invest987

sweetsand said:

Good and informative thread.

Don't forget that if rented out, there may be CGT. Location is the key and if it is a good one then keep it. Selling and investing, look what Covid did to the stock market.
Rental routes via good letting agent is worth the cost and take out rental income insurance but more importantly legal insurance just in case you meet morons who don't pay any rent, sublet then trash your property and by the time you get them out they have easily cost you 20k - but go via the route I said and in even a worse case scenario you will be protected to a larger extent but as anything there is a risk - property vet the renters, have no no pets, no smokers, no one on benefits or even self employed people - just decent hard working people with a good track record of savings and honest work.

ATB

Yes tax implications was part of some initial good advice. It is a bungalow in a good area. I would be mindful of exsisting neighbours who looked out for him so yes I do not want to encourage any problem. Thanks a lot. All good advice. 

Invest987

theoretica said:

I agree that there are some life choices that might be made differently if they know about the money - funding higher degrees without worrying about debt, for instance. 

It will of course be pretty near impossible for the two of them to learn about the money at the same age - if the older knows the younger will presumably too.

I think my strict initial views will relax once they hit thier 20's. I will always be minful to capture and dreams outside of my help that my uncle would be proud to encourage and contribute. Absolute loving the different angles and views. All important and gratefully received. Thank you. 

Invest987

xylophone said:

They will not recieve or even know about it until they are 25. One is 17 and one is 15.

If the bequest has "indefeasibly vested" in your children (has it?) then it will need to be held in bare trust for them - the beneficiaries of a bare trust have the right to access and control at the age of 18.

https://www.gov.uk/hmrc-internal-manuals/trusts-settlements-and-estates-manual/tsem1563

If it is a bare trust, then income belongs to the children and is taxable as theirs - each of them has his own Personal Allowance/savings allowance/dividend allowance/CGT allowance.

At 18, if this is a bare trust, they must be advised of the existence of the bequest because at that age they become responsible for their own tax affairs.

If this is a Discretionary Trust, you will need to register it with HMRC - see below re taxation.

https://www.gov.uk/trusts-taxes/trusts-and-income-tax#:~:text=Trustees%20are%20responsible%20for%20paying,number%20of%20trusts%20they%20have.

You would be well advised to take the advice of a STEP solicitor concerning the nature of the Trust and from an IFA with expertise in trusts to be sure that you are handling matters correctly.

https://adviserbook.co.uk

I have taken note of everything and will let you know how I get on. Much appreciated. Thank You.

Invest987

MalMonroe said:

If the inheritance is in your children's names I assume you, as their parent/guardian are nominated trustee? Will you be allowed to take some of the money to do up the house? If not it may not survive for another 8-10 years if it's left. That does seem the wisest option, do it up and let it out. Or even do it up and sell it. Nobody can forecast the future but whichever way you look at it, it's money for nothing for your children. Lucky youngsters! Win-win, as I see it. 

Thank you. The property needs a lot of work. A trusted builder pointed out rental income ialmost matches the outlay in building cost hence decision to sell. I know its such a kind gift, he was a very special man.