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Financial Advisor

My Uncle bless him has left in total £579k in his estate for my children 17 & 15. The decision was made to sell a property this week worth £400k as renovation costs out wayed rental income. The children will not know until they are 25. I know need the best financial advisor ever, will it be a spealist as the money is for minors? Are there any tax implications? 
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Comments

  • Robin9
    Robin9 Posts: 12,872 Forumite
    Part of the Furniture 10,000 Posts Name Dropper
    As I understand it they can claim their inheritance at 18.  It's likely that by the time the executors sell the property and wind up the estate the eldest will be 18 
    Never pay on an estimated bill. Always read and understand your bill
  • Thank you, it is stated in the will the age of access is 25. 
  • Robin9
    Robin9 Posts: 12,872 Forumite
    Part of the Furniture 10,000 Posts Name Dropper
    As I understand - its unenforceable - consult your solicitor.

    If it's a complex estate your 15 yo may also reach 18 by the time the estate is settled. 
    Never pay on an estimated bill. Always read and understand your bill
  • Ok. Will confirm. I am  very grateful. Thank you.
  • Invest987 said:
    Thank you, it is stated in the will the age of access is 25. 
    Many wills have that clause, but unless the will puts the money into a discretionary trust it is not enforceable, and the children can claim their inheritance at 18.  If there is no such clause then each of their inheritances will need to be held in a bare trust.

    I think engaging an independent financial advisor is a good idea, but I think you should also involve both children in this. It is better that they get a bit of a financial education in advance of receiving such a large sum of money. 
  • xylophone
    xylophone Posts: 45,727 Forumite
    Part of the Furniture 10,000 Posts Name Dropper
    I would suggest that you consult a solicitor expert in the law relating to trusts to establish the type of trust involved (bare/discretionary etc)

    https://content.step.org/step-directory

    If the bequests have indefeasibly vested in your children, then they are the beneficial owners of the money in question and  the money must be held in bare trust for each child.

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

    The beneficiary of a bare trust has the  legal right to access and control from the age of 18 (16 in Scotland).

    Establishing the type of trust involved is vital from the point of view of taxation.

    https://www.gov.uk/trusts-taxes

    Your solicitor may be able to recommend a tax accountant/IFA.

    Otherwise  https://adviserbook.co.uk/ might be worth a look. You would tick "confirmed
    independent" and such other areas of expertise as required when the menu comes up.

  • Robin9
    Robin9 Posts: 12,872 Forumite
    Part of the Furniture 10,000 Posts Name Dropper
    If it is the case that they can claim their inheritance at 18 the set up costs and winding up costs may outweigh the trust income  - as above follow @xylophone advice. There is a lot of money involved here.
    Never pay on an estimated bill. Always read and understand your bill
  • I am so grateful for all your advice. I am desperate for the children to make thier own way in life first. I was brought up to set my own path. I don't mind being told differently. I have tried to keep the emotions out of my questions. I am failing now! 
  • xylophone said:
    I would suggest that you consult a solicitor expert in the law relating to trusts to establish the type of trust involved (bare/discretionary etc)

    https://content.step.org/step-directory

    If the bequests have indefeasibly vested in your children, then they are the beneficial owners of the money in question and  the money must be held in bare trust for each child.

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

    The beneficiary of a bare trust has the  legal right to access and control from the age of 18 (16 in Scotland).

    Establishing the type of trust involved is vital from the point of view of taxation.

    https://www.gov.uk/trusts-taxes

    Your solicitor may be able to recommend a tax accountant/IFA.

    Otherwise  https://adviserbook.co.uk/ might be worth a look. You would tick "confirmed
    independent" and such other areas of expertise as required when the menu comes up.

    Amazing advice I am so grateful. Will post soon with findings. 
  • tacpot12
    tacpot12 Posts: 9,368 Forumite
    Ninth Anniversary 1,000 Posts Name Dropper
    Even such a large legacy will not absolve them from the need to work, but will give them more choices. Properly invested the money might produce an income of about £11K per year per child and this should rise in line with inflation. They will not be able to live on this and do all the things they want to do, but it will give them an enormous safety net. You can use the bequest as a means to discuss money with them. They need to understand that this money will run out if they spend it imprudently, but if not spent, it will last a lifetime and provide them with a very comfortable living, providing they also do some work.

    The tax implications are that the income would be added to their other income and might tip them into paying higher rate tax earlier than they might otherwise have done so. They will also have to consider capital gains tax (CGT) on the growth of their investments. They will get their own annual CGT allowance, and an allowance for Dividend Income, but it will be worth moving the capital from a general investment account (where CGT is payable) to a Stocks & Shares ISA (where growth is exempt from CGT). They can only do this at the rate of £20K per year, so it will take a long time to move all of it into the tax shelter of an ISA but it will be worth doing so. 

    I expect that any IFA would be able to plan the migration of the capital to a S&S ISA in the most efficient manner but they will charge for this. Any IFA will be able to select the right investments. Given their age, and earning potential, they can afford to take a lot of investment risk with this capital; but by "a lot", I mean a lot in terms of the investment risk scales that you find in mainstream UK retail investing. In the mainstream of UK investing, where you are typically buying collective investments from extremely large financial services providers, a "high risk" fund is really in the middle of the road when you consider that the spectrum of possible investments runs from Gilts to Wiskey, Art Works and Classic Cars!

    I would advise that they don't rush into buying a house, until they know where they want to settle down. When they are ready to by a house, I suggest they investigate putting the house into a trust so that anyone they subsequently marry cannot claim half the house from your child. It will be better to spend some of the capital on buying a house, rather than using income from the capital to pay a mortgage.
    The comments I post are my personal opinion. While I try to check everything is correct before posting, I can and do make mistakes, so always try to check official information sources before relying on my posts.
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