Financial Advisor

Keep_pedalling

Invest987 said:

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! 

I am sure they still will, their inheritance provides them with a great start to life, gap year, uni fees and later a step onto the property ladder, but it’s no where near enough to live a life of luxury. With the right guidance they will hopefully make the best use of this. 

wizzywilc

I bought a small home with an inheritance when I was 21 and still studying, even though it wasn't somewhere I planned to live long-term. 50 years on I can see just how much that legacy, and how I used it has affected my life:

• once I was working I could save to go travelling, then rent the house out while I was away,
• there was never the insecurity of renting
• only a small mortgage was needed to buy a bigger place in a more expensive part of the country
• had I needed to claim means tested benefits the house wouldn't have been taken into account
• there is now an option to release equity if needed.

Good luck to your children. You might want to encourage them to think about what they could get with x years of rent they haven't had to pay. And it doesn't look as if owning a home would affect a student loan.

Dox

Robin9 said:

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 

Only if it's a 'bare' trust.  If it's some sort of discretionary trust, it's entirely down to what the will stipulates. You may be able to tell just by looking - if the wording is very simple e.g. 'I leave John £xxxxx to be paid when he reaches the age of 25' (especially if the will was a DIY job), and there is no mention of a discretionary trust, it's almost certain to be a 'bare' trust. 

OP, you don't need some sort of mega expert; this is bread and butter stuff to most competent solicitors. Just run it past your own solicitor, or if you don't have one, perhaps the solicitors who drew up the will? Certainly no need for you to start reading HMRC's manual or getting to grips with the legal niceties. 

Invest987

wizzywilc said:

I bought a small home with an inheritance when I was 21 and still studying, even though it wasn't somewhere I planned to live long-term. 50 years on I can see just how much that legacy, and how I used it has affected my life:

• once I was working I could save to go travelling, then rent the house out while I was away,
• there was never the insecurity of renting
• only a small mortgage was needed to buy a bigger place in a more expensive part of the country
• had I needed to claim means tested benefits the house wouldn't have been taken into account
• there is now an option to release equity if needed.

Good luck to your children. You might want to encourage them to think about what they could get with x years of rent they haven't had to pay. And it doesn't look as if owning a home would affect a student loan.

Thats comgorting to see what you actually gained. Believe it or not I havent felt any comfort about the money so far as I feel so guilty someone else has helped them. But with you message I am beginning to see how he will be in thier lives still. Thank you. 

Invest987

Dox said:

Robin9 said:

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 

Only if it's a 'bare' trust.  If it's some sort of discretionary trust, it's entirely down to what the will stipulates. You may be able to tell just by looking - if the wording is very simple e.g. 'I leave John £xxxxx to be paid when he reaches the age of 25' (especially if the will was a DIY job), and there is no mention of a discretionary trust, it's almost certain to be a 'bare' trust. 

OP, you don't need some sort of mega expert; this is bread and butter stuff to most competent solicitors. Just run it past your own solicitor, or if you don't have one, perhaps the solicitors who drew up the will? Certainly no need for you to start reading HMRC's manual or getting to grips with the legal niceties. 

Thank you. 

getmore4less

Invest987 said:

wizzywilc said:

I bought a small home with an inheritance when I was 21 and still studying, even though it wasn't somewhere I planned to live long-term. 50 years on I can see just how much that legacy, and how I used it has affected my life:

• once I was working I could save to go travelling, then rent the house out while I was away,
• there was never the insecurity of renting
• only a small mortgage was needed to buy a bigger place in a more expensive part of the country
• had I needed to claim means tested benefits the house wouldn't have been taken into account
• there is now an option to release equity if needed.

Good luck to your children. You might want to encourage them to think about what they could get with x years of rent they haven't had to pay. And it doesn't look as if owning a home would affect a student loan.

Thats comgorting to see what you actually gained. Believe it or not I havent felt any comfort about the money so far as I feel so guilty someone else has helped them. But with you message I am beginning to see how he will be in thier lives still. Thank you. 

Often what happens is assets go sideways/down one level and those that inherit are already quite comfortable and often getting on a bit.

Often that money just disappears into lifestyle choices  and by the time those people die the next level down does not really need the money and  the cycle repeats.

Those at the bottom spend their first 10-20 years getting their act together often scraping by.

By skipping a generation you give those starting out the assets to kick start some really serious wealth creation and for future generations to become self sufficient in housing as long as a roof over your head is a priority.
one obvious difference is they can get a decent first home rather than  flat->small house->bigger house... saving £1000s in costs 

They can still go through the house share phase but owning the place and collecting money off lodgers rather than paying out to a landlord.
Still need to work hard and get decent jobs/careers etc.  

Malthusian

tacpot12 said:

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.

At 3.8% per year plus inflation that is a little optimistic, bearing in mind that we are talking about teenagers, not retirees in their 60s. "Safe withdrawal rates" in the 4% region assume the investor is a retiree in their 60s and can stomach some capital loss because it doesn't matter if their cheque to the undertaker bounces. A young person in good health by contrast has no good reason to deplete their capital over the long term.

This is splitting hairs as it's certainly still a good safety net / top up to their earned income / house purchase fund, even if £8,600pa would be more conservative as a reasonable level of income to expect without depleting the capital.

tacpot12 said:

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.

A trust for whose benefit? The only way to stop this house becoming an asset of the marriage would be to irrevocably give it to someone entirely different (or a trust for the benefit of entirely different people), and if they trust that person so much to give them a huge chunk of their assets, maybe they should marry them instead.