What to do with children's inheritance?

eherbert

My two daughters were left £5k each by my mum in 2014. It was left with the instruction that it wasn't to be given to them til they were at least 18, ideally 21, and used to go towards a life purchase, eg house/car etc, not just frittered. Up to now, it's all just been in a smile savings account, but I want to finally sort out a better option for it (I know, I'm rubbish!) They are now 13 & 11, so a good few years available and happy to lock away if best. Doesn't have to be in their name and can be one pot for now til first withdrawal is required for eldest. Ideas?! Ideally don't want to risk any of the capital as I'm very risk averse and mum was notes under the mattress kind!

Albermarle

Children’s inheritance — MoneySavingExpert Forum
This is another thread with almost the same question, and various answers.

Stubod

..Premium Bonds?....not a particularly good return for smaller amounts, but secure and you may "get lucky"?

xylophone

My two daughters were left £5k each by my mum in 2014. It was left with the instruction that it wasn't to be given to them til they were at least 18, ideally 21, and used to go towards a life purchase, eg house/car etc, not just frittered.

If this money was left to your children on an unconditional basis ( ie when not if) they reached a certain age, then  it seems to me that the bequests would have "indefeasibly vested" in them and therefore should always have been held in accounts in their separate names with you as bare trustee.

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

If so, then each child becomes entitled to access and control of the money at age 18 (16 in Scotland).

https://www.gov.uk/trusts-taxes/types-of-trust

parking_question_chap

xylophone said:

My two daughters were left £5k each by my mum in 2014. It was left with the instruction that it wasn't to be given to them til they were at least 18, ideally 21, and used to go towards a life purchase, eg house/car etc, not just frittered.

If this money was left to your children on an unconditional basis ( ie when not if) they reached a certain age, then  it seems to me that the bequests would have "indefeasibly vested" in them and therefore should always have been held in accounts in their separate names with you as bare trustee.

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

If so, then each child becomes entitled to access and control of the money at age 18 (16 in Scotland).

https://www.gov.uk/trusts-taxes/types-of-trust

To quote the op "It was left with the instruction that it wasn't to be given to them til they were at least 18, ideally 21, and used to go towards a life purchase, eg house/car etc, not just frittered."

Without wanting to speak for op, it sounds like their mother considered the use of the money more imporant than the age at which its given, and that it is not conditioned for a set age. Accordingly my suggestion is that op keeps the money in their name as not all 18 or even 21 year olds are mature enough to use the money as intended. Suggestion for where to keep it being 1/3 long term savings account 1/3 tracker fund and 1/3 premium bonds, but there are other viable options for keeping it safe from inflation.

eskbanker

parking_question_chap said:

Without wanting to speak for op, it sounds like their mother considered the use of the money more imporant than the age at which its given, and that it is not conditioned for a set age. Accordingly my suggestion is that op keeps the money in their name as not all 18 or even 21 year olds are mature enough to use the money as intended.

But xylophone's point is that legally this may not be permitted, even if it's what she would have wanted, which is why the exact wording of wills is so important.  If the money belongs to the children and they are legally entitled to access it at 18 then OP isn't allowed to override that....

onomatopoeia99

eherbert said:

My two daughters were left £5k each by my mum in 2014. It was left with the instruction that it wasn't to be given to them til they were at least 18, ideally 21, and used to go towards a life purchase, eg house/car etc, not just frittered. 

The precise wording of the will is potentially important, but have a look at the case Saunders v Vautier to discover how dodgy the ground is that you are trying to stand on by planning to withhold the money once they reach their 18th birthday, no matter what your mum wished the money used for.  

parking_question_chap

They are currently 11 and 13. The chance of them accessing and going through the smallprint of the will is unlikely. Parents on this forum will appreciate that sometimes whats best for a child isnt what they want, depending on the maturity of the child.