Giving money to Grand Children but potential issue

Hippo

My Dad has decided to downsize and the property transaction will free up ~ £1.3M.

Instead of giving the money to his children he has decided to give each of his 12 grandchildren £100K each.

With all but two of them this is straightforward, these two are both under 16 and my Brother (their Dad) is also in an unstable marriage. Dad doesn't want to give their money to my brother to distribute later in life as he thinks my Sister in law could possibly grab half of it.

In a nutshell he wants to ensure

a/ They get it
b/ Would like them to get it a bit later in life, perhaps when they're 25, but would like it freed up earlier if they choose to use it to buy a property.

Suggestions please

JGB1955

AIUI he can put their shares in trust until they're 18.  But... I think that may be the least of his potential problems.  How old is he?  Has he considered the question of 'deprivation of assets'?

Hippo

18 probably won't be old enough. He'd prefer something like 25 when they're a bit older and wiser.

Regarding deprivation of assets he has simply said He's giving his grandchildren a property deposit. He has other assets (money investments).

He's 83

Keep_pedalling

If he wants to prevent them receiving the money at 25 rather than 18 then he will need to set up a discretionary trust rather than a bare trust. With either trust he can chose the trustees. Discretionary trusts are more complex and subject to some pretty tough tax rules so the trustees must be aware of their responsibilities including submitting annual tax returns.

How much would he be left with after giving £1.2M away? This is important because he is giving away far more than his NRB, so if his estate is not able to to meet an IHT bill if he dies within 7 years.

TBagpuss

With those amounts he should look at getting proper, professional advice. A discretionary trust may be the way forward to allow both for money not to be paid out as soon as they turn 18.

However, there are tax rules and responsibilities for the trustees.

If the money were given to your borther expressly to hold on trust for the grandchildren then his wife would not be entitled to it, as it would not be your brother's money. Hwever, that would not stop it being  bone of contentin.

He also needs to take advice about his own tax planning and IHT liabilities to mkae suethat therre isn't a nasty sting in the tail from his generosity, further down the line. 

Grumpy_chap

83 yo releasing £1.3 m (of which £1.2m will be gifted) through downsizing property (so presumably still keeping a reasonable sum tied up in the new, smaller property) plus other assets (money investments) really needs to take professional advice with regard to estate planning / IHT and meeting his own needs for care etc., plus putting in place LPA.  It would be a false economy not to.