Helping out nephews and nieces for their futures – what would you do?

HorseWhisperer

subjecttocontract said:

In my experience it's a good idea not to let them inherit at to young an age and I think 18 is to young. I'd want them to be responsible adults and everyone matures differently. So, if it were me I'd try to arrange things so they received the money at 25.

Yes, that's what I'm trying to do. It's easy with the 17/20 yr olds as I can add it to a LISA, but the youngsters is more difficult, unless I can ask their parents to ensure a JISA is reinvested in a 5yr bond when they get to 18. But I'm always wary of fixing for 5 years as you never know which way the interests rates will go voer that long period. And, the money is technically theirs when they get to 18, and they may refuse to re-invest it then , which is their right.

HorseWhisperer

Albermarle said:

There have been numerous other threads along similar lines.
Some think that them having access to some money at 18, is no bad thing. If they blow it then they learn a lesson. Although as the previous poster is intimating, it could depend on the amounts involved.

So, if it were me I'd try to arrange things so they received the money at 25.

If you want to go down this route, you have limited options. Possibly a trust , but this would be complicated and expensive. Otherwise you have to just save/invest the money yourself and give it to them when appropriate.

I’d like to put a couple of K into a LISA for the two eldest

You can not open a LISA for them, and they would have to be 18 to open one.

Ideally I'd want them to be at least 25 before they got acces to the money. And this is the nub of the problem, as there is no easy way to do this, apart from the LISA route, which is fine for the 17/18 year olds, but leaves me a bit stumped for the youngsters.

Trusts are ruled out due to the cost and complications for only a couple of K worth of cash. Problem with investing myself is a) it doesn't reduce my estate's IHT burden and b) my executor would have to do a deed of variation upon my death, if I was to die before they reached 25, so that they get they cash, which is a faff and also costs money.

As I said above, I could ask their parents to ensure a JISA is reinvested in a 5yr bond when they get to 18. But I'm always wary of fixing for 5 years as you never know which way the interests rates will go over that long period. And, the money is technically theirs when they get to 18, and they may refuse to re-invest it then, which is their right.

BTW I know I can't open a LISA for the older two on their behalf, but I can ask them to do it then forward on the cash. They are (currently) trustworthy enough to put the money in themselves, I hope.

HorseWhisperer

enthusiasticsaver said:

It depends on how much you are intending to distribute between them.  Presumably their own parents will also be looking at this from their own inheritances too?

Personally I would decide how much of your inheritance is earmarked  for them.  What you do now depends on how much you intend to give them.  If it is just a few thousand I would give it to the 2 older ones now and invest the same amount for the other 2 to give them at 18.  If it is 10s of thousands then I would maybe give them some at 18 and some at 25.  

It's just a few K each. There's no way I'm giving that sort of cash directly to the two older ones now as they would just blow it on partying!

HorseWhisperer

MikeJXE said:

November 2021 was my 81st birthday and I am reasonably fit but the law of averages says I don't have a lot of years left yet I could get to high 90s 

I don't want for anything and have everything I need including a luxury car, I live alone in a rented flat, state pension. 

I have 2 sons 53 and 45 plus 4 grandchildren 21 15 14 and 12 years old.

I also didn't want to wait till I died for them to get part of what I had, my will is split equal 6 ways. 

My eldest could even die before me

I did the maths, £130,000 in the bank and I didn't need it all

Christmas 2021 I decided to give £60,000 away to the kids, £10,000 each in a Christmas card..

The younger ones the money was put in a junior isa for when they are 18, they will be adults then and if they make mistakes thats their choice

What I got out of it I wouldn't have got if they received the money after I died 

Was the look on their faces.

Priceless. 

Indeed! I would like them to have in my lifetime and see what they do with it. But I'd rather them not make a mistake and blow it all partying! this is why the LISA works for the eldest two, but it's the youngsters money that i leaving me stumped.

bostonerimus

HorseWhisperer said:

MX5huggy said:

Ball park how much were you thinking because giving an 18 year old access spend £4k on a holiday and a car may different from £40k on 10 holidays 4 cars and a small pile of the white stuff. 

Max £3k each

UK tax free gift allowance is 3k per year. However, you can give more, you just have to keep track of the amounts so if you die within 7 years of making the gift the excess amounts can be added back to your estate for IHT purposes. In the US the gifting rules are far more generous and simple: in a year $17k can be given to as many individuals as you like, so if you have 10 friends you could gift a total of $170k without any tax reporting or implications. I am using this allowance to give money to my nieces in the UK.

warby68

For £3k max, I think I'd give as 18th or 21st birthday presents unless I knew them to be completely daft, and save/invest in my own name until then.

HorseWhisperer

TojoRalph said:

First off, I am going to assume that all parties involved are level headed individuals free from addictions, Etc. On that basis, my take on things and what life has taught me is that the earlier in life you get "money", the more value it has and the more you get from it. For example, £5k at age 25 may fund a dream back packing holiday and a lifetime of memories, whilst £5k at 50 just means that you get a few extras on the spec of a new car. Never underestimate the power of a wee cash handout when it is needed. 

In my experience many level headed youngsters lose their ability to control their spending in their twenties! I'd rather it was spent on something substantial and with investment potential than blowing on a backpacking holiday, or worse! It sounds judgemental, but I worked hard to save up for my backpacking holidays back in the day. Our parents couldn't help us out when we were younger. The only reason we've been fortunate enough to inherit money now is because my grandmother died only a year before my mum did, and my grandparents worked really hard to amass their fortune. My nieces and nephews are lucky enough not to want for anything (my sister just took the youngest ones to Thailand for 3 weeks!). I'd like them to learn the value of money by showing them how to make it work for them and give them positive benefit in the future.

HorseWhisperer

Thank you all for your input. Some food for thought here, but still a bit stumped on what to do for the younger ones.

wmb194

Well, it sounds like there's no option. You clearly don't trust them to make their own decisions so just hold on to it and give it to them at 25.

ashby6567

I think that you're urinating against the wind by thinking you can put an old head on young shoulders. Just saying like.
Better to just give them the money along with your wishful expressions then walk away and if they decide to blow the money on partying etc shrug your shoulders and think oh well.
Partying whilst young, rite of passage.