Money Moral Dilemma: Should I give my nephew £10,000 now even though he'll likely fritter it away?

Eccentrica_Gallumbits

Your niece is obviously commendably sensible with money, and that's a choice she has made which you were glad to support. If you want to level things up, then by all means give your nephew the same money now. Then nobody can ever feel "hard-done-by" because you have been scrupulously fair and that may also help you a little with your IHT concerns.

If your nephew does fritter it all away on expensive meals out, then I am sure he will have some lovely meals thanks to you! However, you cannot be sure he will do that, while even if he does behave exactly as you fear, it takes nothing away from your generosity. He cannot regret your giving it to him, although it's not impossible that he might regret how he spent it one day! But as my late mother once said to me "If you have no regrets in life, then life has taught you nothing". Some people need to learn life's lessons the hard way, and it is possible that your nephew is one of those people. None of that takes away from your generosity.

The only thing I can be sure of is that your nephew will learn how to manage money in his own sweet time, if he's ever going to learn it. You won't be able to make him spend any financial gift you give him in a way that you think proper, unless he also thinks that's the right way to spend it, without it causing resentment in future.

mikedragon

Put it in a trust with you and at least one other adult relative as the trustees.  Many life assurance companies can do this at no extra cost to you when you place an investment with them.

Alnat1

Personally, I would have never been able to treat my niece differently to my nephew in the first place. They would have got £10K each at the time (or £5K each if you didn't have £20K to gift)

Just because someone doesn't choose the same plan for how a life should be lived as you do, doesn't make them wrong. How boring humans would be if they all chose the same path.

iclayt

So you say "Dear Nephew, I gave your sister £10k when she was buying a house, here is £10k for you to do the same". Then if this grown man decides to spend it in restaurants, that's up to him. 

Rocketdogroya

"If you have no regrets in life, then life has taught you nothing".

I disagree wholeheartedly with that, and do not regret anything. NOT because I have never made mistakes or bad choices that I would change in hindsight if I could but I think: 'I trust my own judgement and that was the (well thought out, usually) decision I made at the time'. Its harder to live with regret than to believe in your younger self's choices I think. He is 29 so not making hormone decisions. If he enjoys it now, that's his choice to make. So if you don't agree limit that choice in someway.

I'm pretty sure you can't legally get a tattoo until you 18 so maybe the matured bond is paying for new tattoos.
However, I got my first terrible tattoo  at 16 (I dont regret it though as it gives me and my partner giggles at how bad it is, and 16 year old me loved it)  from an dodgy tattooist but somewhere I could hide and my mum never knew of it until I was in my 30s. So they may already be inked.

I would speak to him, and maybe give him a compromise. He opens something like a LISA and you deposit £7000 for a deposit  to make you happy that you are adding to his future and give him £3000 to be spent how he wants to make him happy. 

Or if he isn't the compromise type put it in savings in your siblings (providing you trust them) name for them to hold it until he is ready for a deposit.

I dont think its right for people to say "don't worry about IHT you'll be dead". I can see you care for him enough that you do care and do not want him to lose out. There is also the huge frustration that you worked hard to earn that and have already been taxed on it so many times its unfair that you will still be taxed on after your 

moneysavy78

Can you give it to his parents to hand over when they think he will use it responsibly? Obviously you would have to trust them.

Unicyclistpip

I would speak to the nephew, not his parents, if I had concerns. Let him know how you feel. Maybe offer some guidance if you feel that would be welcomed. 

There are vehicles, such as trusts or LIFAs, that can restrict how he spends any gift you make - others have mentioned these.

To share my experience: my wife and I saved some cash for our first niece from early in her life. It started as £10 a month in 2000, which we could barely afford as we had just bought our first house. But we thought it important. We used some of the money to pay for blocks of driving lessons when she reached adulthood, as she told us it was important to her. She barely attended any of the lessons (with short notice), and so we had spent a lot unnecessarily. Unbowed, when she became pregnant at 23, we gave her the balance (nearly 3.5k) to help set up her first home in social housing. She spent all of it on herself before even moving in, and then started asking around for help with furniture etc. My wife was furious, but my attitude was that we had gifted the money at the time we put it aside. It was hers to spend, even if it was wasted. We are now at peace. Although we have helped her out with subsequent financial assistance, it is unlikely to be ongoing from now on. 

We have four more nieces and nephews. We have saved for each of them. We will not dictate how they spend their money, but will be a little more circumspect. Inflation and increased earnings mean that each will get about 9k, which will help with university, driving, or setting up home. Hopefully. They don’t know of these sums, but we will have a conversation closer to them receiving it to let them know our aspirations. Then it’s up to them. 

We also have our residuary beneficiaries in our wills as our nieces and nephews as we have no children of our own. Those legacies will have stipulations as they are considerably more substantial, and so will be managed by a trust. 

Woodstok2000

Sueh_2 said:

When my Grandchildren were born, I took out a Baby Bond for each of them which would mature on their 18th Birthday. They all grew up knowing - no tattoos or piercings, but everything else was up to them. You just have to trust them not to waste it. So far none of them have. One put it towards a house deposit, one towards a car and one for a trip to Australia to go travelling. The last one gets theirs in a couple of weeks 🙂

Totally agree.  As a vegan Aston Villa supporter, my kids know that they are not allowed to spend their inheritance on eggs, meat or anything to do with Birmingham City FC.  If they want to swan around in leather shoes and a Lyndon Dykes football shirt they can do it with their own money!

tatt1994

Tell him if he opens a LISA you'll put 10k in there for him. We have invested for our grandson in a way he cant touch until he's 18. More importantly his parents cant touch it either.  Our child wasted a lot of money and still does  but we likely wont be here when the grandson is 18 so we wont see it if he does the same. If worrying about inheritance tax you could give the nephew 3k a year for 4 years and cover his lost of interest over the delay. I keep meaning to set up a trust for when I'm dead, the difficulty is finding a good trustee.

Woodstok2000

tatt1994 said:

Tell him if he opens a LISA you'll put 10k in there for him. We have invested for our grandson in a way he cant touch until he's 18. More importantly his parents cant touch it either.  Our child wasted a lot of money and still does  but we likely wont be here when the grandson is 18 so we wont see it if he does the same. If worrying about inheritance tax you could give the nephew 3k a year for 4 years and cover his lost of interest over the delay. I keep meaning to set up a trust for when I'm dead, the difficulty is finding a good trustee.

There's two issues with the LISA route:

1) They can only be topped up by the account holder, so OP would need to give him the £10k first and trust that he puts it in the account

2) He can still close the LISA and get the money out (minus the 25% govt. fee).  If he's as profligate as suspected, he may well prefer £7,500 in hand to £10k for a future house.