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

Ed264

You're not keen on giving it to him indefinitely. My simple solution would be to give it to him now, but if he fritters it away and doesn't have it when he really needs it, then that's his problem. You've done your bit.

NotArobot24

If the OP can get over the idea of using money to control another person which some would say it is fine as it is their money to do with what they wish, then it becomes quite easy.

What are the objectives?

Providing financial security and the option to buy a property that is out of reach.

In current climate £10k is not going to cut it, there has been talk of valuing a property when sold from it's original cost which would be devastating.

One way out of this has to be equity release, which under normal circumstances I would say run a mile away from, but in this situation could help.

So things my extended family has used to reduce tax liabilities and encourage their Grandchildren to get on the housing ladder include:

Borrowing from Equity Release to provide enough to get not only a deposit but a competitive interest rate.

Gifting the freehold of the property while providing a lifetime tenancy for themselves, I gather this does not necessarily reduce tax burden. 

Buying property abroad where prices are lower and putting the rental income into a Trust for the beneficiary.

Another hint of what is coming with the budget is some help for first time buyers, but regardless of party these have all been rubbish in the past as house inflation ate up any potential help and the goal became a moving target.

Personally, I don't seek to control my kids behaviour, I explained to them that they are responsible for their decisions and also for the consequences of those decisions.  I positioned myself just as an advisor and I remind them every time that the decision is always theirs.

I would say do not listen to hearsay, get to know the nephew yourself, find out what they are passionate about and see if you can support it in a way that meets their and your objectives. 

£10,000 is a drop in the ocean in UK property market, at least in the South, they may not want to relocate up North where property is affordable but local economies appear to be dysfunctional, so maybe you could help him invest in being a Landlord, if that was something he wanted to do. 

If you do not like how he lives his life then just accept you have different values, either stick the £10k in an ISA which you can leave him or take some of the excellent advice offered by others on this thread.

donethat

Your nephew is 29 years old.  Do you want to give him a gift of £10,000 in which case he can do whatever he wants with it.  Or do you want him to receive a weight of expectations.  
He may surprise you with his choice,  but it should be his choice. 
Whatever you decide to do it is something you will have to live with.  Alternatively you could always splurge it on yourself. 

Gaberdeen

When I was school-age a lad a similar age to me came into a significant sum of money at just 16 years old. £25,000 to be precise.

He very quickly frittered it away on things of absolutely no consequence and ended up potless again at 18.

His experience was a cautionary tale for me, at least.

Unicyclistpip

Gifting from freehold, whilst maintaining a lifetime tenancy, as suggested by NotArobot24 above, is called a gift with reservation of benefit. It would be included in the estate in full at death for IHT, so would offer no reduction in tax due. 

mlz1413

The inheritance you received obviously means a lot to you as you didn't just instantly gift £10k to your niece and nephew with no strings attached. 

You probably gave the neice that money as she happened to be buying a house as you inherited. 

The intention was probably to do the same for the nephew when he bought. But that situation has not arrived yet and also looks unlikely. 

This money obviously still means something to you as you don't feel it will have a profound affect on your nephew.  So clearly you're not going to just hand it over and hope he does right by you and the person who you inherited from.

I think putting it into an LISA probably covers the purpose you want it used for.

Into premium bonds / trust / savings account with strings attached may also work.

But otherwise you have to decide if treating them differently is better than seeing the money frittered away.

Ms_Chocaholic

CapeTown said:

You don't have to give him anything. My son is a bit of a spender.  I have put money in a premium bond account for him. He cannot touch it until he buys a house

He has every right to touch it if it's in his name, if he knows about it of course.

Bonnypitlad

Cut out the middle man and fritter away the £10,000 on yourself by eating at expensive restaurants 

CapeTown

Ms_Chocaholic said:

CapeTown said:

You don't have to give him anything. My son is a bit of a spender.  I have put money in a premium bond account for him. He cannot touch it until he buys a house

He has every right to touch it if it's in his name, if he knows about it of course.

It isn't in his name. He does know about it. It will be passed to him in the will. But I am not working my socks off still at 66 for him to fritter it away. He has made financial errors in the past.... bought a new triumph motorcycle,  bought a van to convert into a mobile home then sold it at a huge loss etc. He can spend his own money but not mine... not on my watch

MSE_Kelvin

Bonnypitlad said:

Cut out the middle man and fritter away the £10,000 on yourself by eating at expensive restaurants 

Hahaha! My MMD Response Of The Week Award goes to you, @Bonnypitlad