Delaying inheritance for will beneficiaries

spg1

My will is currently split equally between my five nephews and nieces (I've no partner or dependents). While my nephews (who are in their 30s) are all pretty sensible with money my two nieces (and one in particular) are less so.

If I suddenly died now (I’m 60 so hopefully not soon but obviously possible) they would each inherit a sizeable amount from my house and pension - say £250k each. Not enough to never have to work again but a lot to receive in your 20s.

For one of my nieces in particular I think this could be quite damaging as I suspect she would lose the incentive to work or to progress at work (she currently has a poor attitude to work and has struggled to hold down a job for more than a year).

I’m just pondering altering my will so that if I died in the not-too-distant future there would be a delay before money is received (eg to make it fair all would inherit on their 45th birthday).

I suppose that then means I’d have to set up some sort of trust to look after the money in the meantime. I’d actually be happy for one or two of my nephews to manage the money but not sure if that is possible? Is setting up some an arrangement costly?

Any thoughts welcome.

Marcon

Why is it 'fair' to make everyone wait for another 15 to 20 years just because you believe one niece is likely to squander the spoils? The problem with treating everyone equally is that the outcomes are rarely equal, because the starting points are different.

You're into discretionary trust territory here, so your best bet is to discuss with a solicitor - preferably STEP qualified, given the sizeable amounts involved.

silvercar

people need the money when they are in their 20s. It’s when they could be choosing a career, having that kind of money behind them for a house deposit or whatever means they could afford to chase a vocation eg nursing or start their own business, rather than feel pressured to choose something just because it is well paying.

Children are expensive to have this amount of money when you are relatively young is life changing. To have to wait to middle age moves it from life changing to nice.

Keep_pedalling

Trying to control your assets beyond the grave is rarely a good idea, to do what you are thinking about is going to creat a massive headache for the trustees of your estate, I certainly would not want the burden of managing a discresionary trust for decades.

Albermarle

I understand your dilemma, but trusts can be an expensive minefield.

In any case by the time you die, the situation may have changed as they all get older, settled down etc.

If I suddenly died now (I’m 60 so hopefully not soon but obviously possible) 

In general people underestimate how long they will live. The chance of a 60 year old dying in the next 5 years is only around 5%, and some of those presumably were already ill when 60. The chance in the next 10 years is about 10%.

The average life expectancy of a 60 year old is around 86 and 25% will reach their 90's .

So they might be waiting a long time for their money !

poseidon1

I understand your concerns.

However rather than 'punish' all beneficiaries for the short comings of just one, perhaps any trust arrangement ( to a specified age ) could be limited to the beneficiary concerned?

It is possible to establish a trust where the beneficary has a right to income ( up to a specific age) with capital then automatically advanced at the target age. There are professional costs and complications with potential periodic IHT compliance, implicit with such an arrangement. Furthermore imposing trusteeship on the more responsible nephews may have adverse implications for their ongoing relationship with the niece concerned ( resentment and a rift arising therefrom very possible).

As suggested a discussion with a STEP qualified trust and probate lawyer is indicated here, and with only a £325k NRB to shelter your considerable estate, a major beneficiary will be HMRC taking a very large chunk out of the £1.2million your estate currently appears to be worth, if you do not take any IHT avoidance/mitigation action.

sheslookinhot

Let your will leave an equal share to each of them. You'll be long dead to worry about it. Too many people spend time thinking/worrying/being concerned about things when they need not.

Linton

I feel that unless there are special circumstances it is not a good idea to leave any extended family member a life-changing amount of money. Better just to bequeath enough for them to find very useful and then donate the rest of your estate to charity.

spg1

https://forums.moneysavingexpert.com/discussion/comment/81930378#Comment_81930378

That's an interesting point. Factors such as house price growth and fewer people having children means there will be a huge amount of money coming down the line in the years ahead for some people and it is worth thinking about the impact of that on beneficiaries. A friend of mine's son got left a fair amount of money by his grandparents in his early 20s and it seems to have dramatically affected his ambitions. I think it would probably have made me take different choices in life too, and not for the best.

mta999

Is it possible to leave an inheritance rather than as a capital sum but specified as to be invested in income producing funds (bonds for example) such that the beneficiary gets an income for life but not the actual capital

no idea if this is possible!

Keep_pedalling

https://forums.moneysavingexpert.com/discussion/comment/81930551#Comment_81930551

Yes through the creation of a trust, but that comes with its own problems especially for anyone foolish enough to agree to be a trustee.