How to give money to adult children who are at different life stages

I guess you could specify it’s for property, if that’s what you would like them to use it for and then hold it until they are ready to make that commitment.

It depends where you (they) live. Around here 100, 000 would get you a small flat or a better one/small house on shared ownership.

But if you don’t want it to just disappear and you think it might I’d let them know it’s there but only for property purchase.

grassgreen Why not give DC1 & 2 the money and buy a small property for DC3 & 4? After that it's up to them. People become a lot more responsible when they 'own' something.

£400K is a lot of money to give away, by anyone’s standards.
I would check with a financial advisor that I would still be left with enough money to live on, not necessarily now but in later years
and b) what are the tax implications of these gifts . My understanding is that the amount you can give away each year without tax being paid is far less than £400K.

If you want to give them money then I don’t really think you can have any say in what happens to it. They could all go of to Las Vegas together and blow the lot ?‍♀️.
I don’t mean to sound harsh but that’s how I feel. I’d hate to feel beholden if I were your child and I’d hate for my children to feel they were being judged on what I’d given them.

My 5 grandchildren will receive a sizeable sum when we die.
It is our choice what to leave them and their choice how to spend it.

You'd be wise to check up on the tax burden of your gifts grassgreen.

You can give away a total of £3,000 worth of gifts each tax year without them being added to the value of your estate. This is known as your ‘annual exemption. You can carry any unused annual exemption forward to the next tax year - but only for one tax year.

No tax is due on any gifts you give if you live for 7 years after giving them - unless the gift is part of a trust. This is known as the 7 year rule.
If you die within 7 years of giving a gift and there’s Inheritance Tax to pay, the amount of tax due depends on when you gave it.
Gifts given in the 3 years before your death are taxed at 40%.
Gifts given 3 to 7 years before your death are taxed on a sliding scale known as ‘taper relief’.

Taper relief
Years between gift and deathRate of tax on the gift
3 to 4 years 32%
4 to 5 years 24%
5 to 6 years 16%
6 to 7 years 8%
7 or more 0%

You can give your children as much money as you like, but for the first seven years it will be liable to decreasing amounts of Inheritance tax if you die. After 7 years, the money is no longer liable for inheritance tax.

As you want the money to be spent on property talk to a solicitor about putting it in a trust that will only give your children the money when they complete on a house sale.

As you are buying another property, the value of that could reasonably be assumed to be sufficient to pay your care fees, should you need care at the end of your life.

When people go into care and need to approach Social Services for help because they do not have enough funds, the first thing Social Services check on is whether you gave any money away that could have been used for care fees.

The longer you survive after the gift the easier it is to prove that you did not give the money with the intention of avoiding care fees, so there is an incentive to keep fit and healthy after you retire!

I'm taking on board all your comments and my plan is indeed to live for at least 7 years after I've given money to my children

I agree that I can't dictate what they do with my money after I die but feel I do have that option now, if they want the money that is. And it will be done from a place of love not control

I will consider getting some financial advice regarding whether I will be leaving myself enough funds for the future.

When I moved house 2 years ago I gifted my children the majority of their inheritance. Like you, my 5 children were all at different stages but I thought it only fair to treat them all the same and gift them the same amount each. You have to let them do what they want after that. I don't think you should put conditions on how they spend it. I talked to a financial advisor and he told me to make sure I was keeping enough to live on because if I needed a nursing home within 7 years of giving such large sums away, it could be argued that I had done it to avoid nursing home fees. I must confess that had never crossed my mind.

you say 'don't want my money to be sqandered.'

Once you've given it it is no longer your money,
same as any gift...so think carefully

It’s perfectly reasonable IMO not to want the money to be frittered away. Once we’re dead and gone, of course anyone can do whatever they like with a legacy, but while we’re still here, we can do as we see fit.

Assuming no future problem with deprivation of assets, etc. I’d tell them the money is available, but it’s to be used only for a property purchase, or perhaps for improving one, or paying down a mortgage, if they already own.

If they don’t want to use it for that purpose, that’s up to them.

We have passed fairly substantial sums to dds, inc. much of a legacy from my own mother, but only for property purchase. We didn’t actually pass the money over until the process was well under way and the money needed to be paid.

For an adult dc who is not going to be able to secure any mortgage, I agree with the pp who suggested buying them a small property (if affordable) in order to give them that security.
If they don’t want such a thing now, it could perhaps be bought in your own name, rented out (which I know can be a headache) and left to them in your will.

It doesn’t sound as though your youngest could afford the outgoings on a property even if bought outright (no idea what £100k might buy in your area, zero round here). The third is low paid and might also struggle. The properties would also have to be furnished. Are you sure this is a good idea?

It is from a sense of control. A gift should be freely given, with ribbons, not strings. You might think you are doing this from love, but you want to control what they spend it on. I think it's a very kind thing to do to give your children this money now but how they choose to spend it, is up to them. Your DC4 seems to be out of step with your aspirations for your other children, however that doesn't make their lifestyle wrong, just not what you would want. Think very carefully before you introduce caveats to this inheritance or it might divide your family.

I suspect some of us would be a bit upset to see their hard earned £100k spent on a car and clothes as OP suggested one child might, whilst that child isn’t earning much and can’t afford a house. In her position I wouldn’t hurry to part with my cash, it needs a lot of thought.

I’ve struggled with this as well. Two out of my three AC could do with a cash injection to stop them living from hand to mouth on a daily basis, (despite both working full time) but not sure if they would use the money wisely, so have resisted so far.
Always making sure the children have warm clothes and are well fed.
We had to struggle for years when the children were small, didn’t do us any harm and really taught us the value of money.

Coming at this from a completely different perspective - and I don't have children, so my take on this might be at odds with those who do.

You say that all your money has come from working hard. You must be very proud of that. I came from a hand-to-mouth background, inherited nothing and have made myself financially comfortable, definitely not rich but a little cushion of savings, just through my own efforts. I'm not smug, but am pretty proud of what I've acheieved.

Do you think giving children money early on in life stops them having that feeling of 'I did it on my own'? As I say, I'm perhaps out of kilter with those who have children so you might think I have this wrong.

Another idea - could you buy a property to rent out and split the income four ways. All your children will benefit from a small financial lift now and then, in due course, when they have made their way in life they could sell the house, which will hopefully have increased in value, to smooth the way as they get older.

I agree with what you say about being proud of making it by yourself and it perhaps not being a good idea to hand it to your children on a plate. I also value what I achieved myself. However your suggestion of a rental property wouldn’t be tax efficient as the income would be taxed in the hands of each recipient (could push those who are doing ok into a higher bracket) and CGT would be payable on the increase in value of the property when sold.

Another thing to consider:
Do your children even want a property? Some young people are more mobile these days and are choosing to rent rather than be tied down to one area.

By saying what the money is to be used for you are imposing a value of what is important to you, and what you think should be important to them.

Property ownership can be a millstone round the neck if you don’t have the income to support it.
However after yesterday’s experiences I’m beginning to wonder about it all. A very great deal of money to spread around, the children all so different …

We have done exactly that with our two AC. One has bought a house with his wife, and we have given 50k towards a renovation. The other has Aspergers and lives on a boat. It is not ideal but he enjoys it. He is a mature student now in his second year doing a law degree. He was first given the money to buy this tiny boat before we gave the full amount, just to see how things went. We have since given the remainder, to make the sum up to 50k. He has acted responsibly and invested the money for a later date, and for the moment is living this rather cramped lifestyle. I would of liked him to buy a narrowboat, but he wants to invest instead. I think it's a difficult decision, but I think we have to give without strings. My husband is older than me and not as fit, and we are both pensioners. We have taken the 7 year chance as i'd rather help whilst alive and when they need it. My eldest is happy with this simple lifestyle, doesn't need the money, hopefully, so has invested for now. I'd say, maybe, reduce the amount you give to them all, and put the rest in trust. I think as it's such a large amount you intend to gift, speak to a financial advisor. It's a very difficult decision to make, when your AC are at different stages of their lives. I understand totally, that you don't want your hard earned money to be squandered. Best of luck in whatever you decide.

I do not agree with giving money with strings but if that is what you want to do then speak to the recipients to see if they want the money with the controls in place.

You may well have to finance yourself for another 30 years, I would certainly consider long term financial issues - cost of getting private healthcare should you need it, the cost of future care provision full stop. Inflation has a way of eating into fixed sums too and should be a factor. If you have the money you will have choices. I would consider giving that a reduced sum say £25K each and let them do what they would like now. It's enough to make a difference without scuppering your later years. Apart from that you could consider speaking to a financial adviser, although finding a good one is difficult.

I think it is honorable for you to do this at this stage of your life, but cannot offer any tax or financial info.

Although money given should be without strings, I do understand that you are giving this to them in good faith, and you would like to put them on the road to success and stability.

for your youngest two, perhaps an amount given in stages may be an idea. They may not be interested in purchasing a property, but you could assist (especially the youngest who will need to find accommodation when you sell house) with finding a stable rental where they would be comfortable, in fact you may be requested to co-sign a lease if they have no financial background. Then you could assist or suggest a cleaner since he would have the budget. This might be a bit intrusive in some minds, but some young adults need a bit of a push to be independant.

My mum made a will leaving half her estate to my sister in trust, from which she gets an amount each year, as she is mentally disabled. When she dies, her adult children will inherit the capital. I was fortunate to inherit a sum outright from my parents, and over the past twenty years, I have given more or less that amount to my two adult children, not in one go, but last year one of them needed a substantial sum, so I decided to give the same to the other one. I told them that is it ( until I die), but I am glad that they have had the money now.
If I follow my mum’s example, I might live another 25 years, so I am not thinking about avoiding potential care costs or hypothetical inheritance tax. Ok, so my care costs may eventually exceed my resources, but maybe my children will be able to help me, as I have helped them, who knows?

We must each do what we think fit, having considered all the ramifications. There are no two situations the same.