SerpApi.Org
Dear Moral Money,
I am the trustee for my 18-year-old daughter’s £93,000 inheritance from her grandparent.
She is unaware of the bequest and in the will it stated she needed to be 25 before she receives it.
I have kept the money in Isas but I feel I should be doing more with it so the money doesn’t lose value by the time she receives it.
However, my dilemmas are:
- I wouldn’t know where to start regarding stocks and shares Isas.
- I worry about making risky investments with money that is not mine.
– Anonymous
Dear Reader,
I suspect many parents reading your letter will recognise the weight you are carrying. Looking after £93,000 that belongs to someone you love but does not belong to you is a significant responsibility. The fact you are asking these questions is encouraging because it suggests you are taking your role as trustee seriously.
Your dilemma is not really about whether you should choose a stocks and shares Isa over a cash Isa. It is about understanding what your legal and moral duty as a trustee actually is.
The money is not yours to protect according to your own appetite for risk, nor is it yours to grow according to your own investment ambitions. Your duty is to act prudently in the best interests of the beneficiary: your daughter.
Prudence is a much more demanding standard than simply avoiding risk. In fact, avoiding investment altogether can itself become a risk if inflation steadily erodes the spending power of the money over the next seven years.
One of the greatest mistakes trustees make is allowing their own relationship with money to influence decisions that should be made through the eyes of the beneficiary.
A grandmother, a mother and a 25-year-old woman could all look at the same £93,000 and arrive at very different conclusions about how it should ultimately be invested or spent. None of those perspectives is necessarily wrong. The role of the trustee is not to impose one generation’s values on the next, but to preserve and manage the capital so that the beneficiary has meaningful choices when the time comes.
That is why I think your uncertainty deserves professional guidance rather than guesswork. Trustees have legal duties that extend well beyond choosing investments. They must ensure trust assets are held correctly, administered properly and invested prudently.
One detail in your letter caught my eye. You mention holding the inheritance in Isas. An Isa is, by definition, an Individual Savings Account. Trust assets are usually held by the trustees on behalf of the trust, rather than within a trustee’s own personal tax wrapper. I wondered whether – with the very best of intentions – you might have inadvertently used a product that was never designed for trust money. That alone would persuade me that now is the time to seek advice from a solicitor or financial planner experienced in trust work.
Good trustees are not expected to know everything. They are expected to know when specialist advice is needed.
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There is another aspect of your letter that caught my attention. Your daughter is now 18. She may not yet be entitled to the money, but she is certainly old enough to begin learning about it.
I appreciate that the will specifies she should receive the inheritance at 25, and I am not suggesting you simply hand it over early. However, there is a considerable difference between giving someone control of money and giving them knowledge.
Imagine reaching 25 having had no opportunity to understand investing, inflation, taxation or even the existence of the trust. Compare that with arriving at 25 after seven years of conversations about why trustees make certain decisions, how investment markets behave and what responsibilities accompany wealth. Which young woman is likely to make the better decisions?
The inheritance itself may not be the greatest gift your daughter’s grandparent has left her. The opportunity to learn how to steward wealth before she becomes responsible for it could prove even more valuable.
That does not mean she should dictate investment decisions while she remains a beneficiary rather than a trustee. It does mean that transparency, education and inclusion could help prepare her for the responsibilities that lie ahead. The conversations may even reveal aspirations that influence how the trustees think about preserving the purchasing power of the fund. A young woman hoping to buy her first home at 25 may have different needs from one intending to establish a business or pursue postgraduate study.
Your instinct that you “should be doing more” may prove to be right, but I would encourage you to redefine what “more” means. It may not simply be earning a higher investment return. It may be seeking professional advice, documenting prudent trustee decisions and beginning your daughter’s financial education.
The role of a trustee is not simply to preserve wealth. It is to preserve opportunity. If, at 25, your daughter inherits both £93,000 and the confidence to make wise decisions with it, you will have honoured her grandparent’s wishes in the fullest sense.
All the best,
– Sam
