Vincent had been a personal client of ours for a number of years. Vincent’s brother, Leon ran a very successful business in the north of England. But because of his underlying health issues and problems with alcohol abuse, he knew that he would not live a long life. He wanted to make provision for Stephen, his adopted son, who was to be the only beneficiary of his estate. 

Vincent agreed to act as a Trustee for a Trust that Leon set up for Stephen. We were not involved in the Trust arrangements, since at the time Leon and Stephen were not yet clients of ours. The Trust was set up by a solicitor acting for Leon and without the input of any Financial Planners. It was set up was an “Absolute Trust” with Stephen being the sole beneficiary. 

 

Tragic circumstances

Leon passed away much sooner than he or anyone else had expected. Stephen was still only aged 17 at the time, and went to live with Vincent and his wife Heather. Right at the outset was very aware that he was due to inherit a substantial sum of money. 

On his 18th birthday, sometime in the mid 90s, Stephen inherited a sum in excess of £300,000. The nature of the Trust meant that he received the money in one go, to do with as he wished.

We attempted to advise Stephen. We recommended he take a sensible approach and put a a proper long-term investment strategy in place. This would set him up comfortably for life. Vincent and Heather also did all they could to encourage Stephen to be careful and to think long-term. However, the advice fell on deaf ears.  

The money lasted less than three years. By age 21, every penny was gone. It had been spent on cars that were subsequently written off, holidays for his friends, jewellery for girlfriends, and drugs and alcohol. At just 21 years old, Stephen had no money, no car, no girlfriend and no home.  

 

Takeaway

We make no judgments on this, other than of the solicitor who did a very, very poor job in advising Leon and setting up, in our opinion, the wrong type of Trust. We tell the story to illustrate the point that, sometimes, younger people in particular are not great at goal planning and long-term thinking.

It is important when undertaking generational wealth and legacy planning to consider this point and, if appropriate, to build in the protections around access to money. It’s important to look at the “what ifs” and the ability to delay inheritance until beneficiaries are a little older, and perhaps wiser.