Why Letting Your Children Inherit at 18 Might Be One of the Best Decisions You Ever Make

So Am I Books
23 minutes ago
5 min read

Here’s a full-length blog article exploring why setting up your children to inherit something at 18—rather than waiting until you pass away—can be a smart, meaningful decision:

When we think of inheritance, we often picture a solemn moment: an adult child receiving an unexpected windfall after the death of a parent. It’s the traditional approach—assets passed down at the end of life, often handled through wills, trusts, or estate planning. But what if we flipped the script? What if, instead of waiting until we’re gone, we intentionally passed on a portion of our wealth to our children while we’re still alive—at age 18?

To some, that might sound reckless. Why give young adults access to money or assets they may not be ready to manage? But with thoughtful planning, this approach can be one of the most empowering and transformative gifts a parent can give. Here’s why.

1. Time Is the Most Powerful Asset They’ll Ever Have

Warren Buffett famously said: “Someone is sitting in the shade today because someone planted a tree a long time ago.” When it comes to money and investing, the earlier you start, the better. A child who receives a financial gift or asset at 18 can begin leveraging compound interest—arguably the most powerful force in personal finance. You could even begin investing from birth

For example, investing £10,000 at 18 with a 7% return could grow to over £150,000 by age 60, without adding another penny. If that same inheritance is given at 60, there’s far less time for that money to grow—and the opportunity cost is immense.

Letting children inherit early gives them the greatest gift of all: time.

Vanguard, a well-known investment management company, offers a Junior Individual Savings Account (Jr ISA) that is designed specifically for young savers. This account is an excellent option for parents and guardians who wish to encourage their children to start saving and investing from an early age. The Jr ISA allows children to save money tax-efficiently, as the interest earned on the savings is free from income tax, providing a significant advantage over traditional savings accounts.One of the standout features of Vanguard's Jr ISA is its automatic conversion into an adult account once the account holder turns 18 years old. This seamless transition is particularly beneficial, as it ensures that the young adult does not have to go through a cumbersome process to continue managing their savings and investments. Upon reaching the age of majority, the account holder gains full control over the funds, allowing them to make informed decisions about their financial future.The Jr ISA can be funded through regular contributions, which can help instill good saving habits in children. Parents can set up standing orders or make one-off payments to the account, contributing up to the annual allowance set by the government. This limit is reviewed periodically, allowing for adjustments that can help families maximize their savings potential.In addition to the tax benefits and the automatic transition, Vanguard provides a range of investment options within the Jr ISA. Account holders can choose to invest in various funds, including stocks, bonds, and index funds, depending on their risk appetite and financial goals. This diversity in investment choices allows young savers to learn about different asset classes and the importance of diversification in a portfolio.

Moreover, Vanguard emphasizes the importance of financial education, and they often provide resources and tools that can help young investors understand the basics of investing and personal finance. This educational support is crucial as it equips them with the knowledge needed to make sound financial decisions as they transition into adulthood.

Overall, Vanguard's Jr ISA not only serves as a practical savings vehicle but also plays a significant role in fostering financial literacy among young individuals. By encouraging early saving and providing a smooth transition into adulthood, Vanguard helps pave the way for a more financially secure future for the next generation.

2. You Can Guide and Mentor Them While You're Still Here

Many people inherit money without guidance, which often leads to waste or confusion. But when you gift an inheritance while you’re alive, you’re not just giving them money—you’re giving them a lesson in stewardship.

You can:

Help them open an investment account
Walk them through how a pension or ISA works
Teach them budgeting, philanthropy, or entrepreneurship
Share your values, not just your valuables

This shifts inheritance from a transaction after death to a relational legacy—an opportunity to shape how your child thinks about wealth, responsibility, and purpose.

3. It Can Kickstart Their Life With Options You Never Had

Most of us start adulthood with stress: student loans, rent, credit cards, and minimum wage jobs. Many spend their 20s just trying to get to zero. But imagine if your child had a financial cushion at 18—enough to:

Avoid student debt
Start a small business
Travel the world and gain perspective
Buy a used car outright
Take unpaid internships for experience

This isn’t about spoiling them. It’s about giving them freedom and leverage—the power to choose their path instead of scrambling to survive.

4. It Cultivates Responsibility—Not Entitlement

Contrary to popular belief, giving young adults financial assets doesn’t automatically spoil them. In fact, early exposure to responsibility often leads to maturity.

The key is structure. For example, you might:

Use a Junior ISA or custodial investment account
Tie the gift to certain educational milestones
Require financial literacy training before they access funds
Release the funds in stages rather than all at once

Done right, this becomes an exercise in trust, not indulgence. Your child learns to manage money gradually, rather than being hit with a sudden lump sum later in life with no preparation.

5. It Can Be a Strategic Tax Move

From a financial planning standpoint, passing assets earlier can help reduce inheritance tax liability and make better use of your tax-free gifting allowances. In the UK, for instance, you can gift up to £3,000 each year without tax consequences—and more if it’s part of a regular pattern of giving from your income.

Spreading out your giving over time can help protect your estate, avoid surprises for your heirs, and ensure that more of your money goes to your children—not the taxman.

6. Life Is Unpredictable—Give While You Can

Let’s face it: None of us know how much time we have left. Waiting until death to pass on wealth is a gamble. You might pass at a time when your children are already well-established and no longer need it—or worse, when they could have used it decades earlier.

Giving earlier ensures you get to see the fruit of your generosity. You can witness how your support helps them flourish, and they can thank you while you’re still here to hear it.

7. It Changes the Culture of the Family

Finally, giving at 18 can set a tone that ripples through generations. It shows that:

Wealth is not just for comfort but for contribution.
Family legacy is something to be shared, not hoarded.
Generosity is a living practice, not a posthumous gesture.

This shifts the family culture from secrecy and scarcity to openness, trust, and intentionality. It invites your children to think not just about what they get, but about how they can eventually give.

Final Thoughts

There’s no one-size-fits-all approach to inheritance. Every family is different, and not every child is ready at 18. But for many, setting up a child to inherit something meaningful at the start of adulthood—whether it’s cash, investments, property, or even a business—can be a catalyst for long-term success and character development.

You don’t need to wait for a will to leave a legacy.