Laura Whitcombe

The bank of grandma and grandad is ring-fencing its cash

Do you trust your grown-up children with money? Apparently a lot of us don’t. More than half of the grandparents who plan to leave an inheritance to their grandchildren ring-fence the money so their own children can’t get their hands on it, according to data from insurer Sun Life.

But is it any wonder? British adults have become addicted to debt. The Office for Budget Responsibility has warned we’re on course to spend more than we earn for the rest of the decade. In total, our overspend is expected to be £58 billion this year alone and £68 billion in 2019.

We’re plugging the gap between what we earn and what we spend with unsecured debt in the form of credit cards and personal loans or flogging our assets – everything from our old clothes and furniture to shares.

And with buy now, pay later increasingly the mindset of the nation, it’s hardly surprising that the Money Advice Service estimates that more than 8 million adults are facing problem debt.

And if your children have had three or more children of own, then you’ve got even greater cause for concern. The Money Advice Service analysis found that while having children increases the probability of debt problems by more than 50 per cent, ‘there is a particularly strong relationship between debt and having three or more children’.

While 19 per cent of adults with one or two children are over-indebted, this rises to 26 per cent among adults with three or more children. The Sun Life research found that grandparents across the UK now spend £62 a month on each of their grandchildren, that’s £744 for each child a year on things like pocket money, sweets, clothes, presents, hobbies and clubs. While they say they don’t begrudge spending cash on their grandkids, a third did admit they don’t like having to fork out for school and travel expenses.

And the support they give their grown-up children doesn’t stop there. Despite the fact that they live 119 miles away from their grandchildren on average, four in five grandparents provide some form of childcare for them too. Sun Life found almost half babysit, one in five do the school run, one in four provide daycare during the working week and one in three look after their grandchildren when they are ill.

Seeing as grandparents are so tapped up by their own children, it’s understandable so many are ring-fencing money specifically in their will for the grandkids. It’s also understandable that half of them admit that spending time with their grandchildren is more enjoyable than the time spent with their own children when they were growing up.

So if you are planning to leave your grandchildren an inheritance, make sure that your wishes clearly documented in your will and keep it up-to-date. Without one, your estate will fall under the rules of intestacy and the law will dictate what happens to your money – and your pesky children could end up blowing the lot.

Laura Whitcombe is knowledge and product editor at ThisisMoney.co.uk

Comments