Savings account for my Children

First of all, you can open Junior Isas for them. 3600 a year I think? Put the rest into a best interest easy access acct with you as 'bare trustee'. Then you can open fixed rate bond accts with some of it- you will get higher interest if it is invested over 3-5 years.

Keep a copy of the will, showing the money came from your mother so you don't get charged as if it were yours (100 rule).

But with them being so very young, I would invest some of it ( a large proportion) in equities as they are more likely to give you a return above inflation plus growth over 10 years and more. You could get around a lump sum worry by phasing it into an investment trust savings plan (again with you as the 'bare trustee'). That way you will get growth and dividends and the money will grow to a tidy sum (to pay for university- deposit for first house) over time.

Money kept in easy access can be used for important treats if you cannot afford them yourself such as school trips and driving lessons.

Junior Isas

No, not if these children were eligible for Child Trust Funds
in view of their ages, they would have been?

OP, do your children have CTF accounts?

The normal reason for using the CTF/ISA is to take advantage of the tax privileged status, especially when parents wish to give money to their child., because of the so called "£100 rule".
http://www.hmrc.gov.uk/tdsi/children.htm

As I (no expert) understand it, as this money was left to your children in a will ( I am assuming that there was no formal trust created within the will), the £100 rule does not apply.

You however will hold the money as "Bare Trustee" for each child.
( You will obviously be able to prove the source of these funds because you have a copy of the will).

You say that there is a substantial amount involved.

You might choose to open some form of deposit account for each child

(see notes on "re format" in HMRC link - note the information on R85 and what must happen when the child turns 16 if you are in England).

If there is a long time scale, you might prefer to invest some of the money in a unit trust or OEIC in bare trust for the children -
see http://www.fandc.com/new/uk_sc/Default.aspx?id=78401 for example.

Another example https://www.share.com/a/junior-investment-account.html

Remember that because the money belongs to the child, the income arising belongs to the child - each child has his or her own tax allowance.You will know that this allowance usually increases each year.

If the amount of income to be received by each child is greater than the standard tax allowance, see also the note at the side re 10% band on the HMRC link, remembering that the figures for allowances shown in this section are out of date - simply insert the correct ones.

If you choose to invest in unit trusts/oeics/investment trusts etc on the children's behalf, if any of them pay interest as opposed to dividends, you will be able to reclaim any overpaid tax.

If the bequests are substantial, you might wish to take professional advice.

And, of course, if the income is substantial the additional tax advantage conferred by the CTF might be worth using.

http://www.hmrc.gov.uk/rates/it.htm