16 yr old locked out of HelpToBuy ISA by inheritance?
silvermum
Posts: 223 Forumite
Tricky one this...
A relative died and left a sum of money in trust, divided between several grandchildren. They are not entitled to the inheritance until they are 21.
The trustees invested the money in a property, which they rent out, with the rental income going back into the fund.
The grandchildren aren't yet aware of the fund (and weren't going to be told until 18 or 21).
My 16 year old son is one of the grandchildren. He has expressed an interest in opening a Help to Buy ISA with some of his savings, but I don't think he can, because I think he will be deemed to already have 'an interest' in a property through the inheritance trust?
It seems wrong that someone else has made a decision which blocks him out of a Help to buy ISA?
Also, I don't really want to tell him about his inheritance yet, but we're going to have to aren't we?
What if the trust sell the flat before he is 18? I wonder if my son will actually be deemed too have had an interest - technically you can't 'own' property until you're 18, I don't think?
A relative died and left a sum of money in trust, divided between several grandchildren. They are not entitled to the inheritance until they are 21.
The trustees invested the money in a property, which they rent out, with the rental income going back into the fund.
The grandchildren aren't yet aware of the fund (and weren't going to be told until 18 or 21).
My 16 year old son is one of the grandchildren. He has expressed an interest in opening a Help to Buy ISA with some of his savings, but I don't think he can, because I think he will be deemed to already have 'an interest' in a property through the inheritance trust?
It seems wrong that someone else has made a decision which blocks him out of a Help to buy ISA?
Also, I don't really want to tell him about his inheritance yet, but we're going to have to aren't we?
What if the trust sell the flat before he is 18? I wonder if my son will actually be deemed too have had an interest - technically you can't 'own' property until you're 18, I don't think?
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Comments
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What are the exact terms of the Will that created the trust?
What kind of Trust is this? You mention that the children are "entitled" to their inheritance at the age of 21.
Are you correct in this? Is the Trust in any sense discretionary?
Did the Trust Deed give the Trustees full powers and choice of investment?
If this is an absolute entitlement, why did the Trustees buy a property?
The children do not all become 21 at the same time?
As things stand, the legal owners of the property are the Trustees but who are the beneficial owners of the Trust's assets?
Apart from anything else, the answers to the above have tax implications.0 -
Seems to me that he will be blocked.
I have always thought this term should be refined so that only those whose interest is above x (say the average price of a one bed flat) should be blocked.
It's just as bad for the other grandchildren, one of which might want to live in the flat themselves eventually, but can't afford to buy his/her siblings/cousins out.
Might be worth highlighting the situation to an MP in the hope that the Lifetime ISA (25% bonus also) terms might change to not exclude such persons when they are finalised. Lifetime ISA will be min age 18 though I believe.0 -
Xylophone - I'm not sure I can answer all your questions without looking back through the files.
The trustees had full discretion about investment choice though.0 -
Did you get answers Silvermum. I like Xylophone's answer, but maybe as I am in the same situation0
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