My LISA or new born JISA

GavB79 · 15 October 2017 at 6:24PM

My partner and I are expecting our first (likely only) child next year.

I would like to put some money aside for him but part of me wants the flexibility to pay this over to him as I choose.
I currently pay into a SIPP just enough to get below the higher rate of tax (I am in LGPS for main pension). I also pay into a S&S ISA.

I was going to pay into a LISA from this year (I'm nearly 38). I cannot afford to pay £20k into an ISA/LISA plus £4k into a JISA.
I am thinking of paying into the LISA for the bonus and giving the proceeds to our son when I'm 60 (he will be 22). That way, if he isn't 'ready' for it, I could pass it over in smaller chunks or something.
What are the benefits of choosing the JISA over the LISA, assuming I can't afford both? Other than guaranteeing he gets it and I don't spend it?

Many thanks

TARDIS · 15 October 2017 at 7:16PM

LISA sounds probably the best for your situation. You risk being penalised if you withdraw before 60, but as you say you get the top up you wouldn't get with a JISA. You'll also have control over when they get the money which you won't with a JISA.
You can always open a JISA later if you come into more money.

The downsides of LISA vs JISA are if you get into debt, bankruptcy etc a JISA would not be at risk as it's no longer your money but a LISA will. If you need to claim benefits a LISA will be counted as your savings. And on the very pessimistic side, if you die before 60 the LISA won't automatically go to your child and may be subject to inheritance tax. Either way you need to ensure you have an up to date will.

GavB79 · 15 October 2017 at 7:52PM

Thanks Tardis, those were my thoughts. My ISA should weather the storm of most adverse financial events but I guess I will need to consider the inheritance aspect further.

Keep_pedalling · 15 October 2017 at 9:25PM

If you do put it into a LISA make sure your will reflects what you plan to do with this money.

My LISA or new born JISA

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