Use your child - best child savings account

xylophone

In a normal child account, the child has the right to access at the age specified by the account provider - the fact that the parent has paid tax on the interest does not change this.
example here http://bank.virginmoney.com/savings/learn/childrens-accounts/

Where interest is subject to the £100 rule, the rule relates to the income tax status of the donor so it would make sense for a higher rate tax payer not to be the donor.

As far as I can see, if you wish to gift money to your child and prevent access until a time of your choosing, then realistically your only option is to set up a discretionary trust - the tax treatment is complex http://www.hmrc.gov.uk/trusts/types/minors.htm

You could think of your ISA as "earmarked" for your child, the money to be given at a time of your choosing. As you point out, you might then need to have regard to IHT considerations.http://www.hmrc.gov.uk/inheritancetax/pass-money-property/exempt-gifts.htm

Another point, if you were to fall on hard times and need means tested benefits, the money in your ISAs would be yours and you could not refuse to spend it because you regarded it as "earmarked".

tnp999

My mother's ex partner opened an account with £30 nearly 11 years ago. As my son was a baby he had to open the account and was named on it as a trustee. We have continued to pay money into the Santander account. When my mother separated from the partner, I went into a Santander branch and was told that the account would automatically convert to my son when he reached 18 as his name is on the account too. We are no longer in contact with my mother's ex partner and do not know where he is, although believe he has left the country. We moved house recently and I went into a branch to action the change of address and was told I could not and only the trustee could. I was also told that my son would not be able to access the money, even when he was 18 and that the only person who could do anything with the account (other than pay money in) was the trustee. Could someone please advise if this is true and we have lost all of the money paid into the account? Many thanks.

xylophone

The account was opened in bare trust?

See http://www.hmrc.gov.uk/tdsi/children.htm

Did the child's parent sign an R85? In a "re" account this would definitely show that the money belonged absolutely to the child and was not simply a "designated" account.

See https://forums.moneysavingexpert.com/discussion/4438549 posts 19 onwards.

How do the names appear on the account? "Mr A Partner trustee of Master B Baby" definitely shows a trustee relationship.

Note from the link that only a parent or guardian can sign the R85 and that the address on the R85 must be that of the child.

It follows that if there is an R85 in place then only the parent or guardian can change the address on it.

See link for what happens re tax when a child turns 16 if the child is the beneficial owner of the funds.

The beneficiary of a bare trust has the absolute right to capital and income at the age of 18 (16 in Scotland).

It seems to be that you need to establish the precise way in which this account is held before you can proceed any further?

You should also make every effort to trace the ex-partner?

ses6jwg

Santander cannot do anything without mother's ex partners signature.

Karonher

Sorry if I have missed this elsewhere but are there any accounts that prevent access until 21? My nephew has accounts from a few people and although it is not a fortune it is in the £000s and we would rather he did not get control of it all at 16?

Experience from his pocket money/birthday money shows that he will spend all that he gets.

Thanks

cardiff82

Hey all

We have recently had our first child and would like to open up an account for him.

Our only concern is that when he turns 16 he'll just go and spend on something that we don't approve of. Is there anyway of opening up an account whereby we keep control of the money until he is a little older (preferably 21 or something) so we can make sure it will be spent on uni fees / car / travelling / house deposit etc?

Any help would be much appreciated?

Thanks

Froggitt

Yup. Just dont tell junior about the existence of the account. And make it a Junior ISA so theres no tax implications for anyone.

xylophone

Hey all

We have recently had our first child and would like to open up an account for him.

Our only concern is that when he turns 16 he'll just go and spend on something that we don't approve of. Is there anyway of opening up an account whereby we keep control of the money until he is a little older (preferably 21 or something) so we can make sure it will be spent on uni fees / car / travelling / house deposit etc?

Any help would be much appreciated?

Thanks

Be careful of £100 rule (which does not apply to JISA )

http://bank.virginmoney.com/savings/learn/childrens-accounts/
Regarding parental trusts for children see http://www.hmrc.gov.uk/trusts/types/minors.htm

Regarding JISA and access see https://www.gov.uk/junior-individual-savings-accounts/overview

"Your child’s Junior ISA will be in their name, but the parent who opens this is responsible for managing the account and known as the ‘registered contact’.

The registered contact is the only person who can:

change the account, eg from a cash to a stocks and shares Junior ISA
change the account provider
report changes of circumstances, eg change of address
Contact your account provider to do this.

Children older than 16
If your child is 16 or older they can:

become the registered contact for their Junior ISAs
open a regular ISA
When your child turns 18 they can take out any money in their Junior ISAs."

cardiff82

Good idea Froggitt!

Thanks for the post xylophone; I think a JISA is the way forward.

Woodyrocks

I had never heard of the discretionary trust fund mentioned in here but I am wondering if it would be applicable for me. I have had a quick read but still unclear as to whether I might be able to set up an accumulation trust for DD as a 'vulnerable beneficiary' following OH death. Can someone on here explain a little bit more about it to me please. I can see that the deadline for me making a 'vulnerable person election' would not be until early 2014 so I do have time to figure out if this is the right course of action to take.

My main interest is to safeguard some money for DD's future. I am about to open her first JISA and will be using the current years allowance before the 5th of April. The intention is to max it out annually for her and all in all she will have 5 tax years of JISA deposit - all things willing - before turning 16.

I am a basic rate tax payer - are there other options I am not considering? I don't really want to lump the money earmarked for her in with my own savings plan if it can be helped. Ideally, the money will be locked away until she is over 21. I really want to get all this sorted out before I revise my own will so all comments welcomed.