Use your child - best child savings account

xylophone

I'm just seeking ideas on the best way to continue £100/month regular savings for a child once they've reached 17 years. I have to save up sufficient money in each account to meet the minimum £1000 amount allowed by St. James's Place to add to each child's unit trust in one transaction.

You may find it difficult to open an account in trust for a near adult of 17.

You might just have to hold on to the money in your own name until you have reached the required amount (or make the investment from savings and "repay yourself" monthly).

You should be aware that if the unit trust accounts are held in bare trust, any income or gain arising is assessable to tax on the beneficial owner - this may not have had much significance while your grandchildren were young but as they move into the world of work, it may.

Therefore you may need to make these young people aware of the existence of the trust funds.

If the unit trusts are not held in bare trust but are beneficially yours (perhaps with just a designation), then this problem does not arise (but you would need to make specific mention in your will if you wish the funds to go to each child concerned).

However, if the unit trusts are not in bare trust but are beneficially yours, then it could be argued that you were taking cash from money gifted and beneficially owned by each grandchild (the Halifax money) and giving it back to yourself?

JoP1

Many thanks for your most helpful comments.

The unit trust funds are not held in bare trusts, but are beneficicially mine, with a designation of the grandchildren's initials.

I note your last para comment, but as the amount transferred to the unit trusts each year directly corresponds with amount transferred out of the Halifax accounts, which are also beneficially mine, but in my grandchildren's names, via a Halifax current account set up just for this purpose ìn my name and not used for anything else, then I would hope the clear money trail would obviate problems.

From questioning Halifax and other banks who offer children's accounts at higher interest than adults accs it's apparent that not many checks, if indeed any, are made to ensure that adults are not benefiting from using these accs for their own purposes.

I had reached the same conclusion as you about the answer to my question, but posed it here just in case something was available that I wasn't aware of.

Thanks again for your help - Jo

xylophone

with amount transferred out of the Halifax accounts, which are also beneficially mine,

No, they are not beneficially yours.

The children are the beneficial owners of the money in the accounts - you are the Trustee.

From questioning Halifax and other banks who offer children's accounts at higher interest than adults accs it's apparent that not many checks, if indeed any, are made to ensure that adults are not benefiting from using these accs for their own purposes.

This is immaterial to the fact that you hold the child's account as a Trustee and therefore are not the beneficial owner of the funds.

See the Terms and conditions https://www.halifax.co.uk/savings/kids/kids-monthly-saver/

When opening a Kids’ Saver you:

Will hold the account as trustee for the child you are saving for. You are the only one who can open and operate the account. You can only save for one child in an account, but you can open more than one Kids’ Saver account to save for several children separately.
••
Understand that being a trustee means you must manage the account for the child’s benefit, and that the child can claim the money from you in the future. Generally a trustee will transfer money in a trust account to the child once he or she is old enough. The age this happens will usually be 16 or above.
••
Understand that once the child is old enough we will tell them that we hold some information about them.
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Understand that up to two Kids’ Saver accounts can be held for any one child, for example if two parents want to save

JoP1

Thanks again - I understand the terms 'beneficially' & 'trustee' properly now!

As my oldest grandchild reaches 17 this April Halifax will close his Monthly Saver & transfer money to his Kid's Saver, from which I'll transfer it to the Halifax current acc & thence to his Unit Trust fund. I'll then close the Kid's Saver and, following your suggestion, have set up a standing order of £100/month from my current acc with a different bank to one of my savings accounts from which I will do the annual transfer to St. James's Place Unit Trust. I'll copy this action for the other 2 younger grandchildren when they reach 17.

I'll ask Halifax if they intend to inform the grandchild 're 'his' money. I hope not as the whole idea is that the money will accumulate in the Unit Trust Fund without them knowing it exists until such time as the trustees (parents & g/parents) deem it the correct time to pass it over. After uni & perhaps towards a house purchase deposit - we'll see.
Thank you very much for your time and trouble - Jo

MallyGirl

Halifax will write to 17 year old

xylophone

from which I'll transfer it to the Halifax current acc & thence to his Unit Trust fund.

But you are actually transferring it ( money already gifted to the child) to your Unit Trust Fund? (If you are correct in stating that the unit trusts are not held in bare trust - are you certain of this?)

See final paragraph in post 783 above.

I'll ask Halifax if they intend to inform the grandchild 're 'his' money.

Why "his" in inverted commas? It is his money.

Understand that being a trustee means you must manage the account for the child’s benefit, and that the child can claim the money from you in the future. Generally a trustee will transfer money in a trust account to the child once he or she is old enough. The age this happens will usually be 16 or above.

xylophone

And see

https://www.thepfs.org/knowledge/technical-articles/articles/investing-for-children-part-2/57447

JoP1

Thank you once again. Obviously I need to check about the type of trust fund from St. James's Place as I might have got it wrong. I'll let you know next week.
I know that all three grandchildren's trust funds are dealt with by me solely for their benefit and are only identified in the periodic financial reports from St. James's Place by their initials. I'll ask if they're Bare Trusts.
His was in inverted commas purely because I have g/children of both sexes and I was using the term 'his' for convenience. It could have been his/her.

JoP1

If the unit trusts are not held in bare trust but are beneficially yours (perhaps with just a designation), then this problem does not arise (but you would need to make specific mention in your will if you wish the funds to go to each child concerned).

My St. James's Place Partner has confirmed that they are not Bare Trusts, so that's a relief. Halifax have confirmed that they will not write to advise my grandson either, they will write to the account holder - i.e. me.

talurve

I'm about to receive just over 38k from my son's father's pension provider (his father passed away in December 2018) as a lump sum for his sole benefit (and not classed as part of his father's estate). This is going to be paid into my bank account which leads me to my first question: will this be classed as my income and is it taxable? I don't want to get hit with the higher tax rate or anything!

My second question is where shall I put the lump sum? I don't want any of the money for myself, just for my son to pay for university or towards a house deposit or whatever once he's old enough.

I'm completely clueless with all this - could someone help me please!