need advice for son

shelly2jn

My ex passed away and has left our son some money. We know that there is £4000 in cash for him when he turns 18 (he's 16 now) but there is also death benefits from his pension to come. I'm not sure exactly how much but it's reckoned to be in the region of £45000. We are expecting the cheque any day now. What do I advise him to do with it? I have never had any money, am never likely to have any money! I don't know much about isas or which bank would even be the best for him to go to for his initial bank account. Would we be better to go to an independant financial advisor or would this just cost him money? I want to make sure that this money works for him as it will set him up for a deposit for a house or his first car and insurance. HELP!!!!!

hotkee

Various options - you can pop into the local bank branches and ask to speak to a few advisors (they are free) - arrange appointments with a few of the leading banks and building societies and talk over what you want from the money. They will try to flog their own products so be vary about committing too readily.

As my own suggestion would be splitting money into different areas

Cash ISA (barclays doing good deal).
Fixed term bonds like the west bromwich building society 4.3% for the next 12 months.

If you feel like taking a risk - you could consider a shares ISA invest on top of the £3600 cash only isa.

jem16

shelly2jn wrote: »

Would we be better to go to an independant financial advisor or would this just cost him money?

If you plan to invest the money for him rather than save it then yes you should see an IFA. Do not go near the bank for investments.

Investing would require a time scale of at least 5 years.

dunstonh

you can pop into the local bank branches and ask to speak to a few advisors (they are free)

They are not free. Bank investment products (and life and pensions) are more expensive and that pays for the "free" advice. Also bank investment products are almost all universally poor or if they use a known external provider then they are often cut down or more expensive versions of the IFA product. There is never any reason to seek advice from an insurance agent at a bank.

Were there instructions in the will that stated how the money was to be used and from what age? Will a trust arrangement be required? Do the family all get on or as trustee will you need to protect yourself from possible future issues (you have a legal requirement to do what is best for your son but you also have to be seen to be doing what is best and being able to give your reasons. With problem families you may get someone challenge your decisions and may need to provide evidence as to why something was done. It doesnt happen often but it does happen).

If you feel like taking a risk - you could consider a shares ISA invest on top of the £3600 cash only isa.

You cant use a cash iSA or a stocks and shares ISA.

hamstercheeks_2

shelly2jn wrote: »

My ex passed away and has left our son some money. We know that there is £4000 in cash for him when he turns 18 (he's 16 now) but there is also death benefits from his pension to come. I'm not sure exactly how much but it's reckoned to be in the region of £45000. We are expecting the cheque any day now. What do I advise him to do with it? I have never had any money, am never likely to have any money! I don't know much about isas or which bank would even be the best for him to go to for his initial bank account. Would we be better to go to an independant financial advisor or would this just cost him money? I want to make sure that this money works for him as it will set him up for a deposit for a house or his first car and insurance. HELP!!!!!

hi Shelly sorry you're ex has passed away you must see a financial adviser.

sorry an IFA as they are independent and not tied to any bank oranything.

shouldn't cost much

best of luck

hotkee

dunstonh wrote: »

You cant use a cash iSA or a stocks and shares ISA.

You can open one cash ISA and one stocks and shares ISA each tax year. Up to £3,600 can be invested in a cash ISA. The remainder of your £7,200 allowance can be invested in a stocks and shares ISA. Alternatively, you can just open a single stocks and shares ISA and invest the full £7,200 in that.

Aegis

hotkee wrote: »

You can open one cash ISA and one stocks and shares ISA each tax year. Up to £3,600 can be invested in a cash ISA. The remainder of your £7,200 allowance can be invested in a stocks and shares ISA. Alternatively, you can just open a single stocks and shares ISA and invest the full £7,200 in that.

I don't think you can open an ISA for money held in trust.

evenasus

I'd do my research on the Internet, checking all the bank/building society accounts available.

I imagine you wouldn't want to take risks with your son's inheritance.

Personally I wouldn't go near a 'financial advisor', independent or otherwise.
Neither would I touch a stocks & shares ISA. Have you read some of the posts made by people who have lost considerable amounts of money in them lately?
I know others have said to just hold on and the investment ISA will recoup lost funds in time. Wouldn't make me feel any better hearing that though.

This is just my personal opinion.

hamstercheeks_2

my sister was in a similar position but her kids were 10 and 12 so she put certain amounts from the death benefit into trust funds until the kids were in their 20's

if it is in a child trust fund i'm sure it's exempt from tax and the other nasties

may be different for your boy as he's 16 tho but i would deffo speak to an IFA

dunstonh

You can open one cash ISA and one stocks and shares ISA each tax year. Up to £3,600 can be invested in a cash ISA. The remainder of your £7,200 allowance can be invested in a stocks and shares ISA. Alternatively, you can just open a single stocks and shares ISA and invest the full £7,200 in that.

No you cant. Not in the circumstances mentioned in the first post.

if it is in a child trust fund i'm sure it's exempt from tax and the other nasties

Not an option thats available at that age I'm afraid. Plus, even if it was it may not be consistent with the instructions on when the money should be made available.

Neither would I touch a stocks & shares ISA. Have you read some of the posts made by people who have lost considerable amounts of money in them lately?

What has that got to do with anything? You never invest on the basis of short term and there are many people that are seeing very good short term gains. Equally they count for nothing as its short term.

This is just my personal opinion.

As you say, its your opinion but it isnt right for you or anyone else to impose their risk profile onto someone else.

I imagine you wouldn't want to take risks with your son's inheritance.

You seem to be focusing on only one type of risk and ignoring the others and making an assumption that investment means high risk. Risk is not an on/off situation but a sliding scale. Investments may or may not be the option and low through to high may not be either but ignoring options without knowing circumstances is pointless and could actually put the OP in a position that could see them sued later for not acting in the best interests of the beneficiary (unlikely but does happen and the trustee does have a legal responsibility).

JoeCrystal

dunstonh pretty much outlined all very important points when handling inheritances.

Deciding what to do with your own money is fair enough but, deciding what to do with inheritances and trusted money are entirely in different ball park and should be handled with care and with professional advise.