Bare Trust v Designated Fund

King_Weasel

We want to set up a small fund for our latest gs (under 2yo) - around £1500. We are happy for him to have full control at 18. We can't assume we will still be here by then.

Is it worth bothering with a Bare Trust for this or would a designated a/c suffice? I don't think it's worth seeing a solicitor over this.

dunstonh

For an amount that size, I would go with designation on a UT/OEIC personally.

Reaper

The main difference is the Designated Trust will be taxed as if it is your money, wheras the Bare Trust will be taxed as if it is his. That can be useful if his tax allowances are unused as they probably will be. However as Dunstonh says unless you are planning to add more later the amount of tax you are talking about is small and it is probably not worth giving up the extra flexibility a Designated Trust gives you.

I often suggest Investment Trusts when investing for young children. Here's an example of one (though not the one I went for) which explains the difference between Designated and Bare.
http://www.fandc.com/new/it/Default.aspx?id=78401

BFM

can you have the parents set up a child trust fund - or if they already have one top it up with your investment - thats tax free and becomes available at 18?

King_Weasel

BFM wrote: »

can you have the parents set up a child trust fund - or if they already have one top it up with your investment - thats tax free and becomes available at 18?

Thanks. I thought of that, but doesn't that limit the fund choice and run up charges?

I was thinking of Jupiter Ecology, btw.

Reaper

King_Weasel wrote: »

Thanks. I thought of that, but doesn't that limit the fund choice and run up charges?

I was thinking of Jupiter Ecology, btw.

From a quick look I believe the Share Centre non-stakeholder CTF let's you invest in Jupiter Ecology.

steve572005

are Bare Trusta taxable? can the amounts be ignored for means-testing? any more info much appreciated