Savings - parental control over 18

morning55

Is there any way a parent can store a child's investment until they are 21. My child will be 18 next year but has 20,000 their grandmother left them. If they got their hands on this sort of money at 18, it would be a disaster.

Thanks

withabix

It isn't your money to withhold from them when they reach 18.

atush

With their agreement of course you cold put it in a dual acct needing dual signatures to remove money. OR into your name in a bare trust re:acct.

I have a 21 yr old and have a Bare trush investment trust acct and he doesn't have access to it but hw knows where it is and is happy to leave it to me until I send it to him later this year.

thenudeone

IF he knows about it and unless the will specified any conditions or a trust to be set up, he's entitled to it at age 18.

Can you not sit down and explain how useful it would be to have that sort of money kept safe until he needs to buy a house or a car, and agree to lock it way in some fixed maturity account?

xylophone

What were the terms of the will?
How is the money being held at the moment and who is holding it?
From what you have said it would appear that the money was not left into a discretionary trust.

Under normal circumstances therefore, the money would have been held in a bare trust and held on deposit in a bare trust on behalf of the child, using a "re" account. The money and any income arising are his absolutely.

If the child was a non-taxpayer, the trustee would have arranged for an R85 to be completed so that interest was paid into the account tax free.
At the age of 16 ( I am assuming you are not in Scotland) the R85 would have had to be cancelled and the Trustee to have reclaimed tax on behalf of the minor beneficiary and returned it to the 're' account.

When the beneficiary attains his majority, the Trustee must arrange for the account (s) to be transferred into his name.

Something that the Trustee could have done is to have put all the money into a four or five year fixed rate bond when the beneficiary reached the age of 17 - the trustee would still have to transfer the account into the beneficiary's name at the age of 18 but the trustee would have chosen an account whose conditions did not permit access until the end of the term. At the age of 18 the beneficiary can complete the R85 (if appropriate) for himself.
http://www.hmrc.gov.uk/tdsi/children.htm

westy22

If they got their hands on this sort of money at 18, it would be a disaster

It could still be a disaster at 21! Is there really any age where you can confidently say that he would use the money wisely?

MsHoarder

If they are just likely to "fritter" the money, then talk to them about it, discuss how atm fixed term bonds are the best way to maximise interest and hope that they agree to lock it away for 3-5 years.

If they are desperate to get out into the world and want to burn it up on travel/renting an independent place to live then you will just have to live with it. But discussion as to what the grandmother would have liked to see them do with the money may well be the way forwards.

rpc

xylophone wrote: »

When the beneficiary attains his majority, the Trustee must arrange for the account (s) to be transferred into his name.

I don't think that's quite right. At 18 (16 in Scotland) then beneficiary must be told of the account and can demand it be put in their name, but there is no reason it cannot remain in trust if the beneficiary is happy for that to happen.


OP - depending on the terms of the will, this is probably your child's money to do with as they please. You cannot dictate what they do with it no more than any other savings they have. You will have to rely on the way you have brought them up having given them a sensible outlook (perhaps with a few prompts).

xylophone

You will note my comment about "not in Scotland" above (post 5) and my link to
http://www.hmrc.gov.uk/tdsi/children.htm which explains the England/Scotland treatment.
In view of the possible tax complications that can arise, although the beneficiary could request the Trustees to handle the assets, because he would be responsible for his own tax affairs, this would seem to invite unnecessary complications.
http://www.lawdonut.co.uk/law/personal-law/family-trusts-and-inheritance-tax/trusts-for-children-and-other-family-22-faqs#5
http://www.hmrc.gov.uk/trusts/types/bare.htm