Savings for a (great) grandchild

notahopeinhell

My mother, who is 89, wants to set aside some money for her great grandson until he's 21.

I know there are child savings accounts, like the one at Northern Rock, but what other methods of saving for his future are there that would be secure and hopefully not attract tax?

I've heard of Trust funds but have no knowledge of them and assume they might require a solicitor to set up?

Any advice gratefully received.

Many thanks.

xylophone

The problem lies in setting the money aside until he is 21.
A bare trust can be set up, but the beneficiary is entitled to access to capital and income at the age of 18.
Do not set up any other kind of trust without expert advice as the tax situation is complex.
http://www.lawdonut.co.uk/law/personal-law/family-trusts-and-inheritance-tax/trusts-for-children-and-other-family-22-faqs#4
http://www.hmrc.gov.uk/tdsi/children.htm
http://www.hmrc.gov.uk/trusts/types/bare.htm
http://www.sit.co.uk/products/investing_for_children/features/questions_and_answers/
http://www.hmrc.gov.uk/tdsi/ten-per-cent-guidance.htm
http://www.hmrc.gov.uk/individuals/savings-income.htm

Reaper

If the deluge of links are a bit intimidating here is an example. I used a Bare Trust with Baille Gifford, putting most of the money in their flagship Scottish Mortgage fund (which has nothing to do with mortages!)
http://www.bailliegifford.com/pages/UKPersonalInvestors/Children/InvestingforChildren.aspx
The money came from grandparents and the trustees (people running it) I set up as us parents.
It is an investment so will go up and and down in value with stock markets but over the long term (which this is) ought to outperform savings accounts.

That's only one example though, there are plenty of other good choices out there.

notahopeinhell

Thank you both for the advice it sounds a bit daunting but well worth me checking out.

Many thanks.