can you trust an 18 year old with a CTF?

u751904

I upped my CTF contribution to £75 the other day. I also upped my own fund to £100 pm. I don't earn a lot so this is a good contribution for me. My daughter is six and of course I think she is wonderful and lovely etc.. I am hoping she'll have a reasonable pot of money when she is 18. I've invested in a stocks and shares option for her since she was born and she has more than I do already. About £5k. I have started to think whether this was in fact the best option. I am wondering in fact if should at least stop payments into her fund and in fact leave that where it is and put all the contributions into one pot 'my' pot. I am concerned with handing over that amount to her at 18, its a lot. Certainly more than I had when I was that age. I would of course use the pot of money I accrued for the things that I hoped she'd use it for, driving lessons, travel, uni, business, etc etc.

Besides from the trust / parental thing. Are there any benefits / drawbacks to investing all in a private investment plan. I use at the moment F&C for both. The CTF is a shares account. I've tried to compare costs. Both seem low, can't quite get my head round it but there is a transaction fee of 0.02 % for each PIP purchase. So I guess this is a negative.

Anyone else got concerns over handing over the hard earned savings to an 18 year old !! Thanks

atush

well, saving for children is great, but if you aren't saving enough for your retirement to do so that isn't wise either. So I would look at your overall situation and if you don't have enough savings I would reduce hers and raise yours?

I saved for mine in investment trusts, and it is for university. But, I didn't hand them over- they are in re:accts and the oldest is 21 and it is still int he RE:acct with me controlling it. But I will be getting the forms to turn it over to him shortly as he is graduationing with a 2:1 and has a job- he may want to continue saving into it as it hasn't been completely spent on uni.

So, you have to base it on how you and your OH are raising the kids, and if they take money/education/life seriously or not. If you think not, I would save elsewhere. If you think yes, then carry on.

There are tax drawbacks if you give your children money for savings that produce over 100 quid per chaid/per yr but dont' know if CTFs take that out of the equation or not?

xylophone

If you are unhappy about handing control to your daughter when she is in her teens, then you can indeed stop contributing to the CTF and continue to save for yourself in an ISA - you can then pay for such things as driving lessons etc and support her through university etc.
It's up to you.

If a parent saves in a "re" (bare trust) account for a child outside a tax free scheme like the CTF/JISA then the "£100 rule" applies - see http://www.hmrc.gov.uk/tdsi/children.htm

A child is absolutely entitled to capital and interest in a bare trust at the age of 18.

xylophone

I saved for mine in investment trusts, and it is for university. But, I didn't hand them over- they are in re:accts and the oldest is 21 and it is still int he RE:acct with me controlling it.

http://www.hmrc.gov.uk/individuals/savings-income.htm
http://www.hmrc.gov.uk/trusts/types/bare.htm

atush

None of those links as usual pertain to my situation- and the money is his and is spent on him. He just wasn't interested in doing it until now.

Suarez

Why not just save up yourself and help her our when she buys her first property.

At least you know it's not going to waste.

maryjanell79

I was worried about the same thing actually! I was going to set-up a junior ISA for my 3 year old but as adorable as she is now, I would like some control over what she does with her money when shes 18.

So I currently keep everything under my S&S ISA with rplan, they are great because most of their funds don't have an initial charge and they rebate 50% of the ongoing commission back.

I make similar monthly contributions as you do and have decided that when shes 18 and she wants driving lessons, money for traveling etc. I can monitor what the money is used for.

CLAPTON

no, I would not want a child of mine to get access to a largish sum of money at 18

many kids will be fine and will accept advice from mum and dad but some will not

there' no way of knowing what the situation will be then

save the money in your own a/cs and then decide at the time whether to give it or not.

xylophone

None of those links as usual pertain to my situation- and the money is his and is spent on him. He just wasn't interested in doing it until now.

That's fine then!

ses6jwg

I just won't be giving my daughter the details of her CTF until I know I can trust her with the money.

She can take me to court if she wants.

xylophone

http://www.direct.gov.uk/en/MoneyTaxAndBenefits/ManagingMoney/SavingsAndInvestments/ISAsandJuniorISAs/DG_199672 "What happens when your child is 16 or 18
When your child is 16 they can become the registered contact and manage their own account if they want to.
When your child is 18 they can choose to take the money out of the Junior ISA or invest it in a different type of account. Otherwise the Junior ISA will automatically become an adult ISA."

You may find that the provider has to inform the child of his legal rights?