can you trust an 18 year old with a CTF?

ossian

I have a young son... we have no idea how we will behave when he reaches adulthood so we chose not to get the CTF/JISA route.

Personally I am not entirely sure if I was responsible enough to manage a significant sum of money when I first left home for Uni and I didn't have any bad habits and hadn't gone "off the rails" like some people do.

Anyway my wife and I handle the situation like this.... we pay a small amount each month into my wife's S&S ISA for our son. We pay it into a fund with a suitable risk profile (probably an overly cautious choice however we were not comfortable with getting hit by a huge stock market correction the year before my son goes to uni although most people say go for risky growth investments as the timescale is long).

However to get back on topic the main point is that in addition to retaining control we are using a separate fund so we can track how much of my wife's ISA is for our son.

In addition we hope never to need to do so but if there was some terrible economic disaster (fire, flood, plague, prolonged unemployment) that threatened the households well being we would have the option of raiding my sons funds as a last resort (better than starving). This is an extremely unlikely scenario but the family is stronger for having this as a last resort.

It is our expectation that the funds will pay for an education on leaving school.

I hope some of my rambling post is useful.

Ossian :j

atush

xylophone wrote: »

That's fine then!

:j

doesn't stop you slapping them (and me) out every time i mention it lol. but good links for some.

they can become the registered contact and manage their own account if they want to.

Yes, they can. But don't expect any providers ( i hold re acct plans for my 3 boys and a godson) to ever contact the children when they are 18- they haven't and don't bother. It is up to the child or you to do so.

I don't hold CTFs for Jisas so they might- but who knows as it will be a while before any of those kids reach 18? Wil be good to knwo whne and if though.

atush

maryjanell79 wrote: »

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.

The only problem with this (that I can see) is that if you are using S&S and/or Cash ISA allocations for her future use/life, you aren't using them for your own life/retirement. So am hoping you have enough retirement and other savings to do this comfortably?;)

xylophone

doesn't stop you slapping them (and me) out every time i mention it lol. but good links for some.

I wasn't aware I was slapping anybody! I simply try to point out (I hope courteously and in the spirit of helpfulness) tax considerations of which people may not be aware.

With regard to providers contacting the children/young adults in question, you can see above the official link concerning the CTF/JISA in particular - as I said, the child/young adult does have legal rights, particularly at 18, so the provider might well have to contact him/her - no doubt time will
tell!

atush

I have yet to see this myself (the companies contacting any children once 18), and do understand the concept.

Thing is they don't in general, and if you don't mention the plan you have set up (or don't remind them constantly about it) they forget and won't know how to go about getting access really.

I suppose when the first wave of 18 yr olds with CTFs come to age (when will that be?) we will find out for sure how many kids are contacted and grab the money and run.

u751904

atush wrote: »

I suppose when the first wave of 18 yr olds with CTFs come to age (when will that be?) we will find out for sure how many kids are contacted and grab the money and run.

Huh.. just realised my small person was the first year of CTF 2005 so she'll no doubt be one of those hell raising kids who'll be spending that money in the local or uni bar.. (Joke? who knows).

I don't 100% understand the tax differences mentioned above I'll read up on the links. But I am thinking that I am going to change tack a bit. She has a little pot waiting for her in her CTF but I want to exert a bit more control and actually I think I need to review my own needs a bit more. I've done that classic parent thing of making sure my daughter is ok but forgot to look at my own situation.

gadgetmind

ses6jwg wrote: »

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

When my daughter turned 18, I showed her all of her savings, share, etc. accounts, and asked her which she wanted me to continue to manage and which she wanted to take control of herself. She mused on this and decided that she'd be happier handling just her day-to-day account, at least for now.

On the day that she changes her mind, I will respect her wishes.

xylophone

[

B]On the day that she changes her mind, I will respect her wishes.[/B]

The point is that on reaching 18, the beneficiary of a bare trust has the right to call for capital and income at any time he wishes - he can also choose not to exercise that right - this does not of course change the fact that any liability for income tax falls on the beneficiary so that he must be kept advised of the tax position.

Another thought has occurred to me on the subject of a parent "hiding" the existence of a JISA from a child - since only the child can call on the cash from the age of 18, and since if the child does not call on the cash it becomes a normal adult ISA, the financial provider would have to contact the young adult annually with the usual statement of interest and capital as they would any other adult with an ISA?

wriggly

I think many here are showing a lack of faith in their kids, while putting too much faith in themselves.

We put money into our kids' CTFs. We plan to teach our kids to be responsible for their own decisions, and as part of this, at 18 they can do as they wish with their CTF money, for good or ill.

In the meantime, the money is safe from any bankruptcy, gambling addiction, or other "economic disaster" that strikes (supposedly mature adults can be irresponsible too).

atush

My 21 yr old has just about run out of money at the end of Uni and his new post graduate job that he was offered doesn't start until August-so he has asked me to give him some of his 'pot' lol. He won't get back his deposits for some time, so I'll have to give him a float to tide him over.

So I have trusted him, but he still wants me to give it out in dribs and drabs ;-)