Investing money for children

horseykitty

My younger children have inherited a five figure sum each as a result of an inheritance. I am at a loss as to what's best to do with the money for them.
The eldest is 17 and will turn 18 next March when she will presumably be able to have the money under her own control.

My other two children are 14 and 4. The youngest has a CTF - does that mean that the money has to go in there?

I'd be grateful for any advice - Thanks

xylophone

Assuming that the will imposes no age/specific trust conditions, the children are entitled to the money on their 18th birthdays. (16 In Scotland)

Until then, the money needs to be held in"bare trust" for each child. See http://www.hmrc.gov.uk/tdsi/children.htm

You will note the R85 conditions from the above link- rather than faff about, it might be simplest to deposit the seventeen year old's money into a fixed rate bond with a building society that pays interest after she turns 18 - that way she can take control of the account on her 18th birthday and sign an R85 for herself if appropriate.

With regard to the child with the CTF, you will be aware that there is a maximum contribution limit for each year - I cannot see that there would be any problem about depositing the appropriate amount in in for the current year if you choose, and doing the same in succeeding years but having read the above, you might prefer to keep the CTF for subscriptions from parents if you are in a position to make the children gifts from parental resources.

Presumably the other child is eligible for a JISA but the same considerations would apply.

Full information about the CTF/JISA can be found within this link http://www.hmrc.gov.uk/tdsi/children.htm

You can consider cash/stockmarket investments within a bare trust - many building society accounts can be held in "re"/trust form. You do not have to confine yourself to accounts specifically for children. http://www.money.co.uk/savings-accounts.htm?t=391369&u=78ab3c1f3f1

With regard to stockmarket investments, you could consider OEICS or /Investment Trusts held in bare trust.

Establishing a bare trust is very simple. You will need to complete a ‘declaration of trust’ form, which the investment manager you choose to invest with can provide to you. You should consider who will be the trustee – possibly one of the parents – and whether you wish to appoint a second trustee in case the first dies before the trust becomes available to the child.

See this example of an investment trust held in bare trust http://www.sit.co.uk/products/investing_for_children/features/questions_and_answers/

See also http://www.hmrc.gov.uk/individuals/savings-income.htm

This might also be of interest http://www.hmrc.gov.uk/tdsi/ten-per-cent-guidance.htm (combined with this http://www.hmrc.gov.uk/rates/it.htm for correct allowance figures.