Buying a house for kids

hcb42

assuming you can do this, it seems to store up problems for the future. What if one of the kids wants to get the money out e.g. for uni, or a world trip and the other two dont etc...the potential scenarios are endless.

If it were me, I would have wanted my parents to put it in a decent savings account paying a reasonable rate of interest, and I can access it when I want to, once I was an adult.

Out,_Vile_Jelly

hcb42 wrote: »

assuming you can do this, it seems to store up problems for the future. What if one of the kids wants to get the money out e.g. for uni, or a world trip and the other two dont etc...the potential scenarios are endless.

If it were me, I would have wanted my parents to put it in a decent savings account paying a reasonable rate of interest, and I can access it when I want to, once I was an adult.

This is what I thought. Also, presumably all three would have to wait until the youngest was 21 before deciding what to do with the property as the eldest couldn't proceed without the others. Surely less hassle all round to put the money in individual accounts at the best rate you can find. It'll still be a fantastic bonus for whatever path they want to pursue.

N79

bingham40 wrote: »

Yes the money was specifically left to them, yes I guess it is legally in a bare trust (although I didnt understand that term until now)for them and I have an obligation to them with this money. I think some people are missing my original point though. They are my kids, I provide for them, I already invest money for them monthly and am wholly committed to making the best investment possible for them with this inheritance.

Yes it is a trust. You have obligations to manage the trust in your childrens' interest. This is why you could use the money to pay of your mortgage as doing so would provide a home for the children.

bingham40 wrote: »

My question was whether it is possible to to take out a mortgage in my name on behalf of their trust, thus avoiding any tax implications for myself and ensuring they receive 100% of the rental return. I would cover the mangement/repair costs and any shortfall in the mortgage if ever vacant (although my research suggest a 6% yield). In 15 to 18 years the mortgage would be clear, the house could be sold and the kids would have 1/3 of the value of a house each. The value of which will have tracked with the rest of the property market.

It is not possible for you to personally grant a mortgage on a trust asset. However, you may well be able to apply for a mortgage as a trustee but then the mortgage is being given by the trust. Take advice as if your investment goes bad then you could be liable if you are not as good an investor as you think and if it could be shown you made a bad decision.

I dont see how this is any different from investing their money in a traditional savings account or shares. From responses though and further research it would certainly seem more common to just put it in a low to medium risk fund and forget about it until they are 21.

Normal practice would be to appoint at least one trustee who can not be a beneficiary of the trust - their role is then to see "fair play". You might like to consider this - see advice from a trusts lawyer.

cte1111

My children inherited £10,000 each last year. I've put £3600 into each of the child trust funds. The rest is in the best savings account I could find for them. I've also opened regular savers with the Halifax and Prinicipality so money is being moved into higher interest accounts gradually. When these end, I will transfer the total into their CTFs (you can invest £3600 each year, same rule for Junior ISAs I think).

E.g. I've done what I can to manage their money sensibly and so that they can access it for themselves when they are 18. I know there is some risk from the shares in the CTF, but over the next 9-13 years, it is unlikely to lose money I hope.

I think investing in a house with all 3 children's money is a potential nightmare, they are unlikely to all want to do the same thing with their money when they are adults and you are risking locking it into a plan that may not suit any of them.

bhatti3000

bingham40 wrote: »

Er actually as their guardian I can do whatever I want with the money, including spending it on myself, a car, holiday etc. Luckily for my kids I want to invest the money for them. The choice of investment is down to whatever i think is best, at 3, 5 & 7 they cant make a decision about how to invest the money! It's no different than a more traditional long term investment. What should I do, leave the money in a .5 % a/c?

yeah, i totally agree with you, you tell her, that member is always so rude.:mad:

pinkteapot

Agree with the others suggesting three separate pots. A house would be one asset so the oldest child would have to wait a few years before they get their proceeds, for the youngest to reach the relevant age. What if one then wants to keep the house as they think it will be worth more in a couple of years and the other two want to sell it? Could easily lead to arguments unless what will happen is clearly defined now.

andy.m_2

is CTF a better vehicle than a decent Children's savings account?
Looking at a direct comparison with our CTF vs savings account, the SA has out performed CTF year on year for the past 4 years.
We have therefore decided to leave the original cheque in CTF and all other investments are dumped into the SA.
Plus there is flexibility in Sa that there is not in CTF.

Unless I am reading it all wrong.

Which is quite likely.

I've done it before.


Sod it, perhaps I should spend all his money on hookers and blow