Best account to set up for our two kids

pamelab21

Our two kids are 3 and 7 months. We have savings for them currently under our own names. However I am looking to sort something for the as individuals to get the best interest rate. Just wondering though am I missing something?
A lot of the accounts appear to be paid to them on their 18th birthday. Is this correct? To be honest as I don't have a crystal ball I have no idea how responsible they will be when they hit 18 and I want to be able to distribute the money that we have saved for them so that it doesn't all get blown on a party for their mates abroad if you see what I mean? Would I just be best to keep it in our own names in that case?

xylophone

Presumably your 3 year old has (or at all events is entitled to) a CTF and the three month old is entitled to a JISA.

As you point out access is their right when they become 18.

The value to parents of these accounts is that they are not subject to the £100 rule.

If a parent makes interest bearing monetary gifts to his/her child (whether inside or outside bare trust) the interest will be taxed at the parent's highest marginal rate if it exceeds £100 per annum. The capital and interest would nevertheless belong to the child absolutely and he/she would have the right to control of the account at 16/18 depending on the type of account and how it was held.
Explanation and example here http://bank.virginmoney.com/savings/learn/childrens-accounts/

The parent might simply prefer to regard his/her own ISA as "earmarked" for the child but might need to be aware of IHT implications when he came to gift money to the child.
https://www.gov.uk/child-trust-funds/overview
https://www.gov.uk/junior-individual-savings-accounts/overview
http://www.hmrc.gov.uk/inheritancetax/pass-money-property/exempt-gifts.htm