A bit of advice please - policy maturing

pipkin71

Hi.

Approx 15 years ago, I took out insurance policies on my daughters and one of them matures shortly due to the age of my eldest, as she recently turned 16.

Due to her age, I don't think my daughter should receive this money just yet. The insurance policy has both my daughter's and my name on it but I think the cheque will be paid to me.

I want to reinvest this money [and my daughter is in agreement] but not sure of the best way to do so.

Any ideas on what to do now, so that she gets the best return when she is old enough to appreciate it?

Thanks

innovate

pipkin71 wrote: »

Any ideas on what to do now, so that she gets the best return when she is old enough to appreciate it?

How long do you / does she think she will need to appreciate it?

xylophone

Your daughter might consider a cash JISA https://www.gov.uk/junior-individual-savings-accounts/overview with the Halifax? So called relationship interest rate currently 6%. Would the policy mature in time to subscribe this year's allowance then add next year's on or after 6 April?
http://www.halifax.co.uk/savings/interest-rates/personal-rates/#junior-cash-isa
"The Relationship Interest will also apply to all Junior Cash ISAs where the child is 16 or over whether or not the Registered Contact has a qualifying Halifax cash ISA."/B]

Incidentally, does this money belong beneficially to your daughter? You might then find that the maturity cheque is paid only in your daughter's name.

It seems to me that if the proceeds belong beneficially to you so that you would be making a gift of the money to your unmarried minor child, then using the JISA route might be advisable because of the £100 rule which does not apply to JISA.
http://www.hmrc.gov.uk/manuals/saimmanual/saim2430.htm

A stocks and shares option is also available in a JISA if a long term investment is required.

pipkin71

xylophone wrote: »

Your daughter might consider a cash JISA https://www.gov.uk/junior-individual-savings-accounts/overview with the Halifax? So called relationship interest rate currently 6%. Would the policy mature in time to subscribe this year's allowance then add next year's on or after 6 April?
http://www.halifax.co.uk/savings/interest-rates/personal-rates/#junior-cash-isa
"The Relationship Interest will also apply to all Junior Cash ISAs where the child is 16 or over whether or not the Registered Contact has a qualifying Halifax cash ISA."/B]

Incidentally, does this money belong beneficially to your daughter? You might then find that the maturity cheque is paid only in your daughter's name.

It seems to me that if the proceeds belong beneficially to you so that you would be making a gift of the money to your unmarried minor child, then using the JISA route might be advisable because of the £100 rule which does not apply to JISA.
http://www.hmrc.gov.uk/manuals/saimmanual/saim2430.htm

A stocks and shares option is also available in a JISA if a long term investment is required.

The policy matures in July.

I am assuming that the cheque would be paid to me as I had a conversation with someone who had a similar policy and I was shocked that she was keeping the money rather than giving it to her daughter.

Even if the cheque is made out to my daughter, we are in agreement that it should be invested, so that won't be a problem, anyway.

I would like the money to be invested until my daughter is 25, although she is looking at age 21 so I need to know what will be available in order for us to discuss it.

I'm not really clued up on savings so appreciate any advice here on the best way to proceed

pipkin71

innovate wrote: »

How long do you / does she think she will need to appreciate it?

I would like my daughter to invest it until age 25 but she has suggested investing for five years until age 21

xylophone

Are you able to establish whether this money belongs beneficially to you or to your daughter?


Can you say approximately how much money will be involved?

pipkin71

xylophone wrote: »

Are you able to establish whether this money belongs beneficially to you or to your daughter?


Can you say approximately how much money will be involved?

It's around £3,000.

Would I phone up the insurance company to ask who the money will be paid to?

On any correspondence, it is addressed to me and states 'in respect of [my daughter's name]

All annual summaries have been addressed to me but states my daughter's name at the top.

Apologies if I cannot give a more specific answer. Does it make a difference?

atush

With just 3K, I'd look at the junior ISA route. either 6% in cash as suggested, or go the S&S route. If a JISA is opened, it wont matter who the cheque is made out to.

for S&S there is a 5 yr 'min' investing horizon, the years between 21-15 would be 5-10 years.

pipkin71

atush wrote: »

With just 3K, I'd look at the junior ISA route. either 6% in cash as suggested, or go the S&S route. If a JISA is opened, it wont matter who the cheque is made out to.

for S&S there is a 5 yr 'min' investing horizon, the years between 21-15 would be 5-10 years.

With the junior ISA, would my daughter be able to access this whenever she wants? I would prefer she didn't have that temptation.

xylophone

https://www.gov.uk/junior-individual-savings-accounts/overview
She will have the right to access at 18.

However, if the money is hers beneficially she has the right to it now unless it is in bare trust in which case you can keep control until she is 18 when she will have the right to access capital and income.
If this money is held by you in an account in bare trust, an R85 could not be completed - you would have to reclaim any overpaid tax on her behalf on an R40.

If it is yours, then you can invest it as yours and make your daughter a gift at 25 if you so choose - this might have IHT implications.

All in all, the JISA route might be the easiest option?

pipkin71

xylophone wrote: »

https://www.gov.uk/junior-individual-savings-accounts/overview
She will have the right to access at 18.

However, if the money is hers beneficially she has the right to it now unless it is in bare trust in which case you can keep control until she is 18 when she will have the right to access capital and income.
If this money is held by you in an account in bare trust, an R85 could not be completed - you would have to reclaim any overpaid tax on her behalf on an R40.

If it is yours, then you can invest it as yours and make your daughter a gift at 25 if you so choose - this might have IHT implications.

All in all, the JISA route might be the easiest option?

Thank you

It will be her money, whoever the cheque is made out to. I just have to hope she will be sensible when she can access it, and not spend any.

She is pretty sensible with money though, so the junior ISA is the most likely route.

Appreciate your advice. Thank you again