Retaining control until kids aged 25

flipiter

Hi,

We have been saving money (from child benefit and from Grandparents) for the children, now aged 11 and 13, in a Nationwide Smart account. I am looking to move it so that it earns more interest.

It has accumulated into more than I had expected and do not know at this stage how well they will manage such a sum of money when they are 18.

Firstly, is there any way of retaining control of the money, for example in a trust of some kind, so that they do not have control of it until later - aged 25?

Secondly, if any more funds are given by the Grandparents can I keep them in an account in my name (with a letter to say that the money is for the children from their Grandparents) so that I can retain control that way until they are older? I know I would be liable to tax on the interest but I currently do not earn enough to pay tax.

Thanks, for any replies.

bugbyte_2

As the Nationwide Smart account is a kids account I can assume the funds are in their name. If you move it into your own account you may be liable for tax, as the bank will presume you were using the childrens account as a tax free haven. I vaguely remember this happening to me several years ago. I would chat to the bank and ask them how you can put the money in your own account for their benefit - so you can invest it elsewhere on their behalf. Once in your own account, you can invest it as you like. I would however talk to the grandparents as they gifted part of the money, so should have some say in where it is kept, when it is released and what for.

However, some people will take the view that as the money is in your childrens name, your children should be allowed to do what they like with it.

grey_gym_sock

it's possible to have a trust, which you control, and where your children only have an absolute right to the money at age 25. however, if money has already been given to them, so that they will have an absolute right to it when they are 18, then you don't have the right to take it away and put it in such a trust now. for future gifts, it depends on what the donors (e.g. grandparents) agree to.

xylophone

https://forums.moneysavingexpert.com/discussion/comment/59830881#Comment_59830881

Post 17

not-so-civil

You can set up either a Designated or Bare Trust for the child where you keep control. Look at either Baillie Gifford or Aberdeen Children's Savings Plans. This will give you the differences.

xylophone

Bare Trust for the child

Child has right to access and control at 18

Designated Money belongs to parent and stays in parent's estate, and is taxed as the parent's. The parent can hang on to the money as long as he wishes.

Money already in the Smart accounts belongs absolutely to the children and cannot be taken back by the parent to put into designated account.

eviekins

Why 25? What about if they'd like to purchase a car or use it as a house deposit before that age?