advice for kids savings

nickboller

Good Morning. I'm new to this and wondered if anyone could give me some advice.
I have two small children, one born in 2008 and the other in 2012. They will soon come into some inheritance that theirgrandparents have stated in their will is not to be accessed until they are 21. They will receive approximately £12, 000 each.
I am completely confused by ISA's, savings plans etc. All I know is that I that I don't want to do any gambling with stocks and shares etc. Does anyone have any ideas where I might look to ge tadvise or know of a good deal? Would be very grateful!

atush

the terms of the will have scuppered you for keeping the investments tax free, as you cannot use Jisas (as they revert to the child at age 18).

So, you are left with Bare trusts and perhaps RE: accts if the money is sent in a cheque in your name.

I would speak with the executors on this point (ie who the cheques are made out to).

As for savings, I wouldn't. I would invest the money on their behalf as you won't even match inflation much less beat it thru cash savings (esp w/o a tax free wrapper). Look at drip feeding into funds or investment trusts thru their savings plans.

xylophone

accessed until they are 21.

As far as I (no expert) can see, in effect, the will creates a trust but in view of the age condition see http://www.hmrc.gov.uk/manuals/tsemmanual/tsem1563.htm examples 1 and 3
to establish what kind of trust

See also http://www.hmrc.gov.uk/trusts/index.htm

If, despite the age condition (in a bare trust, the beneficiary normally has the right to access and control at the age of 18, 16 in Scotland), the solicitor advises that the will has created a bare trust and that the income can be treated as such for tax purposes, the trustee(s) ( will this be you/your wife?) should be able to deposit the money as trustee for each child individually in any product where the provider allows and to complete R85 (for interest to be paid gross) on the child's behalf until the age of 16 (assuming non- taxpayer)- after this, as the accounts are to remain in trust, the R85s would need to be rescinded and any tax overpaid reclaimed by the trustee(s) on behalf of each child.
http://www.taxinsider.co.uk/763-The_Bare_Essentials_Bare_Trusts.html might be worth a look.


You will no doubt be aware that interest rates on deposit accounts are very low at the moment and barely matching CPI let alone RPI inflation.

Under these circumstances, and despite your aversion to stocks and shares, you might want to consider whether an investment in an investment trust held in bare trust might be worth
looking at?

Here is an example http://www.sit.co.uk/products/investing_for_children/features/questions_and_answers/

Your or the testator's solicitor will give advice specific to your situation?

xylophone

http://www.osborneclarke.co.uk/publications/services/tax/articles/the-powers-and-duties-of-bare-trustees.aspx
might also be worth a look.

webmasterpolo

You're personal opinion of risk is not the same as your professional opinion of risk when acting as a Trustee (I assume you are named Trustee in the will, if not your opinion is irrelevant). As Trustee you are duty bound to manage the money on behalf of the beneficiaries, any reasonable person would consider investing for a 1 year old with a 20 year term as necessary rather than optional.

I'd take advice and do it properly.

-Wed

jimjames

I'd agree with the post above, the main risk over 20 years is keeping it all in cash.

If you don't understand risk then it would be worth using an adviser that is able to explain it for you.

bruceingram1958

Might as well consult a financial advisor. He might give you a number of options to invest such amount of money.