Buying shares for a minor

TobyS

Can anyone recommend an online share dealing account which will let me setup an 'Account Designate' so that any shares I buy are designated to my young nephew? I've had a look around and contacted a couple of companies but they don't offer this service. They tell me that I can just add his initials to my own account but that would only be for my own records.

I'm sure there are some benefits to actually setting up an account designate rather than just setting up an ordinary account in just my own name but with his initials added, so I would like to do this, but I'm struggling to find a company that will let me.

Barclays Stockbrokers have a MarketMaster account which will let me do it by "adding A/C Des abc" (where abc are my nephew's initials) to the "suffix" box on the form. Naturally there is no suffix box on the form so I'm at a loss. I'll try calling them when I have some free time but until then I wondered if you kind people had any experience with any other companies that you could recommend.

Thanks in advance.

xylophone

Are you making an absolute gift of these shares to the minor?

If so, then it needs to be made clear that you are holding these shares in bare trust

If you are thinking merely of setting a certain portion of your own shareholding aside so that it can be thought of as "earmarked" for a gift at some time in the future, then mere designation is adequate.

Have a look at this which concerns shares in an investment trust which might clarify the difference between holding in bare trust and holding in designation.

http://www.sit.co.uk/products/investing_for_children/features/questions_and_answers/

With regard to individual shares, some registrars allow them to be held in the minor's own name, others don't.

See http://www.pearson.com/investors/shareholder-information/faqs/shares-and-shareholding.html#4_4

Hargreaves Lansdown offer a bare trust and designated service in the Vantage Service - google Hargreaves Lansdown bare trust.

TobyS

Thanks for the reply. Basically, it was decided that we would all pool whatever money we could afford every birthday and Christmas and use it to buy shares for the boy. We were going to just pay it into a savings account but my brother suggested shares would be more profitable (although a lot riskier). As far as we are concerned 100% of the money is the boy's.

I'd like to be able to buy and sell shares as and when needed, which I think means a 'designate' account is what I need but on the other hand I would also like to not be liable for any income tax due so a 'bare trust' is needed. Are bare trusts just for investing in funds or can I buy and sell stocks of my own choosing?

xylophone

I

'd like to be able to buy and sell shares as and when needed, which I think means a 'designate' account is what I need but on the other hand I would also like to not be liable for any income tax due so a 'bare trust' is needed. Are bare trusts just for investing in funds or can I buy and sell stocks of my own choosing?

Shares can be held in bare trust and indeed since the money being used to buy the shares is an absolute gift to the child, it seems to me that a bare trust would be necessary?

Incidentally, I would not use any money gifted by the parent in this arrangement (you will have seen information in SIT link)-you could explore the possibility of a Vantage account in bare trust with HL- a vantage account can hold shares, OEICS, ITS etc - however, remember the fees.


Life might be easier if the relations decide how much they wish to give in a year, divide the total by 12 and pay the resulting sum into a regular bare trust savings plan in an investment trust?