Investment Advice For Goddaughter

Valo

I've been set a task my parents and need some advice, as to my options. My family would like to long term invest £1000 into a bond/investment account for my late sister's goddaughter as a gift.

My family would like the investment to mature when she is 21yrs old. I'm happy to consider accounts/schemes that could be topped up by her parents and those which can't, which would simply lock the initial investment away.

Can anyone advise me?

xylophone

she is 21yrs old.

This could be a problem unless a discretionary/accumulation trust is used - hardly worth the trouble for a modest sum?

A bare trust becomes available to the child at 18 (16 in Scotland)


http://www.hmrc.gov.uk/trusts/types/

If the child has a CTF/JISA which has "room" for the money this could be used but it will become available to the child at 18.

Unless in tax privileged accounts like CTF/JISA, it is usually wise to keep gifts from parents separate from gifts from others (for tax reasons - "£100 rule")

Interest rates on cash, even for children, is rather poor at the moment - your parents might want to consider a lump sum investment in an investment trust held in bare trust with them and one of the child's parents as Trustees.

Otherwise they might want to consider a designated account and pass the investment to the godchild when she becomes 21 but note that any such account would be the property of your parents, not the child and remain in their estates for IHT purposes. Example and explanation here. http://www.sit.co.uk/products/investing_for_children/features/questions_and_answers/

atush

I agree, all the accts I know of, are age 18. To get to 21 and above, I used an investment trust plan in my name, but with my child as the Designee. This meant I was able to keep control (and paying in) for longer.

The problem I see with this is, you could open one for the God-daughter but, you would perhaps be more uncomfortable in asking others to contribute as well as the act is basically in your control. You could send them copies of the statements so they can see the money is there.

you'd have to mention it in your will as well,. so it isn't taken in by your estate and paid out to your nearest and dearest.

Valo

Thanks for the information; it looks like I've got some reading ahead of me.

The age point requirement I made in my first post isn't set in stone. This point was suggested by parents. I had a bond/investment which matured when I turned 21, but obviously times and regulations change.

What are the options for a long term investment/bond/account which matures when she turns 18?

atush

well, the problem is at 18 they may not be 'set' in life.

If they are off the UNI, the money (if invested rather than being in cash) could be a significant sum that would help them on their way (and reduce the need for the new, much higher rate student loans),

then, there is the fact the money at 18 could help them (say they had a job working full time) rent a place of their own, take driving lessons etc.

But you could be left with an 18 yr old waster, who can't wait to get their mitts on the cash and blow it on chav treats or Ibiza.

If their parents are happy with it being at 21, being in a designated account in your name, with full disclosure to them, so be it.

xylophone

What are the options for a long term investment/bond/account which matures when she turns 18?

If cash, her parents could open an account as bare trustees for the child- your parents could provide a letter to show the source of the funds.

http://www.moneysavingexpert.com/savings/child-savings-tax-free

If money is held in bare trust after the age of 16, any R85 would need to be rescinded and the parents would have to reclaim any overpaid tax on R40.

If there are a number of years before the child turns 18 then the investment trust/OEIC option might be a better bet. See the SIT link re bare trust/designation.

The simplest solution would be the CTF/JISA assuming that the parents are not making full use of the allowance? https://www.gov.uk/child-trust-funds/overview