Childs Savings with Parental Control

Chrissie.b

My Children have been lucky enough to be given £10,000 each by their grandparents. The money was given to me to keep on their behalf until I see fit that they will use it responsibly, so I opened 2 isa accounts in my name. However I am worried that if I/my husband encounter financial problems or even a marriage breakdown that this money will come up for 'grabs' (with all good intentions things can always get nasty). This money is not mine, will never be mine so any suggestions to how it can be invested in my children's names with myself as trustee until a time that I see fit (ie not automatically they are 18) that they can access the money. Should I just contact some banks or can you recommend anything specific.
I've even thought about just investing it with me as a trustee and just not mentioning it to them any more (they are both under 10 years) as I am guessing if they don't know about it they can't access it - that is how desperate I am, however I am hoping there is a more official route I can take.

Mojisola

Chrissie.b wrote: »

My Children have been lucky enough to be given £10,000 each by their grandparents. The money was given to me to keep on their behalf until I see fit that they will use it responsibly, so I opened 2 isa accounts in my name.

However I am worried that if I/my husband encounter financial problems or even a marriage breakdown that this money will come up for 'grabs' (with all good intentions things can always get nasty). This money is not mine

It's in your name - it is yours at the moment and would affect any means tested benefits you tried to claim.

Moving it out of your name into the children's name could also leave you open to problems (see deprivation of capital) if you need benefits in the near future.

For two reason, I would get something in writing from the grandparents that the money is for the children and not to be used by you - that might help if DOC became an issue and also may be needed by their executors if they die within seven years.

roobee13

Don't bare trusts automatically pass to the beneficiary at an agreed age, i.e. older than 18? I used to deal with them in work and they require a lot less paperwork than normal trusts.

I don't know enough to give further advice though, sorry OP. Have a look on the HMRC website for guidance, or try and find a decent financial adviser.

Archi_Bald

If the kids are eligible for JISAs, you can pay £4K into each this year, £4K each next April 6, and the remaining £2K each on April 6 2016. If they are not eligible this year because they might have a CTF, you can start their JISAs April 6 2015. JISAs lock the money away until they are 18.

Seeing it is at least 8 years until they could have access, investing in a stocks and shares ISA seems preferable to using a cash JISA. You can, however, currently get 4% in a kids cash ISA with Halifax.

In the meantime, their money could go into a normal kids savings account where it will earn a lot more interest than in an adult ISA as you can apply for the interest to be paid tax free.

Search the forum for kids / children's savings / accounts / trusts - there are a lot of useful links in many of the existing threads.

Reaper

roobee13 wrote: »

Don't bare trusts automatically pass to the beneficiary at an agreed age, i.e. older than 18? I used to deal with them in work and they require a lot less paperwork than normal trusts.

They do, and are indeed simple to set up. I favour using Investment Trusts (Foreign & Colonial, Aberdeen etc) for child investments and they will generally set up the Bare Trust for you for free.

However do look at Archi Bald's JISA suggestion first as although Bare Trusts are tax efficient JISAs are even better.

xylophone

If the money was given to your children then it is their money and should be in their names - if the grandparents had wished to set a date other than the children's majority
for them to receive the money, then they should have set up discretionary trusts.

By holding this money in accounts in your name, you are treating it as your money and legally it is your money - were you to need means tested benefits, or were you to be involved in any legal situation where there was a call on your assets then this money would be included.

If the children have CTF/JISA (and note that CTF should be transferable to JISA from April 2015), then these can be used. https://www.gov.uk/child-trust-funds/overview

Otherwise there are other accounts that can be held in bare trust for each child.

mike88

Each person is allowed to open one cash ISA each tax year so how were you able to open two. The money is now yours and will be "up for grabs" as you put it even though the original intention was a gift to your children.

ANGLICANPAT

This subject was aired on here a while ago - this thread may be of interest

https://forums.moneysavingexpert.com/discussion/4914309

Yawn

The best tip I ever heard was locking up the funds in a three/four/five year fix just before they turn 18. The most straightforward way of ensuring that they don't spend it all on their gap year (as I once did...)

Chrissie.b

Yawn wrote: »

The best tip I ever heard was locking up the funds in a three/four/five year fix just before they turn 18. The most straightforward way of ensuring that they don't spend it all on their gap year (as I once did...)

Did you do this on their behalf in their name?


In response to how come I opened 2 isa's. The money was given to me to take care of 4 years ago. Even though I am extremely grateful for my parents generosity, it has also been a bit of a bind as it prevented being able to top up my own ISA's (even though yes I do also understand the ones I've opened for my children are technically mine)


I will at least move them out of my name for now whilst I look into what has been suggested.


Thank you

xylophone

I will at least move them out of my name for now whilst I look into what has been suggested.

Having held on to this money in your sole name for four years might rather give the appearance of your gifting £10,000 each to your minor children.

Let us suppose that you deposit the money into a non JISA/CTF account paying 3% per annum - I am assuming that the money has now grown to more than £10,000 in each of your ISA accounts.

The interest on these accounts would amount to more than £300 a year gross on each.

See the information on the £100 rule here http://uk.virginmoney.com/virgin/savings/learn/childrens-accounts/
under "Things you might like to know".

Money given by persons other than parents is not caught by the £100 rule.

In sum this is a bit of a dog's dinner?