Investing 90k

Kopaloadofthis

Recently sold my parents house in which I have majority in share I'm looking to share equally other share between 5 off my late parents grand kids I was thinking an isa is that the best idea ages of kids are 21 7 two @ 5 and one 3 I was taking in to consideration interest in which funds when released @21 year old ie youngest receives less ?

Confused .com

missile

You could get better rates than currently available for ISA

joe_mcclaine

21 isn't a 'kid', surely?

I'd just give the 21 year old and the parents of the four children the cash to do what they want with.

jimjames

missile wrote: »

You could get better rates than currently available for ISA

It may be a s&s ISA they're looking at?

bowlhead99

Kopaloadofthis wrote: »

Recently sold my parents house in which I have majority in share I'm looking to share equally other share between 5 off my late parents grand kids I was thinking an isa is that the best idea ages of kids are 21 7 two @ 5 and one 3 I was taking in to consideration interest in which funds when released @21 year old ie youngest receives less ?

Confused .com

It's difficult to follow when you don't use sentences or punctuation.

So you have £90k to invest for the 5 grandkids, at £18k each? Or you have received £90k total and the majority of it is yours and you're looking to share/invest the remaining £30k for the grandkids at £6k each?

Either way, £18k or £6k is more than would fit into one year's junior ISA allowance. Also, if you used their ISA allowance they could control the funds at 16 and release it at 18, not 21. If your parents wishes were that the money given to their grandchildren could not be accessed by them at 18 to spend on their own life's living costs when they were old enough to drink, smoke, get married, drive a car, join the army, live on their own at university etc etc, then you will need to form a proper trust for them.

If your parents would have been happy for you to invest it purely in your own name and give them all gifts later, then you can have complete control but will have to pay taxes on income and gains from it (once you've used up your own tax allowances) until you give it to them. If you instead invest in a junior ISA or a bare trust in their individual names then they will be able to access at 18. If you want to ensure it's not in your own personal name (to avoid taxes) but not in their name either (to avoid them accessing it automatically when they turn 18) then you will have to see a solicitor to create a more complex trust.

In terms of considering the value when funds are released at 21, I think you will be screwing over the youngest one if you say that he/she is only going to get (say) £10,000 in 2032, while the 5-year-olds got £10,000 in 2030 and the 7-year-old got £10,000 in 2028 and the 21-year-old got £10,000 today.

That's because the price of things goes up over time so if you get £10,000 in 2028 you can buy more stuff with it than you could buy for the same amount of money when given it in 2032. The person receiving the same amount of money, later, loses out. Also, the seven year old today who receives £10,000 in 2028 has the option to continue to save or invest it earning returns for themselves, so they can turn that money into £13000 by 2032 if they want to do that instead of spending it. If you deliberately underpay the youngest now, so that by 2032 it's only worth £10000, that seems very unfair because in that year they have only £10000 compared to the £13000 that their older sibling/ cousin has.

So you don't need to give the youngest a small pot to account for them earning more years of investment returns. The older children can have those extra years of investment returns if they want, by simply investing the money when they receive it until the later release date. The only thing to do, presuming your parents loved all their grandkids equally, is to give them all an equal slice of the pie in today's money.

The 21 year old can spend it but could invest it in investment funds for the next 13-16 years if he/she wants. The 5 year old should have it invested for them for the next 13-16 years. But the value of the money being paid out from the house today in 2014, should be the same for both, surely.

I agree that any money put away for the 3, 5, and 7 year-olds should be in investment funds not cash, whether or not an ISA is used around the outside of it. Their parents might have different views so if your parents didn't leave explicit instructions on what should be done between now and them reaching 21, let the kids' parents decide.

xylophone

Do you mean that the grandchildren have been left a specific share of the sale proceeds under the terms of a will?