Help with saving for daughter

Love12

Hi
I am after some advice

We have been saving for our daughter in her Child Trust Fund account since her birth, however as control of this account automatically defers to her on her 16th birthday, we are no longer going to be using this account.

There is a good sum of money in there for her to be happy with at 16, however my question is: is there anyway of us saving for her in a way that she cannot access until an age we decide.

I understand its our job to teach her about money, and to educate her in life skills, however from my own experience this is not always something easy to do at that age. I myself frittered away a large-ish sum of money at 18, that had I had at 21 would have been more beneficial to me.


In short I want be able to save money monthly for her, in an account that is inaccessible to anyone other than her at 25(or whatever age we feel is appropriate)

Any help or advice would be grateful
Many thanks

sterlingstash

If you have any unused ISA allowance, perhaps use your or your partners ISA, allowing you to keep full control while retaining the tax advantages of saving in the child's name?

Otherwise I think you need to look at discretionary trusts, and it starts getting more complicated/expensive. Xylophone is the expert on that and might be along with some links shortly (or you could search Xylophone's previous posts - it is quite a common question)

atush

Use an investment trust savings plan. Does not need to be in an ISA, as dividends are already taxed (unless you pay HRT) and capital gains allowance can be negotiated thru timed sales.

In your name, designated for the child.

[Deleted User]

I just wouldn't tell her, put it in an ISA, then when she's in a position to 'need' money (e.g. wedding/house deposit) rather than 'want' money (round the world post-uni trip...) I'd give it her

xylophone

There is a good sum of money in there for her to be happy with at 16

She can control it at 16 but cannot access until age 18.

https://www.gov.uk/child-trust-funds/managing-the-account

In your name, designated for the child.

Make sure that you understand the difference between "designation" and bare trust.

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

Re parental trusts for children see http://www.hmrc.gov.uk/trusts/types/minors.htm

xylophone

Xylophone is the expert on that

Not an expert - it is just that some years ago, I found myself the bare trustee for a minor and a close relative was landed with being one of the Trustees of a settlor interest/discretionary Trust and had to grapple with the tax rules.

Love12

many thanks for all the replies!!

Still feel non the wiser if im honest

if we save for her in an ISA account, but want to keep this money away from her til she is 25, if she then opens her own account without our knowledge, will she not be in breech of the cash ISA agreement?

i think i need to speak to a financial adviser

many thanks again

bargainbetty

You cannot open an account in her name and not give her access to it at 18 - it will be 'her' money. If you wish to save in an ISA, you will have to do it in your own name and sacrifice your own tax-free savings.

If you don't want her to have access to it, keep it in your own name and give it to her later.

xylophone

if we save for her in an ISA account, but want to keep this money away from her til she is 25, if she then opens her own account without our knowledge, will she not be in breech of the cash ISA agreement?

You cannot open an adult ISA for your daughter.

She can have an ISA in her own name as she is now 16, but this would be wholly within her control.

If you provide the money for an ISA for her, the interest would be caught by the " £100 rule". http://www.hmrc.gov.uk/isa/faqs.htm#12

"ISAs for 16 and 17 year-olds are primarily for those in full or part-time employment, including those still at school with, for example, Saturday jobs. But some young people will also use adult ISAs to save money given to them by their parents.

If you give your child money to invest in an adult ISA account, and the total investment income arising on all gifts from you, not just in adult ISAs, exceeds £100 in any tax year, all the income arising will be treated as part of your income for that tax year for Income Tax purposes. You should report that income to your Tax Office.

This rule does not prevent you from giving your child money to invest in an adult ISA - you just have to take care not to give your children too much. The £100 income limit for each child applies to each parent, not to both taken together."

You can regard your own ISAs as "earmarked" for your child and you can give the money whenever you like but http://www.hmrc.gov.uk/inheritancetax/pass-money-property/exempt-gifts.htm might be worth a look.