Help requested on where to place Inheritance

Tony_C_2

I must admit that financial matters are a complete mystery to me and as I have to place money into a "Savings Account", thought that I would seek advice as I have to save £2000 for my daughter and £3000 for my son which has been left them by late grandparents.

I have a few questions but to start, the money can be put into an account for up to 5 years, both are over 18 years of age with my daughter currently unemployed due to pregnancy, while my son just having started full time employment.

1. Would it be better to put the money into an account under their names or under mine?
2. Would it be beneficial to put all the money into one account or into separate accounts?
3. Due to work commitments, I would prefer the account(s) to be Internet based although I am flexible over this.

I think that I am number blind (I just get totally confused when looking at numbers:o ) but will be fully appreciative any pointers/advise that can be offered.

Thanks,
Tony

isofa

Better to put the money in their own names, your daughter will get gross interest if she isn't working and her annual income (including interest on savings) is below the current limit (£5225).

However you should get both to open a cash ISA first, this is a maximum of 3K per year, all interest is tax free, good ISA recommendations are on this site and Moneysupermarket you should be able to find them at 6% or higher.

Always open cash ISAs first, as they are gross interest regardless of your earnings.

If you have any left over (or have used the ISA allowance this year already), their are many instant access internet accounts, Icesave is a popular choice, but their are many, many others if you read the Savings recommendations on this site.

Jonbvn

Open ISA's for your son & daughter. The ISA's must be in their own names, and are completely tax-free. Details of the best cash ISA's can be found here.

If they have used their ISA allowances already, then NS&I index linked savings certificates would be good for your son, since he is a tax payer, and these certs are tax-free. For your daughter (a non tax-payer), open a high interest account, and complete form R85 to get interest tax-free. Details of the best savings accounts here.

CLAPTON

Of course, if an account ISA or saving a/c is opened in their names then the money is theirs and not yours and they can draw it out whenever they like. And you can't actually open an ISA for them as such because they need to sign the application.

Why not simply give then the money and let them decide what to do with it.

isofa

Saving certificates are a good bet sometimes, but it all depends on how inflation changes in the next 3-5 years (savings certificates run for either 3-5 years and are based on the inflation rate + a fixed percentage), unless he is a high-rate tax payer, he may (or may not), get a better deal with a high rate fixed rate bond...

Cash ISAs in their name the way to go!