does it make sense ? (saving for a child)

justme111

I am a parent and my child has CTF (F&C) in which contributions been made for a few years and hopefully will be made till she is 18.
There is as well Halifax regular saver and linked to it halifax young saver where contributions are being made. I do not want her to get control of this money when she is 18 , so I was planning to withdraw it closer to her 18th birthday and buy some product in her name with maturity in 5 years ideally - some type of bond I suppose. It says that withdrawals are allowed from young saver so it should work.
Can you see any flaws in my planning?

xylophone

Looking at the Halifax web page, there is no indication that these accounts can be held in bare trust after the age of 16?

A child has the right to access and control of cash in a bare trust account at 18 (16 in Scotland).

You might therefore need to deposit the money in a five year bond before the child reaches 16.

Have you and your spouse provided the money for the halifax accounts?

If so, remember the "£100 rule".

In any case, under current arrangements, any R85 on an account held in bare trust has to be rescinded after the age of 16- the parent has to make a reclaim for any tax overpaid.

If you did open a five year bond shortly before the child's 16th birthday, (assuming you are not in Scotland) the child would have the right to control of the bond (if not access to the cash) at age 18 and would fill in an R85, (if appropriate), for himself at that age.

justme111

Now , is halifax young saver a bare trust account? I do not think so. Why do you talk about bare trust accounts then ?

[Deleted User]

justme111 wrote: »

I was planning to withdraw it closer to her 18th birthday and buy some product in her name with maturity in 5 years ideally

What's to stop her deciding to cash it in early and pay the 90 days (or whatever) interest penalty that many of these products allow?

justme111

Nothing I suppose. Unless I find a product that does not allow it. Or do it with her not being aware of it.

xylophone

Now , is halifax young saver a bare trust account? I do not think so. Why do you talk about bare trust accounts then ?

You are holding it in your name for your child where the child is the beneficial owner of the money?

http://www.halifax.co.uk/savings/accounts/junior-savers/

If so, you have a bare trust type situation.

justme111

Sorry xylophone I struggle to follow you . In your first post you mean to say that child will be able to access account with full control and will be able to spend money from the age 16?

How is it relevant that r85 are not valid afrer age of 16 ?
Young saver account is in child's name , why do you discuss situation where I hold it in my name?
On the topic - I suppose another option would be to opt for a product with insurance component which pays on certain date and not earlier .

Westie983

young saver accounts are opened in the childs name with a controlling adult till the child turns 16 then they have access to the account and the money.

If you dont want your child to have access to the account you will need to withdraw the money and open a fixed rate product but on maturity of that fixed product the money is your childs and you cant stop them having access as you can no longer open account is trust for a child.. account are opened in the account holders name regardless of age but with controlling access dependant on age of the child.

Some parents allow their children to have access to their young savers as soon as an account card is issued (aged 11)....

Westie983

Im sure there is a way to have an access account where the money is not accessed till x year or aged x but this is written up by a solicitor and the account is held in trust and tends to be proceeds of inheritance or compensation from courts.

justme111

Discretionary trust , I was advised against it for the sums involved as apparently fees are huge.
Thank you for explaining , so the child gets control at 16, not 18.
Would be happy to allow her access to some account , would have to be some third pot though. Probably will open another account where her monthly bus fare and school dinner moneys would go..

sezamma

I think that while what you're trying to do does make sense - my assumption with my own child with their CTF is that everyone their age group will have access to the CTF when they attain 18 and so trying to do it without them knowing is a bit foolhardy as they'll all be counting down to their 18th birthdays and finally having access to the fund.

I'm planning on making my son add to his from wages when he gets his first job and making him have more awareness of being able to use the money when he is older - though admittedly this might not go to plan depending on what he's like as a teenager.

I also plan to talking to his friend's parents nearer the time too in order to gauge what they aim for the money to be used for - ie whether it will be reinvested or go towards first car etc.

It's also important to bear in mind that some people, like yourself, will have added to the pot over the years, whereas others will only have the initial amount gaining interest.

I did plan to have two accounts - the CTF, and another which would have "real" savings and keeping one secret - but now I'm a bit older and wiser, do not believe it possible to keep a bank account in their name secret - nor do I consider that it would be good for our relationship for me to try.