Investing for grandchildren

Sxlin

Sadly my daughter passed away last year and after probate there is around £40,000 to invest for my 4 year old granddaughter. What advice can you give me as to where the money should be invested until she is 21?

xylophone

https://www.gov.uk/trusts-taxes/overview

https://www.gov.uk/trusts-taxes/trusts-and-inheritance-tax

http://www.tolleytaxtutor.co.uk/taxtutor/files/subscriber/personal-tax/uk-trusts-and-estates/lectures/1d11.pdf

You are the Trustee for either a Bare Trust or a Trust for a Bereaved Minor?

Presumably your/your daughter's solicitor will have advised on the nature of the Trust.

You mention 21, but in fact although assets can be held in bare trust after the age of 18, the beneficiary does have a right to call for assets and capital from the age of 18.

http://www.prescient-financial.com/docs/Bare%20trust%20returns.pdf



Does your grandchild have a JISA?

https://www.gov.uk/junior-individual-savings-accounts/overview

This might be worth considering - it can be cash or stocks and shares or both - you might wish to consider a half and half option

http://monevator.com/how-to-invest-for-children/

http://www.hl.co.uk/investment-services/investing-for-children

http://www.sit.co.uk/private-investors/products/stockplan-a-flying-start
may be worth a look - read FAQs

steampowered

Very sorry to hear about the bereavement.

17 years is a long time period, so you should look to invest for the long term. This means investing the money in stocks and shares - probably through a balanced and diversified a fund.

Perhaps a junior investment account would be a good idea?

Sxlin

Yes I am executor of my daughter's estate and have fought to retain this money for my granddaughter from her father who was estranged but has now assumed parental responsibility. My solicitors just suggested that I get advice on where the money should be invested. They are holding it currently. I also hold another £30,000 so in total my granddaughter has around £70,000 to be invested.

xylophone

Have you yet found out whether or not your grandchild has a JISA?

(Incidentally, money in a JISA is owned by the child and cannot be accessed until the age of 18 and then only by the child).

If the child has a JISA, you could consider making an annual contribution (bearing in mind the safeguard explained above).

This could perhaps be the "cash" portion of provision for your grandchild.

You might hold a certain amount in a child account held in trust for this purpose, gradually moving it into the JISA.

http://www.moneysavingexpert.com/savings/child-savings-tax-free

For the balance, you might wish to consider the stock market option, held in your name as Trustee (from what you have indicated as "bare trustee") - remember that your grandchild would have the right to access and control at the age of 18.

It is to be hoped that you will have had the opportunity to educate her into a sensible attitude to her inheritance.:)