How best to save for a child that is not mine?

Biggles

AnotherJoe wrote: »

When you say "they work" in what sense do they work? Seems to me you lose out on flexibility (especially if you have a child that's "gone off the rails") and most of the benefits that that link mentions are equally applicable in an ISA.

In the sense the OP was asking about, ie as a package for investing for a child, in its own name but controlled by the donor.

There are downsides to ISAs in this context, such as if there are multiple children you would have to segregate the money inside it yourself, since you cannot contribute to multiple ISAs in one year

You haven't mentioned the biggest downside, being that if you snuff it before the child reaches 18 (quite possible, esp in the case of g'children), the money will form part of your estate, thus you will have to go to the trouble of making some provision in your will or the child would never get the money. That's apart from the fact that the weak-willed would too easily be able to spend the money themselves if only they know about it.

As for no need for an ISA I'd say balderdash, 18 years out, without an ISA, capital gains tax could be a problem

I did say, 'unless your investment is going to be very substantial', otherwise your cumulative gains would be unlikely to reach whatever the CGT allowance is in 18 tears time; even if they did, you could sell before they reach the allowance, wait 31 days and repurchase, assuming no changes in the rules.

xylophone

https://thescottish.co.uk/wp/wp-content/uploads/2017/05/03903-SIT-AFS-application-pack-2017.pdf

You can hold this either as a "designated" account (in which case the investment belongs to you - leave a bequest of "my holding in SIT (Godchild A/C) to Mary Jane Jones)

or in bare trust (belongs to godchild who has right to access and control at age 18).