Money for Grandchildren

evergreen

My husband has a terminal illness and we want to give some money to each grandchild for when they go to university or when they are older. We are not sure how to go about this and whether it should be done now or through our wills. Who would be best to give us advice on this, solicitor, or financial advisor? Not sure if this is the correct forum but would appreciate any advice. Thanks

justme111

I guess solicitor . but I do not see why would you need them - a parent opens a bank account or investment in child's name then you deposit money there. if you let us know children's ages we may be able to give some pointers. or you vould read childrens saving section on here.

Keep_pedalling

Although without a doubt your husband should make sure his will is in order, in his shoes I would make the gifts now. Giving in your own lifetime is more satisfying than when you have gone.

Anything he leaves or gifts to anyone other than you will affect the amount of nil rate band that can be transferred to your estate, so if your net worth is such that it would be subject to IHT and he should make any gifts over his annual allowance indirectly via you, as gifts to spouses have no consequences as far as IHT is concerned.

How old are the GC?

xylophone

How much does he wish to gift?

How old are the grandchildren?

evergreen

Our grandchildren are 2, 8, 11 and 13. We want it so the children can't touch money until they reach a certain age. So are you saying it makes more sense for me to gift them the money?

xylophone

Each of your grandchildren will have (or be eligible to open) CTF/JISA which they will be able to access at the age of 18.

See links in post 3 here

https://forums.moneysavingexpert.com/discussion/comment/73527460#Comment_73527460

You can make gifts to each child which can be held in accounts controlled by their parents until each child reaches the age of 18.

You can take a solicitor's advice concerning establishing a discretionary trust which will allow the Trustees to take decisions on if and when monies are released to the children.

https://www.step.org/member-directory

However, this will only be worthwhile if the sums involved are substantial and you find trustees willing and able to administer the Trust and deal with the taxation issues.

https://www.gov.uk/trusts-taxes/types-of-trust

Keep_pedalling

evergreen wrote: »

Our grandchildren are 2, 8, 11 and 13. We want it so the children can't touch money until they reach a certain age. So are you saying it makes more sense for me to gift them the money?

It makes more sense to gift now for IHT purposes, a S&S JISA would be good for the youngest children, although this would need to be set up by the parents.

redux

The amount of potential complication depends on whether the value of the estate, including the house, exceeds the inheritance tax nil rate band. Jointly for a couple, including the main residence, this currently adds up to £850,000, increasing in steps to £1 million after Apr 2020.

Outside that though, there are annual allowances for gifts. £250 per person, any number of people. And separately a total of £3000 of larger gifts; if this is one person they can't also receive the £250. If the previous year £3000 allowance year wasn't used then, it can be rolled into the current year.

Then, gifts over these amounts become potentially exempt transfers for inheritance tax purposes. If the donor survives for 7 years, which unfortunately sounds like it might not be the case here, there is no inheritance tax to pay on the transfers, with a sliding scale for fewer years.

The current nil rate band allowance for IHT is £325,000, with an extra band for the house, which will eventually become £175,000.

Transfers between spouses, including transfers on death of the first, are exempt from all these things above. Also, the nil rate band (or remainder of it) of the first deceased is transferable to the second, so up to a million for a couple in a year or so.

So the suggestion above of some of it transferred to you then coming from you might have a number of aspects.

The smaller annual gift allowances could be enhanced if you both do some. If you haven't used the £3000 annual gift allowance you could each do this for both now and last year, thus £3000 each for the 4 grandchildren. If you arrange to each give £3000 each to two, the other could give £250 each to the other two, and vice versa. And add some in the next tax year, from April.

Then if the bulk of his estate initially comes to you, you might then be able to make some use of the potentially exempt transfer route. Or if the joint estate, including the house, is under £850k becoming a million, then inheritance tax doesn't come into it anyway.

So things will depend on how much there is, and how much you both want to transfer, now and in future.

If you go for independent financial advice, then almost certainly they will be cautious for your sake, not to give away too much, as the first priority is to protect you, such as the risk of care home expenses later.

If sadly, he is very ill, and there isn't time to arrange everything before he goes, it is possible to alter the will, with the consent of all beneficiaries, using what is called a deed of variation. For instance, if someone's will leaves their estate to their children, it might be altered to change to some of it direct to the grandchildren.

There are various types of trusts which might be useful, especially if there would be inheritance tax issues. For instance someone might gift money as a potentially exempt transfer to a certain type of trust in favour of the grandchildren, and they will have access to it later, but while he/she is alive it still pays him/her the income from the investments.

If I haven't written this well enough, try this instead

https://www.moneyadviceservice.org.uk/en/articles/gifts-and-exemptions-from-inheritance-tax#what-else-is-exempt-from-inheritance-tax

evergreen

Thank you so much for this detailed information. It seems that I would be better gifting this money myself rather than my husband. Can I just ask who could sort out a trust for us where the parents could be trustees until the children reach the age we want them to access the money, solicitor or financial adviser?

justme111

solicitor
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Keep_pedalling

evergreen wrote: »

Thank you so much for this detailed information. It seems that I would be better gifting this money myself rather than my husband. Can I just ask who could sort out a trust for us where the parents could be trustees until the children reach the age we want them to access the money, solicitor or financial adviser?

What sort of amount per child are we talking about here?