Junior ISA

cloud_dog

Zorillo wrote: »

That's a fair question and one I've thought hard about, but this is already his money and I'm just hoping to do the best I can for him. After that...

Yes and no. I absolutely agree that money gifted to him is his money and you have no legal right to withhold that money but, you mentioned in your first post:

"...I am proposing to annually contribute an amount close to £1000 (or more)..."
So, it is reasonable to assume that the money will be coming from yourself (parents), as opposed to gifts/inheritance from non-parents.

Zorillo wrote: »

I have considered investing it in my name but I think it will lose some of its educational value if I do that. And it's his.

At what age are you expecting this financial education to occur? If it is a JISA then the very first, real financial decision your son will be able to make is his 18th birthday (see my first post). If you are going to make your son aware of the JISA and perhaps encourage him to see how it grows, how returns materialise, etc, etc, then does it matter if the account hast £3000 or £4000 in it; does it need to have a value of £12000 or £14000?

I'm not trying to dissuade you from your goals, and your intention is fine but I would ask you to thoroughly think through this one solution approach. Access to large amounts of easy money can actually be destructive force (as well as a positive one).

Because I didn't have a crystal ball we have set up a number of savings and investment accounts for our DD, some in her name and some in ours. If she is financially balanced and willing to listen to advice from us old codgers come her 18th birthday then great, perhaps she'll receive all of the money. Maybe she won't though. We will have options and flexibility.

Zorillo

Thanks Cloud Dog, food for thought.

I'm hoping the education will be ongoing, starting with piggy banks and ending in investments!

Zorillo

I'm still favouring the Junior ISA route, for reasons I won't elaborate on particularly as the points Cloud Dog has raised are fair and valid.

If I realise when he's a teenager I've got it horribly wrong, what will actually happen to the JISA? Let's say I've managed to withhold the existence of it from him entirely, what would happen to it? Would (e.g.) Hargreaves Lansdown write to him, and I'd have to steal his post? Would I have to make some sort of fraudulent declaration in order to convert it to an adult ISA in his name (albeit well-intentioned, I don't fancy a criminal record)?

Or would it just carry on as an online account and he'd be blissfully unaware until such a time we feel he's ready for the responsibility to handle his own money?

xylophone

From Charles Stanley JISA FAQ

I manage a Junior ISA for a child who is about to turn 18. What do I need to do?

We will contact you as a matter of course ahead of the child’s birthday. Once the child turns 18, he or she will need to register through our home page and complete an ISA application. Once complete we will then convert the account into a full ISA in the child’s name.

It seems to me that the provider cannot permit the registered contact to manage the account once the child reaches the age of majority.

Zorillo

Thanks Xylophone. That poses two obvious questions:

What happens if the foolish teenager can't be bothered to log on to the boring website?
And what happens if their cautious dad does it instead?

Obviously, they can't permit the parent to run it, but can/do they enforce the rule?

xylophone

Logging into an account owned by another adult without his express permission.....how would you describe that?

If CD became aware you had done it?

Myself, I wouldn't risk it.

Zorillo

CD?

I'd probably call it well-intentioned but of course I see the point you're making. Basically I'm think out loud and asking the questions I can't very well ask the providers.

cloud_dog

The thing you are conveniently sidestepping is the fact that the money is legally your childs, you have no ownership or say in what happens to the money, well intentioned or not.

Ergo post 12.

Zorillo

I'm not sidestepping it at all, I'm thinking around it.

No legal say in the money, but I'd be disappointed if my parental relationship with my offspring had broken down by age 18 to such an extent he'd not value my opinion, at least.

And if it had, then at least I'd know I'd tried my best.

I'm not really thinking I'd resort to breaking into his adult bank accounts either, and ultimately if he wants to spend it however he chooses it'd be up to him. Every penny of it is his, not mine, now and at 18.

xylophone

CD

Sorry - CSD (Charles Stanley Direct).

Another thought - should your child need means tested benefits at any point in adulthood, he would have to declare any savings held in an ISA.

How could he do that if he didn't know about them?

And what would your relationship be like if he found out that you had concealed the existence of his money/ committed fraud by misrepresentation (and that's how the bank would see it) by passing yourself off as him on his account?