Where oh where to invest

Peelerfart

”Good point, the second one, not the first and third"

Thanks banana, I've always had my doubters ��, fortunately I've never been one of them.

Think we'll have to wait for clarification from the OP.

steampowered

Please consider that, if you use the money to buy a property for the children, you will risk making them ineligible for government support for first time buyers (such as the help to buy scheme), since they would have already had an interest in property.

You also risk making your children liable for additional stamp duty when they want to buy their own property.

You also make it difficult for one of the children to get the money when they need it - they are different ages and may need to access the money at different times.

Investing in a single property is also a higher risk approach than a balanced stock market fund which is diversified across different countries and different sectors.

I suggest considering stock market investments, such as leaving the money in a balanced fund (which is exactly how pensions work). Not to mention the tax benefits which are available for stock market investments but not property.

Malthusian

You need professional independent financial advice. Doing as you have suggested would be a breach of your legal duty as trustee to invest the money as a prudent person of business would. Due to the failure to sensibly diversify, and the fact that the eldest beneficiary potentially won't be able to access the money he is absolutely entitled to when he turns 18. Plus the potential tax consequences (stamp duty, support for first time buyers).

Your children would be entitled to sue you if the result is that your eldest can't access the money when he turns 18 or the property becomes a duff investment.

Taking independent regulated professional advice ensures you have met your duty to invest the money prudently.

ValiantSon

Malthusian wrote: »

You need professional independent financial advice. Doing as you have suggested would be a breach of your legal duty as trustee to invest the money as a prudent person of business would. Due to the failure to sensibly diversify, and the fact that the eldest beneficiary potentially won't be able to access the money he is absolutely entitled to when he turns 18. Plus the potential tax consequences (stamp duty, support for first time buyers).

Your children would be entitled to sue you if the result is that your eldest can't access the money when he turns 18 or the property becomes a duff investment.


Taking independent regulated professional advice ensures you have met your duty to invest the money prudently.

Absolutely. OP, please don't dismiss the possibility of your children taking legal action in the future. Many families have been torn apart over money. None of us would want to think that it would happen in our own family, but it remains a possibility.

As a trustee you have significant legal duties. You cannot treat the money as you might your own. What you would do with a £150,000 windfall is not the same as what you should do with your children's £150,000 windfall.

thenewcomer

property is a good investment. but like what others have pointed out:

1. it is risky. even as an experienced property investor, for every 5 properties you buy, two will be of not good investment.

2. they will lose their first time buyer privileges. my dad did this to my brother and when he was financially stable, he was not happy with it!

Entsman

Good point but children are not allowed to own property in the uk until they are 18 so it would be sold before they reached this age avoiding them both having any legal involvement in the property until then.. From our point of view it would act as capital investment with the bonus of rental income achieving a much higher yield at this present time than other investments on offer..

Entsman

Hi xylophone

Their grandfather basically gave this money to them as his FA said he needed to get shot of some of his money as the only person benifiting was the tax man.. I think we are bare trustees and as both boys are very young our solicitor said we can do what we want with the money as trustees but we want to make it work for them obviously...
reading all the posts fund investment seems to be the best option but I’m always wary of a shiny suit.. I think I will talk to a FA, I have seen companies online like “ easy invest” etc but again am wary about handing over my sons monies

Entsman

Yes I have and the stocks & shares isa also..worried that if we have horrible 18 yr olds they may spend spend spend..
I am thinking for now of putting 50k in nationwide 2.5% pa
20k in Halifax 2% pa until I do more research into fund investments

MallyGirl

Entsman wrote: »

reading all the posts fund investment seems to be the best option but I’m always wary of a shiny suit.. I think I will talk to a FA, I have seen companies online like “ easy invest” etc but again am wary about handing over my sons monies

Make sure it is an IFA - Independent Financial Advisor

cloud_dog

Entsman wrote: »

Yes I have and the stocks & shares isa also..worried that if we have horrible 18 yr olds they may spend spend spend..
I am thinking for now of putting 50k in nationwide 2.5% pa
20k in Halifax 2% pa until I do more research into fund investments

I'm not sure you are grasping the point that it is their money, and you will have no control over it.

EDIT: The grandfather really needs to re-consider what / how he is doing this. Placing it in a trust with you (for the children) might be better.