Childrens' savings/investments/pensions

sovsov1357

Junior ISA and pension. Given the long term nature of the savings I would suggest more risk/higher reward eg. stocks and shares, probably emerging markets etc.

louloubelle79

Hi with the junior plan with HL in bare trust it says until child turns 18, or have I mis read? Thank you

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

bowlhead99

louloubelle79 wrote: »

Hi with the junior plan with HL in bare trust it says until child turns 18, or have I mis read? Thank you

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

If you open up a 'junior investment account' it will be in bare trust for the child which as you can see from the comparison table on that page you linked, means the child is entitled to assets in the account from age 18; a bare trust means the child (rather than the person putting the money in) is the beneficial owner for tax purposes after the donation into the account has been made.

If you click through from the investing for children overview page to the junior investment account page (http://www.hl.co.uk/investment-services/investing-for-children/junior-investment-account), they note that

"It's also possible to open a Fund and Share Account that's designated to a child. However this does not create the same legal arrangement as a bare trust, and there are fewer, if any, tax benefits to be had."

So if you have decided on HL as your favourite provider, but you are not happy with it being the child's money at 18, then don't use a junior investment account under bare trust and don't use a JISA, simply open up your own "Fund and Share" general investment account and ask them to put a designation on the account name (e.g. "re: [the child's initials]" at the end), so that you'll remember that that particular account is one that contains money you intend to give to the child in the future.

But if you were to do that, as it is your account, any income or gains are taxable on you, and putting money in an account that you designated with a funny account name does not count as a gift for inheritance tax purposes.

Some people investing for their children use JISAs, some use bare trusts, and some use their own accounts (either a general investment account, ISA or pension) with the intention of later gifting the money to the child when they see fit. All routes have their advantages and disadvantages when looked at from different perspectives.

anandp

louloubelle79 wrote: »

Hi with the junior plan with HL in bare trust it says until child turns 18, or have I mis read? Thank you

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

As the above poster has said, yes bare trusts funds are technically the child's at the age of 18. With some bare trust forms you can put a higher age but I'm not sure how you would enforce that.

I was filling the HL bare trust form recently, and found that you don't actually send this to HL - but keep a record of it with you. Does that sound right to trust experts out there?

Reaper

anandp wrote: »

With some bare trust forms you can put a higher age but I'm not sure how you would enforce that.

The company only accepts instructions from the trustees, even when the child turns 18. So while legally entitled to the money if the trustees refuse to hand it over the child would have to replace them, which is surprisingly hard to do.

I was filling the HL bare trust form recently, and found that you don't actually send this to HL - but keep a record of it with you. Does that sound right to trust experts out there?

Sounds odd to me. How do they know what tax to report to Inland Revenue? They need to know whose tax affairs the money relates to.

bowlhead99

anandp wrote: »

I was filling the HL bare trust form recently, and found that you don't actually send this to HL - but keep a record of it with you. Does that sound right to trust experts out there?

Perhaps the form to which you're referring is a written record that initially constitutes the trust and confirms that somebody A (and perhaps somebody else as trustee(s) are running a trust for the benefit of somebody C with some basic facts - effectively a simple trust deed.

HL may not need to see that entire piece of paper itself, but presumably they need to know the details/identites of the trustee(s) and beneficiary as part of the process of establishing an account; though maybe they do this with you online. Some financial services businesses have a greater or lesser appetite for having sight of all the possible documentation that could be required as part of their customer due diligence / AML/ 'know your client' processes.