Designated Account

natoliver

Hi
I would like to invest for each of my young children in a Designated Account, so that the investments remain in my name but are earmarked for them in the future. I don't want to use a Bare Trust as that means legally they are entitled to the investments at 18.
I use Interactive Investor but they have stopped offering Designated Accounts.
Does anyone know which platforms offer these?
Thank you

dunstonh

Most platforms have pulled out of offering designated investments. They are still available direct from fund houses though.

natoliver

Thank you dunstonh. Do you know why? Assume not very popular?

dunstonh

1 - Low useage - it wasnt used by many people
2 - when used, it was typically small values. So more expensive to offer but the fees they would get back didnt make it worth it. In these days of unbundling and reduced cross-subsidy, this is one of the losers.
3 - the major software provider for platforms doesnt support it. Platforms are moving away from in-house software (except front end) and using third party back end software, such as FNZ - which doesnt support it.

Inv Perp still do it. I use them when I want a designated account. Although via advisers they wipe out the initial charge. I dont know if they will if you go direct.

bowlhead99

I had a designated account with TD Direct from a number of years ago, which got absorbed into Interactive Investor last year. However at that point I decided that the level of fees on the new trading account fee scale was a bit wasteful - so I transferred it out (to AJ Bell Youinvest) as I have other accounts there and it's handy to not need lots of logins for lots of firms.

When I transferred to Youinvest I didn't mention that the account had formerly been a 'designated' account (after all, the source of funds was me and the assets legally and beneficially belong to me, it wasn't an irrevocable bare trust and the person for whom it was originally designated isn't a signatory, trustee or custodian). So now, the account has no designation.

Which is fine with me, because all a designation functionally does (in terms of tax etc) is help you identify the account separately from your own funds.

The account had previously been named (e.g.) #123456, John Smith a/c re: ABCS.

But as ABCSmith now has a sister XYZSmith, really I wanted it to be #123456, 'John Smith re ABCS and XYZS'.

Instead, when I transferred it to another provider - who doesn't offer designations, only bare trust accounts or normal accounts - it is now simply a normal general investment account #654321, John Smith. I know what it's for. If I want, I can put in my will that in the event of my untimely demise I want the proceeds of that particular account to go to ABC Smith and XYZ Smith. Or if I don't have a will, I can just tell my next of kin (and the child's parent) that that's my wishes, in writing so they don't forget.

In practice, I don't plan on dying before the kids are old enough to get some or all of the money gifted from me to them. Before that unspecified date, circumstances might change and I'll perhaps move it into a different type of investment.

The bottom line is, you can probably get by without a formal designation and simply document your own affairs properly. I'm not expecting the situation to occur where my descendents are going through my financial affairs and come across an account and have to think to themselves "aha, this account is called John Smith re ABCS, he must have been saving the contents to go to little Andrew Benjamin Christopher, maybe we should do that...."

If you go back through the years with the search tool in this forum you will find various threads on bare trust vs designation - here's an example. https://forums.moneysavingexpert.com/discussion/5091712/designated-investment-account . But Dunstonh is right that generally the groups offering it are the investment managers selling direct to customer, rather than DIY fund supermarket platforms.

For example on the F&C Children's Investment Plan application form you have the choice to name the child as owner or simply do a designation while retaining beneficial ownership. Similarly Baillie Gifford Children's Saving Plan has the options of opening as a Designated Account or Bare Trust Account.

dunstonh

The bottom line is, you can probably get by without a formal designation and simply document your own affairs properly.

Such as using a different fund in your GIA for that particular purpose. (or within your ISA if you have spare allowance).

BLB53

Here's a recent article on the DIY site which may be of interest

http://diyinvestoruk.blogspot.co.uk/2018/04/investing-for-grandchildren.html

cloud_dog

I'd just like to extend this conversation slightly if I may.

I've been running an IT based savings plan, in my name, with the intention of using the proceeds to give to my nieces/nephews at age 18. The plan is with Ballie Gifford and is not in an ISA.

My question, ideally I'd like to gift them the value in a share certificate, in their name(s) so that (hopefully) they may obtain (more of) an awareness of investments; if only to figure out how to sell them

I am not in a position to obtain required certificates etc to open accounts in their own name(s), and at the time I wasn't sure how many there might be so went with a single approach in my name.

Anyone think this is possible / achievable, any ideas? I know the obvious will be to speak with BG to see what is possible but thought I'd ask in the mean time (still 2 years to go yet for the first).

grey_gym_sock

cloud_dog wrote: »

I've been running an IT based savings plan, in my name, with the intention of using the proceeds to give to my nieces/nephews at age 18. The plan is with Ballie Gifford and is not in an ISA.

My question, ideally I'd like to gift them the value in a share certificate, in their name(s) so that (hopefully) they may obtain (more of) an awareness of investments; if only to figure out how to sell them

I am not in a position to obtain required certificates etc to open accounts in their own name(s), and at the time I wasn't sure how many there might be so went with a single approach in my name.

Anyone think this is possible / achievable, any ideas?

one route might be to ask BG to transfer all (or some) of the shares into a certificate in your own name; and then to ask the registrar to transfer (stating this is a gift) the certificated shares into 1 or more names of nephews/nieces (stating how many shares each are to receive).

Alexland

We also have a designated account in my wife's name for our toddler son with Baillie Gifford and invest £50 per month in an investment trust. The online management system is very basic but it's good enough for the purpose and all going well so far.

https://www.bailliegifford.com/en/uk/individual-investors/how-to-invest/childrens-savings-plan/

cloud_dog

grey_gym_sock wrote: »

one route might be to ask BG to transfer all (or some) of the shares into a certificate in your own name; and then to ask the registrar to transfer (stating this is a gift) the certificated shares into 1 or more names of nephews/nieces (stating how many shares each are to receive).

GGS, many thanks, excellent suggestion.