Saving for a child in your name

jim79

Hello all

I have recently become a father and am interested in saving for my daughters future. A look online gives lots of ideas about Child ISAs or Childrens saving schemes that would give her full access to the money at 18.

A worry I have is, if my wife and I save for 18 years plus into such a scheme, we then don't have any control over how it would be spent. While I would hope my daughter would use it wisely, there is nothing stopping her just going on a spending spree and wasting all the money we have taken so long to save.

With that in mind, does anyone have any ideas of alternatives to such schemes? I already have both a cash and stocks ISAs while my wife has a cash ISA. One idea was to use a Stocks ISA in my wife's name but that would of course stop her having on in the future herself.

We are also thinking about simple investment schemes like Vanguard life, but are conscious of tax implications as both my wife and I are already close to the 40% band.

Does anyone have any alternative ideas?

Thanks

Jim

AnotherJoe

Save into a scheme in your own name. That is what i am doing for grandchildren. And on the same basis, flexibility about when they get it or if they get it and its all my (our) choice.



There is no reason you cannot invest into an ISA partly for wife partly for daughter/future children all in your wifes name. Just keep the fund choices separate so you know whose funds are nominally allocated to whom. That is what i am doing, granddaughter has one fund, wife has the others, all within the same account all in wifes name.

chelseablue

I save for my son in a S&S ISA that is in my name. I just know the money in there is for him.

Like you I didn't want him to just have access to the whole lot when he's 18, just in case!

Currently there's almost £6,000 in there so at 4 years old he's got more money than I have

I use Hargreaves Lansdown and its invested in Vanguard Life strategy 100%

xylophone

but that would of course stop her having on in the future herself.

This ISA would be your wife's ISA!

She saves into it and then decides what she wants to do with it when the time comes!

She can regard it as money that she will use to gift to your son but she has absolutely no obligation to do so!

https://www.vanguardinvestor.co.uk/investing-explained/stocks-shares-isa may suit.

Mojisola

jim79 wrote: »

A worry I have is, if my wife and I save for 18 years plus into such a scheme, we then don't have any control over how it would be spent. While I would hope my daughter would use it wisely, there is nothing stopping her just going on a spending spree and wasting all the money we have taken so long to save.

It is wise to consider this possibility!

The only downside of saving in your own name is that, if life were to change and you had to claim means tested benefits, the savings would be counted as yours.

Best not to let your daughter know that there is £x amount put away for her in case you need to use it yourself.

Wildsound

jim79 wrote: »

A worry I have is, if my wife and I save for 18 years plus into such a scheme, we then don't have any control over how it would be spent. While I would hope my daughter would use it wisely, there is nothing stopping her just going on a spending spree and wasting all the money we have taken so long to save.

Hi Jim,

Firstly, congratulations for becoming a father and secondly for wanting to think about her future. Not wishing to come across in the wrong way, but what is to stop you educating your daughter (and any future children) on the importance of saving and spending sensibly? I'd say I'm in a generation where schools really didn't prepare me for what was to come when I left school. Luckily, my parents did some really simple things to help me appreciate what power money can have over my life (unfortunately), and so I was able to take sensible steps once I gained my independence.

Not only will it help you learn a few things yourself along the way, but it will give you great satisfaction (I'm sure) to see your children grow up with a proper respect for the paper/plastic stuff.

Let me know your thoughts.

Terry_Towelling

Presumably you could create a trust fund with stipulations as to how the money might be used and at what age full 'ownership' should pass to the beneficiary. This would have a cost attached to it of course.

If you save in your own name, there may be more to consider than the effect it may have on any means tested benefits you may need to claim. Suppose you needed full-time residential care for dementia (God forbid, but don't be fooled into thinking it only affects old people). Depending on your overall asset level, that money would potentially have to be allocated to paying for your care.

Like others have said, just educate your daughter as best you can, put it into her name and let her do with it as she will; that's what giving gifts is all about - no strings.

cloud_dog

Terry_Towelling wrote: »

Like others have said, just educate your daughter as best you can, put it into her name and let her do with it as she will; that's what giving gifts is all about - no strings.

Sorry, but couldn't disagree with this more.

It is sensible and responsible to take precautions; if everything turns out fine then hand the money over to your child(ren) but, if if the worst happens then you still have the ability to help them, and possibly even more importantly protect them from themselves/actions. I'm sure some might think this view point to be somewhat 'over controlling' but if experience has taught me anything it is to always plan for flexibility when dealing with finances.

ValiantSon

chelseablue wrote: »

I save for my son in a S&S ISA that is in my name. I just know the money in there is for him.

Like you I didn't want him to just have access to the whole lot when he's 18, just in case!

Currently there's almost £6,000 in there so at 4 years old he's got more money than I have

I use Hargreaves Lansdown and its invested in Vanguard Life strategy 100%

Hargreaves Lansdown are an expensive platform. At £6,000 you are paying them £27 p.a. in platform fees. If you held the same investment on Vanguard's own platform - Vanguard Investor -you would only pay £9 p.a. Obviously, as the investment size grows, so do those fees (HL is 0.45% and Vanguard is 0.15%).

I'd recommend that you look at transferring the investment to Vanguard Investor to save on fees, which are eating away at your return. Sadly HL will charge you a £25 exit fee (because they're nice like that!), but even paying this you will soon recoup that cost thanks to the much lower Vanguard fees.

Additionally, Vanguard's payment options are much more flexible and customer friendly. While HL require you to hold cash in the account (earning nothing) to cover fees (or they sell fund units), Vanguard allow you to pay your fees by quarterly direct debit. And should you ever want to transfer the investment to a different platform, Vanguard don't charge any exit fees!

ValiantSon

cloud_dog wrote: »

Sorry, but couldn't disagree with this more.

It is sensible and responsible to take precautions; if everything turns out fine then hand the money over to your child(ren) but, if if the worst happens then you still have the ability to help them, and possibly even more importantly protect them from themselves/actions. I'm sure some might think this view point to be somewhat 'over controlling' but if experience has taught me anything it is to always plan for flexibility when dealing with finances.

You are entitled to that opinion, just as others are entitled to disagree with it.

One of the problems that we face with the children of today is that far too often they are not allowed to make mistakes and to fail at things because well-meaning, but horribly misguided parents - and other adults with caring roles - try to control everything and shelter them from any misfortune. It is actually essential for a child's healthy development for them to be able to take risks, make mistakes, and sometimes fail. In allowing these things to happen, you increase the chances that they will grow up to be well-adjusted, emotionally health and mentally strong adults.

ValiantSon

jim79 wrote: »

Hello all

I have recently become a father and am interested in saving for my daughters future. A look online gives lots of ideas about Child ISAs or Childrens saving schemes that would give her full access to the money at 18.

A worry I have is, if my wife and I save for 18 years plus into such a scheme, we then don't have any control over how it would be spent. While I would hope my daughter would use it wisely, there is nothing stopping her just going on a spending spree and wasting all the money we have taken so long to save.

With that in mind, does anyone have any ideas of alternatives to such schemes? I already have both a cash and stocks ISAs while my wife has a cash ISA. One idea was to use a Stocks ISA in my wife's name but that would of course stop her having on in the future herself.

We are also thinking about simple investment schemes like Vanguard life, but are conscious of tax implications as both my wife and I are already close to the 40% band.

Does anyone have any alternative ideas?

Thanks

Jim

As others have said, you can use your wife's ISA. Is she likely to be filling it every year with her own personal contributions?

Alternatively, you can open a general investment account, but be aware that this will potentially incur tax implications, depending upon dividends received and capital gains made, and these will be assessed on your financial position, not your daughter's. If you do go down this route, then I would suggest it is easier to hold income versions of funds, rather than accumulation, because working out the value of dividends from and accumulation fund can be a nightmare.