Saving for a child in your name

Terry_Towelling

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.

No apology necessary, but do please try to retain some context - I hope you read the two paragraphs that came before the bit you chose to jump on.

Anyway, to have such an extreme disagreement (you said you couldn't disagree more) is a bit odd. Precisely which bit irked you so much? - suggesting OP should educate his daughter? - suggesting the money should be put into the daughter's name? - suggesting that gifts should be unconditional? - or suggesting that an adult should be allowed to make their own decisions?

Perhaps I've inferred a tone in your post that wasn't there (apologies if that is so) but you are either giving a gift or you aren't.

Comms69

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. - But isn't that the point? 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. - What about just a basic savings account?

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

Trust that in the 18 years you're raising your child, they've picked up some semblance of maturity?

System

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.

I don't understand this mindset. How is that any different to giving her the money at 25 when she could do just the same? My parents are in their 70s and give them a lump of money and they'd do just the same. Financial responsibility doesn't have anything to do with age.

What it does have to do with is education and I would hope you as parents would give her good enough financial education as she grows up that she is already in the proper mindset over money when she hits 18. How she handles money as an adult is entirely down to how you bring her up.

Saving for a child in your name can have a whole load of tax implications both for you and for them as not only could you pay unnecessary tax on gains as you point out, they could get taxed on it when you transfer it to them depending on how you do it, the amount and the rules in place at the time which could change so significantly that advice given now be worthless in 18 years time.

ValiantSon

Tarambor wrote: »

I don't understand this mindset. How is that any different to giving her the money at 25 when she could do just the same? My parents are in their 70s and give them a lump of money and they'd do just the same. Financial responsibility doesn't have anything to do with age.

What it does have to do with is education and I would hope you as parents would give her good enough financial education as she grows up that she is already in the proper mindset over money when she hits 18. How she handles money as an adult is entirely down to how you bring her up.

Saving for a child in your name can have a whole load of tax implications both for you and for them as not only could you pay unnecessary tax on gains as you point out, they could get taxed on it when you transfer it to them depending on how you do it, the amount and the rules in place at the time which could change so significantly that advice given now be worthless in 18 years time.

While in general I agree with the principle of what you are saying, it isn't true that how a child behaves as an adult is entirely down to how they were brought up (and by implication how good their parents were). Lots of people will have worked hard to bring their children up well, and made excellent choices about how they teach them, but they still find that their children are !!!!less/arrogant/unpleasant/criminal...!!!8230;!!!8230; You will also find that there are many families with multiple children where each child benefits from essentially the same upbringing, but each child is also very clearly different in their attitudes and outlook, as well as their behaviours.

I'm sure you didn't mean that all criminals are criminals because their parents were failures, or that all financially !!!!less people are so because their parents were failures. The truth is that parents have a duty to do their best to prepare their children for adult life, but they are not responsible for the behaviour of their adult off-spring.

ETA: The useless MSE software thinks that a perfectly decent word - which is spelt: f e c k l e s s - and means lacking in initiative, strength of character, or irresponsible - is an obscenity!

Schoolworker

I have a junior Isa for both my daughter and son which has £1k as this is in their control. Transferred from a child trust fund. I also have a Halifax savings account in my name in trust of them both. I will close this account when 16 as I need to due to terms and conditions then decide if holding the money or giving it to the or using the money for college or driving or something else. I pay in a fixed amount every month and can get money out of the account if needed. Good luck in what you decide.

cloud_dog

ValiantSon wrote: »

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.

As with everything in life, things are never black and white, and flexibility will always prove best in the long run.

My DD has a number of accounts (savings and investments) some are in her name and some are in ours. The money in her name is, well, hers. She can do as she pleases with it and I hope she a) enjoys it, and b) gives due consideration to how and what she uses it for. But, ultimately her money is her money.

cloud_dog

Terry_Towelling wrote: »

No apology necessary, but do please try to retain some context - I hope you read the two paragraphs that came before the bit you chose to jump on.

Anyway, to have such an extreme disagreement (you said you couldn't disagree more) is a bit odd. Precisely which bit irked you so much? - suggesting OP should educate his daughter? - suggesting the money should be put into the daughter's name? - suggesting that gifts should be unconditional? - or suggesting that an adult should be allowed to make their own decisions?

Perhaps I've inferred a tone in your post that wasn't there (apologies if that is so) but you are either giving a gift or you aren't.

Perhaps my tone was too 'forceful'. Too many people do not consider the future implications of their actions and often only realise their hands are tied when it is too late.

The only point I'd make, without wanting to come across a bit of a pedant, is that the OP is not discussing a gift. If that were the case then it absolutely must belong to the child and they must have every right to use that money as and when, and for whatever reason they desire. This is why we have a number of accounts; gifts to our DD go to her (account), for her use (for whatever that may be).

AnotherJoe

Terry_Towelling wrote: »

Perhaps I've inferred a tone in your post that wasn't there (apologies if that is so) but you are either giving a gift or you aren't.

Well you seem to have missed the whole point there. The idea is to reserve your decision so that you have the choice as to whether to give that gift, and also when.

And you get to make that choice at the time it's best to and not at an arbitrary date set by date of birth.

Terry_Towelling

cloud_dog wrote: »

The only point I'd make, without wanting to come across a bit of a pedant, is that the OP is not discussing a gift.

You are quite right, OP did indeed say he was wanting to save for his daughter rather than give her a gift. The trouble is, saving in her name is tantamount to gifting. That leaves saving in his name or creating a trust fund with rules as his safest options.

AnotherJoe wrote: »

Well you seem to have missed the whole point there. The idea is to reserve your decision so that you have the choice as to whether to give that gift, and also when.
And you get to make that choice at the time it's best to and not at an arbitrary date set by date of birth.

Well, perhaps not entirely missed. If you go back and read my earlier post you will see that I mentioned setting up a trust to retain control and pointed out some of the risks of saving in your own name (as you are doing and as am I and my wife) in the event life gets in the way and you are obliged to spend the money on yourself which, in our case, is now quite likely as it is in a long-term account in my wife's name and she has advanced dementia.

That may not be a great risk for a young parent but it is a very real risk for a grandparent and you might like to think about safeguards against that whilst you still have capacity and whilst the money is not locked away for a fixed term.

Anyway, if you suspect the 18th birthday is too near (or too far away) then by all means retain control until a point that suits you but, other than never giving the cash, what safeguards can you put in place to ensure that it will be spent wisely when you do give it?

AnotherJoe

Terry_Towelling wrote: »

Well, perhaps not entirely missed. If you go back and read my earlier post you will see that I mentioned setting up a trust to retain control and pointed out some of the risks of saving in your own name (as you are doing and as am I and my wife) in the event life gets in the way and you are obliged to spend the money on yourself which, in our case, is now quite likely as it is in a long-term account in my wife's name and she has advanced dementia.

That may not be a great risk for a young parent but it is a very real risk for a grandparent and you might like to think about safeguards against that whilst you still have capacity and whilst the money is not locked away for a fixed term.

Anyway, if you suspect the 18th birthday is too near (or too far away) then by all means retain control until a point that suits you but, other than never giving the cash, what safeguards can you put in place to ensure that it will be spent wisely when you do give it?

I wouldnt put any safeguards in place other than picking an age when grandchild didnt seem to be "off the rails". Its more of a safeguard against extreme events - drugs, criminality, or something they do thats too extreme for me, and it wont be held over their heads, they wont know its coming or there until it comes. (It could well be argued that if a child knows when they are 18 they are getting a very large sum of money whatever you think of them, that might encourage (and certainly wont dissuade) all sorts of counter productive behaviours.



Yes you make a good point about life events but that works two ways, you might decide that the wife needs the money more than the child and having it locked up in a trust so the wife cant get, lets say the cure for Alz* because its £250k and thats inaccessible would be a bad outcome.



* or more mundanely, 2 hip operations rather than waiting 5 years on the NHS