Child Trust Funds

c_lothian

Hi all,

Through his Will, my late father has left his grandchildren a tax free sum of £5k each (there's 2 of them, aged 4 & 5). I've been told by the Solicitor that this needs to be put direct into a Trust for them to receive only once they each turn 18 (so, therefore can't go into their children's bank accounts).

Any advice on which Trusts are best and suitable for this purpose please as I don't have any knowledge on this at all?

Thanks in advance.

Chris

xylophone

Do your children have JISAs?

The JISA does not allow access until the child is 18 so would be a suitable vehicle.

https://www.gov.uk/junior-individual-savings-accounts

Up to £4260 per child can be contributed in the current tax year.

You might consider the Nationwide JISA with the balance in the Smart Limited Access saver to be moved to the JISA in the next tax year.

https://www.nationwide.co.uk/products/savings/junior-isa/features-and-benefits

https://www.nationwide.co.uk/products/savings/smart-limited-access/features-and-benefits

Keep_pedalling

For that sort of sum JISAs would be ideal.

Heedtheadvice

Trying to avoid confused advice.....


Are you asking about a Trust to be set up to manage the money? The solicitor should advise you what and how to set up in accordance with the will's conditions but beware of anything that costs a lot! Costs (such as ongoing professional fees if a trustee is acting in a professional capacity) can certainly eat into or negate any income or capital gain especially for such small amounts of legacy.... Does the will specifically say to set up a will trust and mention who are to be trustees?



Or are you asking where to invest the money? There can be many ways to do so such as unit or investment trusts (causing confusion over what is meant by a ' trust ' ! ) and other investments such as those suggested above. If it is set up as a Will Trust (with the nominated or appointed trustees) then there is much more scope for where and how to invest (maybe limited by the will conditions) and that might be worth exploring given the custody time scale.


For what it is worth based upon experience for the size of the legacies I would consider avoiding setting up a Trust if possible due to the amount of administration required -various activities not least of which is record keeping and tax returns! It can be a complex area.

c_lothian

Thank you. I was under the impression that the whole £5k would have to be paid in, and as you say, the JISA's are capped at £4260 this year?

c_lothian

Thank you - I'll have to check back with the Solicitor, but I'll be more aware of what to look out for now.

xylophone

This money is an absolute gift to each child but they cannot have it now as in their minority they cannot give good receipt.

You would hold the money in Bare Trust for each child.

If the solicitor wishes to pay the money for each child into a bare trust for each as a lump sum, you can open an account for each child in Trust to receive the lump sums (Smart Limited Access or any other similar account see below), then open the JISA for each and transfer the maximum for each child, then transfer the balance over as soon as possible in the new tax year.

Other than SLA you might look at eg

https://uk.virginmoney.com/virgin/savings/learn/childrens-accounts/

https://www.halifax.co.uk/savings/accounts/kids/kids-saver/#

xylophone

And don't forget to keep an eye on JISA rates over the years and transfer as appropriate.