Alternative to Junior ISA

sanch3z_77

My kids are due £5k inheritance from my Dad. My first thought was to open a Junior ISA however I'm not keen on them getting access to the money as soon as they turn 16. I was very sensible with money at that age but my brother was very different! Also the rates are pretty low...

I think I would prefer the money in my name until I feel their reason for access is reasonable (education or property) and I plan on adding to it over the years.

Really I want them to have a pot to help them get on the property ladder as they are going to need all the help they can get.

My daughters are aged 6 and 9 so there seems very few decent options to them... Obviously they have time on their hands for a reasonably risky investment as they are 10 years away from needing the money.

Obviously the ISA deadline for this year is quickly approaching so I need to sort it soon...

Any suggestions would be greatly appreciated.

xylophone

If the money "indefeasibly vests" in your daughters, and the only reason that they may not have immediate access is by reason of their minority, then they are already the beneficial owners of the money and you would only hold it as bare trustee until they are 18 (16 in Scotland).


https://www.gov.uk/hmrc-internal-manuals/trusts-settlements-and-estates-manual/tsem1563

On that basis, the JISA would be an excellent home for the money. The money will grow free of tax and capital gains.

Does the older child already have a CTF?

If so, see https://www.skintedmintedmum.co.uk/minted-blog/how-to-transfer-a-child-trust-fund-ctf-to-jisa-with-a-double-scoop-of-tax-allowance.html

At the moment, the best rate for cash is on the Coventry JISA.

With regard to stocks and shares, see

https://moneytothemasses.com/quick-savings/parents/best-junior-stocks-and-shares-isa

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

https://monevator.com/using-vanguard-lifestrategy-funds-life/

https://monevator.com/index-investing/

MallyGirl

You can't get money out of a JISA till 18

xylophone

You can't get money out of a JISA till 18

Yes.

The child can however take control of the account at age 16.

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

The child can take control of the account when they’re 16, but can’t withdraw the money until they turn 18.

sanch3z_77

thanks for the detailed feedback. My eldest child does indeed have a CTF of which we've never added too... Whilst 18 is better than 16, I would still worry whether a child is mature enough at 18 to make the right decision. I'm hoping my parenting goes to plan and they understand but a decent pot used the right way could make life much easier for them...

I also think they have time on their hands, so an investment with more risk could be beneficial in the long run. For this reason I feel a S&S ISA would be better but in my name as a trustee incase they want to blow it on a crazy weekend.

xylophone

For this reason I feel a S&S ISA would be better but in my name as a trustee incase they want to blow it on a crazy weekend.

With regard to the inheritance, as previously explained, if the money has indefeasibly vested in your children then they are the beneficial owners and have the absolute legal right to access and control at age 18. You hold it in bare trust until then.

You can't hold an ordinary ISA as a trustee and a child under 16 cannot have an ordinary ISA.

You can control a JISA as the person with parental responsibility for a child as explained in the link.

If you are uneasy about gifting your own money to your children, then why not simply use your own ISA allowance to save and pass on the money to your children at what you feel is the appropriate time.

sanch3z_77

Apologies, on reading it again I understand what you mean now. It's a tricky one, my parents have a joint will. My Mum has said about executing this element of the will now, however she has also said that if on her death the estate still has this value she would like to execute it again. I guess in this instance the first payment would be a gift and the second inheritance. Nothing in the will states it has to be executed now and if the funds don't exists it would be applicable.


It's funny, my kids are growing up everyday and are very different from each other, as I am to my brother. I always saved for a house, my brother always spent his money... He might have been more content than me, maybe he still is... I don't have a mortgage.

All I know is a house is probably the most expensive, stressful and draining purchase in our lives and I want to help as much as possible.

I also feel leaving home at 18 to buy a house is probably a bit young... go out live, work, decide what you want to do and be before settling down.

That JISA recommended looks much better than what I had found. Ideally I would prefer a S&S JISA as I feel they can take a little more risk at their age and might reap the benefits...

xylophone

It's a tricky one, my parents have a joint will.

Do you mean this?

https://www.makeawill.co.uk/page-joint-and-mutual-wills-file-43.html

Did your father leave all his assets to your mother (unless she predeceased him) in which case they were to go elsewhere?

Your mother (having inherited the assets), now wants to make an outright gift of £5000 each to her grandchildren?

The grandchildren stand to inherit another £5000 each on the death of their grandmother?

If the money is an outright gift, then the money belongs to your children now and should be in accounts in their name.

The JISA is suitable provided that access is not required before the age of 18.

xylophone

If you are opening the JISA for the younger child, you can get £4,260 in now and the balance after 5 April.

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

If the LISA is still around when they reach the appropriate age, it might be an option.

https://www.gov.uk/lifetime-isa

sanch3z_77

I totally understand why parents can't take 100% control. Makes total sense so i'm not going to try and circumvent it. I will have to make sure they understand the value of things before they turn 18, that's kinda my job anyway

I've spoken to Vanguard and I can set up a JISA for each of my kids if I open an account, I'm leaning towards their life strategy range, I will do something for myself whilst i'm at it.

Thanks for the reminder on £4,260, will get that done now and more after the 5th April...

xylophone

I can set up a JISA for each of my kids

But one of them already has a CTF - see second link in post 2 above.

A child cannot have both a CTF and a JISA.

Vanguard will accept the transfer of a JISA - not sure about CTF.

You might need to transfer from CTF to cash JISA first (see link before you do) and then to a Vanguard JISA.

Coventry BS accepts transfer of CTF to JISA.