Childrens Savings that Parents retain control when they turn 18?

rich05uk

Hi,

We would like to start a savings account for our son who is now 15 months old, we would like to save money regularly on a monthly basis and also have the option to pay in any lump sums (e.g. if he is gifted any money from relatives for Birthdays and Christmas etc).

The main problem we have is that with most accounts the money will fall into his control when he turns 18 years old. As he is still very young, there could be a substantial sum saved by that time!

The money will be for him only, however 18 years old is still very young and we would like to retain partial/full control of that money so we can guide his expenditure e.g. house deposit or invest for the future etc, rather than to blow the lot drinking, travelling, going to gigs every 5 minutes (as I might have done when I was 18).... :beer:


Any suggestions?

Thanks!

MallyGirl

If you want the best rates then the account has to be a children's account and it will be his at 18. You have nearly 17 years to bring him up to make the right choices at that point.
If you want to make the most of the time then a stocks and shares ISA is the best way and you could have one in one of your names if you aren't using this option for yourself.
I am really looking forward to my DD's 18th birthday in 6 months time as she has no idea about the accounts in her name. They will open all sorts of doors for her (gap year?, work experience abroad as part of uni course, travel before uni, ...)

xylophone

if he is gifted any money from relatives for Birthdays and Christmas etc).

Such gifts are his absolutely and should be paid into an account in his sole name - he will have the right to access and control no later than 18.

Had you considered the JISA?

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

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

If you wish to save a sum from your own resources for your child's use when you are minded to give it, you and your spouse could use your own ISA allowances - this could build a substantial sum by the time he is old enough to eg, buy a property.

elsien

What's the issue with spending money on travelling?

AnotherJoe

The only realistic option is to save in his name.
I suggest a bit of both.
Some in his name he knows about some thats yours you can gift as and when seems appropriate.

Alice_Holt

One, very long term, option would be a Pension.
https://www.telegraph.co.uk/finance/personalfinance/special-reports/11437077/Turn-2000-into-500000-the-pros-and-cons-of-starting-a-Sipp-for-your-child.html

Starting so early, it could build to a very useful sum. And, possibly negate the need for your son to make substantial pension savings through his 30's, 40's, and 50's. He might then have more options for other financial priorities during these years.

However, I fully understand that this is a rather left-field suggestion and wouldn't provide help with potential house purchase but it is certainly a very tax efficient "investment for the future".

AnotherJoe

Noooooooo ! numerous reasons why this is a bad idea unless you have exhausted every other option to the max before you use this,
One unpleasant statistic, around 1 in 12 (from memory) wont even get to use it

Boleyn19

I can understand your concerns. Saving in his name should remove the savings from your estate and not incur IHT. But then the money will be his at 18. If the awful situation arose that he did not reach that birthday then the money becomes yours as parents of a minor.

I have the same concerns and have just chatted them through with my financial advisor. My children are 19 and 15. They have both just inherited £35k from the death of their aunt. The 19 year old has put his into long term savings for house deposit, education etc. The 15 year old will inherit his at 18. I was thinking of making a deed of variation on my mother's will to leave them an amount so it was taken out of my estate. But his considered advice, as advisor and parent, is that future use is not only based on the child as an adult, whose behaviour cannot be determined at present, also on any future spouse. That has made me think again.

So I will keep adding to our younger son's JISA, which becomes his at 18 and giving the elder the equivalent amount. I can then make other gifts (for marriage, house deposit) or pay for items (eg driving lessons) but this is within my/our control. If within two years of Mum's death I can do a DoV other wise I'll have to survive 7 years.

Malthusian

rich05uk wrote: »

Any suggestions?

Involve him in how the discussions of how his money is invested and what he wants to do with it when he is able to access it, as soon as he is able to understand the concept. I.e. starting from age 12-13 at the latest, assuming he has normal mental capacity and doesn't refuse to be involved. Money is like any other life skill, you don't make somebody good at handling it by banning them from ever touching it.

You can't control another compos mentis adult's money. The only option that retains control is not to give them the money in the first place.

Would you actually pay tax if you invested the money in your own name, to be given to him as and when you wanted?

IanManc

Boleyn19 wrote: »

I can understand your concerns. Saving in his name should remove the savings from your estate and not incur IHT. But then the money will be his at 18. If the awful situation arose that he did not reach that birthday then the money becomes yours as parents of a minor.

There is no law (in England and Wales) which says that parents inherit the estates of deceased minors.

The Intestacy Rules apply, and the people who would inherit would firstly be the spouse, which the minor could have as one can marry at 16 in this country; or if no spouse then the issue, which the minor could have as the age of consent is 16. Only if there is no spouse or issue do the parents inherit, but that inheritance is nothing to do with the deceased being a minor.

Boleyn19

Yes IanManc you are quite right. I assumed that the child died unmarried with no children/grandchildren who would inherit before parents.