Kids Savings they can't automatically help themselves to....

splazza

Hi all, and happy new year to everyone.
I'm struggling here to find any info....my mum wants to put a few hundred pounds into a bank account for my 3 year old daughter, but doesn't want her to have it until she is 21.
I already have an ISA open for my daughter which she will have automatic access to when she is 18, so the idea of a second account she can access when she is 21, or later, makes sense, however I've only found an account with HSBC which effectively puts the account in my name and I hold it for my daughter until I sign it over to her, and the interest rate is 0.75%!
Anyone got any ideas? Any advice appreciated! Thanks in advance.

eskbanker

The simplest solution is for your mum to open an account in her own name (actually, not 'effectively') and to gift the proceeds to your daughter when she feels ready to do so. She can pick from fixed rate products at https://www.moneysavingexpert.com/savings/savings-accounts-best-interest/, the best currently paying 2.38%, or alternatively consider investing (preferably via S&S ISA) rather than saving, given the 18 year horizon.

bowlhead99

Kid's grandma doesn't want the grandkid to have money for another 18 years from now which is after the age that the kid will have become an adult.

The two obvious points are:

1) a cash deposit is unlikely to grow significantly in real terms given price inflation over 18 years, so a cash deposit is not really suitable for the objective

2) putting it in the name of the child would allow the child to have it when they are recognised as being an adult at age 18, which the grandmother or mother do not want.

Solution to both problems is not to put it in a high street deposit account, but an investment, in the mother's name rather than the child's name.

The mother's pension (if she will be in her late 50s and have access to it when the child reaches 21) or S&S (investment) ISA if the mother is younger, would seem to fit the bill.

peachyprice

I think you're going to struggle to find anything that denies access until 21 TBH.

I've used this account for all my children:

https://www.harpendenbs.co.uk/savings/personal-savings-accounts/18-club/

No accesss at all until 18, can be paid in to by anyone but is solely in the name of the child. At 21 the account holder can choose what happens with the money, either withdraw it, reinvest until 21 or a mixture of both.

bowlhead99

peachyprice wrote: »

I think you're going to struggle to find anything that denies access until 21 TBH.

True, it is possible to get a solicitor to create a discretionary trust but if you wanted cash product you will be stuck with low interest rates and the costs of setting it up would have eaten up the 'few hundred pounds' that the grandmother was willing to put in

I've used this account for all my children:

https://www.harpendenbs.co.uk/savings/personal-savings-accounts/18-club/

No accesss at all until 18, can be paid in to by anyone but is solely in the name of the child.

That seems much worse than a junior ISA because:

a) interest rate is only about two thirds of the rate paid by the best cash Junior ISAs or easy access child accounts

b) The lack of ability to withdraw or transfer means OP's child would be literally stuck with the same product and building society for another fifteen years from now, while the rate is variable so may fall to be even less competitive than it is now, with no chance of letting the money 'escape' to a bank or building society that pays a more competitive rate.

c) the account is accessible by the child at age 18, so it's no better at avoiding the child getting access at age 18 than a JISA would be. Sure, the child might decide at age 18 to give instructions to the building society to lock it up for another 3 year term at that point. But they could do that with their JISA proceeds too; and if they don't take any action, at maturity it converts into an adult account with a worse rate and is available for them to withdraw, just like a junior ISA would do.

Malthusian

splazza wrote: »

I'm struggling here to find any info....my mum wants to put a few hundred pounds into a bank account for my 3 year old daughter, but doesn't want her to have it until she is 21.

As eskbanker says this is very easy.

1) Open bank account (or just use your existing account) and put money in it

2) Take money out when granddaughter is 21 and give it to her

3) Update Will to ensure it reflects her wishes as to what happens if she dies before the daughter is 21. (Note that writing "the contents of bank account X to my daughter when she turns 21" will be the daughter's at 18, or 16 in Scotland.) Update Lasting Power of Attorney to ensure her attorneys don't close bank account X in the course of tidying up.

There are various reasons she might not want to do it this way but you haven't mentioned any.