Teenager Help

akadessie

Hi, I have 3 teenage sons. I set up a Help to Buy ISA a while back for the eldest and that's going fine. I have been meaning to do likewise with the 2nd (17 year old) since he turned 16. Finally got round to doing it and I now find they're discontinued! There's a lesson in there somewhere. Anyway, I now need to work out what to do next. He has a savings account that I am trustee for; when he turns 18 the interest rate plummets to about 0.25%. I want something that I can turn over to him when he's old enough not to blow it all on parties and x-box games, possibly for buying his first home but not necessarily. Not too fussed about immediate access, with a relatively high rate of interest. I looked at Lifetime ISAs and they seem a bit too restrictive - if he decides that he doesn't want to be a housebuyer then as far as I can see he has to wait until 60 before he can get at the money or lost 25% of it so that's no good. Anyone have any advice?

xylophone

He has a savings account that I am trustee for; when he turns 18 the interest rate plummets to about 0.25%

If this is held in bare Trust, he has the right to access and control at the age of 18.

Have you discussed the LISA with him? What does he think?

Otherwise, if you want to make gifts at a time of your choosing, why not just pay as much as possible into your own ISA and use proceeds from that at the appropriate time?

akadessie

He has a right to access it - but only if he knows it's there :-)
I think a LISA is too restrictive and I know he will - his long term plan is to go to a party tomorrow. I'll look into the ISA option, I always wonder if a bank will look at me funny if I transfer money from a trust account to one in my name?

xylophone

I transfer money from a trust account to one in my name?

Having been a bare Trustee for a minor, I would not have dreamt of passing money from a Trust account to an account in my own name.

And see https://www.bathbuildingsociety.co.uk/savings/personal-savings-and-investments/supersaver as an example.

• All withdrawals must benefit the child. Our staff will ask for proof that the funds are being withdrawn for this reason if it is not obvious from the transaction. Please do not be offended if you are asked to prove the purpose of any withdrawal. Please note that in some circumstances the Society may refuse to complete a transaction if we are unsure if the funds are being used for the benefit of the child.

• For all withdrawals by post, the cheque will be made payable to the child

Your son is the beneficial owner of the funds and is entitled to any income thereon.

The income is taxable as your son's - this may become important in the future.