child trust fund

nic71lm

Hi 
i wondered if you could advise, my son and daughter both have child trust fund accounts which have been transfered from halifax to Forester life, i have received the information pack from forester and the accound has reduced from £460 to £360 since February, I realise this is due to the shares but what is my best option as i don't want to lose any more money. 
Thanks

xylophone

If you are unhappy with a share based CTF, you might consider a transfer to a cash JISA?
https://www.nsandi.com/junior-isa

Malthusian

As it stands you and your children haven't lost anything, assuming you didn't cash in. The best option to avoid losing money is almost certainly to do nothing, and wait for the recovery over the next few years.

What fund are the CTFs actually invested in? 22% is quite a big drop considering the global stockmarket is down about 14%. (However an undiversified investment could easily be lower - the FTSE 100 is down 22%.)

Malthusian

xylophone said:

If you are unhappy with a share based CTF, you might consider a transfer to a cash JISA?
https://www.nsandi.com/junior-isa

That would be a bad idea unless one or both of the children will turn 18 in the next few years and has indicated that they plan to spend all the money then. The OP is a trustee and has a statutory duty to invest their childrens' money as a prudent businessperson would. Cashing in investments at the bottom of the market is not what prudent businesspeople do.

xylophone

https://www.gov.uk/child-trust-funds/managing-the-account

The OP is a trustee and has a statutory duty to invest their childrens' money as a prudent businessperson would.

I would disagree that the parent is a trustee - he is a "nominated contact".

On maturity of the account, the provider will contact the "child ", not the parent.

With a bare trust, the Trustee would have to "sign over" the account (albeit that the beneficiary of such a Trust has the absolute legal right to demand access and control, it would take a court battle to force the Trustee to facilitate it).

The nominated contact may handle the account as he wishes until the child is 16- see link.

As for changing from stocks and shares to cash or vice versa, this comes down to the decision of the contact who has the right to choose one or the other (or in a JISA both).

Alexland

xylophone said:

As for changing from stocks and shares to cash or vice versa, this comes down to the decision of the contact who has the right to choose one or the other (or in a JISA both).

It also depends on the child's age as many CTF default strategies don't seem to reduce market risk as age 18 approaches when they may wish to use the money.

nic71lm

my children age is only 10yrs and 12yrs.  
so would you suggest to leave it, its just £100 reduction just seams a lot, it was moved from halifax to forester in April, i have a letter from halifax in February stating value at £460 and then when i received paperwork from Forester it stated £360, seems massive, i do not know what the shares are they just state number of shares on the paperwork. 

Malthusian

xylophone said:

https://www.gov.uk/child-trust-funds/managing-the-account

The OP is a trustee and has a statutory duty to invest their childrens' money as a prudent businessperson would.

I would disagree that the parent is a trustee - he is a "nominated contact".

The OP is looking after someone else's money on their behalf, that makes them a trustee. CTF-specific terminology and a slightly earlier age at which the child can gain control over the account don't alter that.

With a bare trust, the Trustee would have to "sign over" the account (albeit that the beneficiary of such a Trust has the absolute legal right to demand access and control, it would take a court battle to force the Trustee to facilitate it).

Very unlikely. It would never go to court as every reputable solicitor would tell the Trustee to stop being silly and hand over the money.

nic71lm said:

my children age is only 10yrs and 12yrs.  
so would you suggest to leave it, its just £100 reduction just seams a lot, it was moved from halifax to forester in April, i have a letter from halifax in February stating value at £460 and then when i received paperwork from Forester it stated £360, seems massive, i do not know what the shares are they just state number of shares on the paperwork.

What exactly does the paperwork say? It doesn't make sense to state a number of shares but not say what of. Whether the drop is "a lot" or not depends on what it is invested in.

kuratowski

According to this page, 
https://www.foresters.com/en-gb/products/childrens-savings/flctf
it's invested in a FTSE tracker.

xylophone

The OP is looking after someone else's money on their behalf, that makes them a trustee.

There is still a difference between a bare Trustee and a nominated contact.

Very unlikely. It would never go to court as every reputable solicitor would tell the Trustee to stop being silly and hand over the money.

Unlikely or not makes no difference to the legal position.

And choosing cash over shares is a legitimate choice.

ratechaser

kuratowski said:

According to this page, 
https://www.foresters.com/en-gb/products/childrens-savings/flctf
it's invested in a FTSE tracker.

Which over 10 and 12 years respectively may well not have returned a huge amount anyway. Doesn't look like the transfer to Forester Life changed the underlying investment, and it was FTSE based while still at the Halifax.

OP - does the current £360 valuation come just from the £250 CTF grant that was originally invested when your children were born?