Investing on behalf of children (not my own)

dunroving

I've been looking for a way to open an investment account on behalf of some younger relatives. Having learned late in life the John Bogle attitude towards long-term investing, I'd like to drip-feed and occasionally lump sum invest in tracker fund/s for some younger relatives, with them being unable to access until they are 18.

From a somewhat selfish perspective, I'd like them to know who the money came from, when the time comes (I'll likely not be around when they reach 18). Here's what I have found so far:

JISA - I can't open one of these for them, and if I contribute to one their parents opened (if they ever thought of that ....) my gifts would be mixed up in the contributions of others.
Premium bonds - I can buy these in their name (would need the help of their parents?), but they could cash them in before age 18.
Regular investment account - not sure if I can open one of these in their names, but presume not(?) Also, no tax advantages.

- Are there better options I'm not finding? I don't want to contribute to any sort of cash savings account.

[Edited to add: I also thought a roundabout way would be to open a SIPP, and leave the SIPP in equal parts to them, to be kept in trust until they are 18. If they reach 18 before I meet my maker, I could withdraw their portion and gift to them, but then am not sure about gift allowances and IHT if it's within 7 years of me dying. Ideally, I'd like whatever account I open to be in their name.]

wmb194

Hargreaves Lansdowns' 'Junior Investment Account' might suit. If it's in bare trust in their name then they will receive all of the usual adult tax allowances so, unless the amounts involved are huge, tax might not be an issue even in a taxable account.
https://www.hl.co.uk/investment-services/investing-for-children

Edit: I notice that due to Covid-19 these accounts cannot be opened at the moment.

xylophone

If the parents have not opened JISAs for the children, why not ask them to do so on the basis that you will be the contributor?

dunroving

xylophone said:

If the parents have not opened JISAs for the children, why not ask them to do so on the basis that you will be the contributor?

Without going into the politics too much, a JISA would be opened by the parents, and it's not guaranteed that at some point in the future, they will "forget" to tell the kids it was me that funded it.

A separate issue (and a different branch of the family), but I recently found I was left £3,000 in a relative's will, and I never received it. That sort of "forgetfulness" is what I'm thinking of. 

dunroving

wmb194 said:

Hargreaves Lansdowns' 'Junior Investment Account' might suit. If it's in bare trust in their name then they will receive all of the usual adult tax allowances so, unless the amounts involved are huge, tax might not be an issue even in a taxable account.
https://www.hl.co.uk/investment-services/investing-for-children

Edit: I notice that due to Covid-19 these accounts cannot be opened at the moment.

Thanks; I'll take a look.

DiamondLil

I save for grandchildren on the Charles Stanley Direct platform. When I set the accounts up six years ago, they were the only platform who understood what I wanted. The accounts are in my name, each one designated to a grandchild by name. The tax I pay is minimal so far and doing it this way gives me control over when I gift the monies.

xylophone

https://www.youinvest.co.uk/investing-for-children/dealing-accounts-for-children
Not wholly clear whether anyone other than parent or grandparent is permitted to open the account.

dunroving

DiamondLil said:

I save for grandchildren on the Charles Stanley Direct platform. When I set the accounts up six years ago, they were the only platform who understood what I wanted. The accounts are in my name, each one designated to a grandchild by name. The tax I pay is minimal so far and doing it this way gives me control over when I gift the monies.

Hi, if the accounts are in your name, won't they be subject to IHT? Also, you say "designated" to each grandchild by name - has this been done in some official way, or just in your own mind? (Again, I'm trying to figure out what sort of accounts these are, and how IHT plays into inheritance, if it comes to that)

Malthusian

dunroving said:

DiamondLil said:

I save for grandchildren on the Charles Stanley Direct platform. When I set the accounts up six years ago, they were the only platform who understood what I wanted. The accounts are in my name, each one designated to a grandchild by name. The tax I pay is minimal so far and doing it this way gives me control over when I gift the monies.

Hi, if the accounts are in your name, won't they be subject to IHT? Also, you say "designated" to each grandchild by name - has this been done in some official way, or just in your own mind? (Again, I'm trying to figure out what sort of accounts these are, and how IHT plays into inheritance, if it comes to that)

If they are irrevocably designated to the grandchildren, they are the grandchildren's for tax purposes. They are "in DiamondLil's name" only in the sense that DiamondLil is the trustee. An irrevocable designation can be made in various ways but it can be as simple as attaching the grandchild's initials to the account. This would be a gift so IHT would only come into play if the donor failed to survive the required period (typically 7 years but can be up to 14). Regular savings might be automatically exempt from IHT under the "gifts out of regular income" rule if they don't compromise standard of living.

xylophone

If they are irrevocably designated to the grandchildren, they are the grandchildren's for tax purposes. They are "in DiamondLil's name" only in the sense that DiamondLil is the trustee. 

But DL says

gives me control over when I gift the monies.

Is this  "earmarking" rather than a bare trust?

See https://www.cii.co.uk/learning-index/articles/investing-for-children-part-2/57447

Is Diamond Lil the legal and beneficial owner of these assets?

Is she paying any tax due?

If so, they are part of her estate and were she to die, unless specifically willed to the children, would pass under the general provisions made in the will.

dunroving

Malthusian said:

dunroving said:

DiamondLil said:

I save for grandchildren on the Charles Stanley Direct platform. When I set the accounts up six years ago, they were the only platform who understood what I wanted. The accounts are in my name, each one designated to a grandchild by name. The tax I pay is minimal so far and doing it this way gives me control over when I gift the monies.

Hi, if the accounts are in your name, won't they be subject to IHT? Also, you say "designated" to each grandchild by name - has this been done in some official way, or just in your own mind? (Again, I'm trying to figure out what sort of accounts these are, and how IHT plays into inheritance, if it comes to that)

If they are irrevocably designated to the grandchildren, they are the grandchildren's for tax purposes. They are "in DiamondLil's name" only in the sense that DiamondLil is the trustee. An irrevocable designation can be made in various ways but it can be as simple as attaching the grandchild's initials to the account. This would be a gift so IHT would only come into play if the donor failed to survive the required period (typically 7 years but can be up to 14). Regular savings might be automatically exempt from IHT under the "gifts out of regular income" rule if they don't compromise standard of living.

Thanks. I'm only just getting my head around this, but I note that the annual limit on gifts is £3,000, and I wouldn't be depositing more than this in total per year. Hopefully, this is my solution. Just need to find a low-cost provider that holds trackers. I don't see any child accounts in Vanguard, unfortunately. My plan is to just invest them in a low-cost global tracker, and let time do the rest.