Investing via Bare Trust for 3 young relatives - best platform?

dunroving

I posted a thread a while back because I want to invest over the next 13-17 years on behalf of three young relatives (aged 1-5 years). I wish to be able to control the investments (choose which funds), and for the funds to be accessible when they reach 18 - at which point, I will very possibly be pushing up the daisies. The recommendation on here was to invest in an investment account via a bare trust. JISA and SIPP are not options I want to or can consider. Having done some research (including searching this forum), I'm wondering the following:
1) Do I need the permission of their parents? (I think not, but thought I'd ask)
2) Do I need to engage a solicitor to set up the bare trust? (I think not, from looking online, but thought I'd ask, just in case).
3) Is there a platform/provider via whom this is most straightforward, and inexpensive (fees-wise)? Vanguard doesn't seem to provide this option at the moment; neither does Hargreaves-Lansdown. Fidelity are standard 0.35% p.a., from what I can tell.
My plan is to invest up to £1,000 per year for each child, in broad-based passive fund/s, via a low-cost platform. No fancy investments, so don't feel the need to pay high fees for any bells-and-whistles platform.
Thanks for any advice!

cloud_dog

Can I ask why a JISA is not an option?

xylophone

If you open these accounts in bare trust, then the children are the beneficial owners of the  accounts - they each have their own Personal Allowance/dividend allowance/CGT allowance, just as if they were adults.

They also have the absolute right to call for access  at the age of 18. This is exactly as in  JISA.
However, what is not like a JISA, is that any income and gains are potentially taxable.

The funds in a JISA will be released to nobody other than the young adult. 


You seem to think that you may have shuffled off this mortal coil by the time the children reach age 18.

If opened in bare trust,  obviously you would wish to let your executor know of the existence of the accounts but  bear in mind that you cannot  bequeath them as they would  already belong beneficially to the children - your exor  would need to sort out a replacement Trustee.

Really, the JISA would be the better option?

xylophone

3) Is there a platform/provider via whom this is most straightforward, and inexpensive (fees-wise)? Vanguard doesn't seem to provide this option at the moment; neither does Hargreaves-Lansdown. Fidelity are standard 0.35% p.a., from what I can tell.

https://www.youinvest.co.uk/investing-for-children/dealing-accounts-for-children but not clear whether anybody other than parent or grandparent could et up the account.

Malthusian

1. No

2. No

3. I'll leave the platform suggestions to others. (I use HL, but that is not a recommendation as I don't mind them being reassuringly expensive - others do.)

If opened in bare trust,  obviously you would wish to let your executor know of the existence of the accounts but  bear in mind that you cannot  bequeath them as they would  already belong beneficially to the children - your exor  would need to sort out a replacement Trustee.

It would make more sense to appoint at least one other Trustee from outset, who would simply take over on the OP's death. The parents?

Really, the JISA would be the better option?

Doesn't meet the OP's objective of retaining control of the money. JISAs have to be managed by a parent or guardian. (*edit* Also, their earlier thread says they don't want their contributions to be mixed up with others' and want their young relatives to know that £X of their trust fund came from Generous Auncle Dunroving, which is fair enough.)
Unless the child is loaded and would be liable for tax on income or gains, JISAs don't have any tax benefit. They are much more useful for parents wishing to give their kids money, due to the rule that income over £100pa arising from gifts from parents is taxed as the parents'.

cloud_dog

Malthusian said:

Doesn't meet the OP's objective of retaining control of the money. 

The OP doesn't say he wants to retain control of the money, simply that he wants to control the investment choices.  I'm sure that can be achieved by the OP stipulating the investments to use.

dunroving

cloud_dog said:

Can I ask why a JISA is not an option?

Because their parents already have (cash) JISAs for them, and I want these investments to be held separately, and invested, not sitting in cash.

cloud_dog

A child can hold both a cash and a S&S JISA, if that helps.

dunroving

xylophone said:

If you open these accounts in bare trust, then the children are the beneficial owners of the  accounts - they each have their own Personal Allowance/dividend allowance/CGT allowance, just as if they were adults.

They also have the absolute right to call for access  at the age of 18. This is exactly as in  JISA.
However, what is not like a JISA, is that any income and gains are potentially taxable.

The funds in a JISA will be released to nobody other than the young adult. 


You seem to think that you may have shuffled off this mortal coil by the time the children reach age 18.

If opened in bare trust,  obviously you would wish to let your executor know of the existence of the accounts but  bear in mind that you cannot  bequeath them as they would  already belong beneficially to the children - your exor  would need to sort out a replacement Trustee.

Really, the JISA would be the better option?

My plan is for one parent to be co-executor. I'd also leave them with some suggestions as to how to manage the account as the children approach 18 if I'm not around, although clearly it's up to them to follow my suggestions or not. 

Re: bequeathing them, I understand that the accounts would already belong to the children, and would hope their parents will tell them who opened and invested into the accounts for them. When they are old enough, if I am still around, I'd let them know of the existence of the accounts myself. 

dunroving

xylophone said:

3) Is there a platform/provider via whom this is most straightforward, and inexpensive (fees-wise)? Vanguard doesn't seem to provide this option at the moment; neither does Hargreaves-Lansdown. Fidelity are standard 0.35% p.a., from what I can tell.

https://www.youinvest.co.uk/investing-for-children/dealing-accounts-for-children but not clear whether anybody other than parent or grandparent could et up the account.

Thanks; I'll look into this.

dunroving

Just as a side note, the reason I wish to keep control of (manage) the investments is that their parents are not knowledgeable about investing (for example, they have "invested" money in the children's cash JISAs that are not earning much at all), plus I don't want to burden the parents with the responsibility for managing the accounts. But having one parent as a co-exec means I can at least communicate with them about the investments as the children grow older.