Saving for my grandchildren without their parents knowing

SandyN21

My grandsons are 7 and 16 and when they were born I opened up and paid monthly amounts into a Halifax children's savings account without their parents knowledge. The 16 year old's account has now changed to a normal low paying interest savings account and the 7 year old's interest rate is now low because the balance is over a certain amount so I'd like to change these accounts to higher paying interest accounts until they are both 18. What account can I open for them but still without their parents knowledge and still using my address details. Thanks

bowlhead99

For the 16 year old they are old enough to open an account themselves, and even to be able to apply online these days, but not without them knowing they were doing it and the bank will need to know where they live for customer identification / anti money laundering /financial crime purposes. For the 7y/o if it's going to be their account which is held in trust for them, you would expect the bank to need to be provided with ID for the child as part of their documentation process and most banks would expect the trustee to have parental/guardianship responsibility. And for premium bonds you could buy them as a gift but need to give details of the parent/guardian who would manage them. So options are limited.

There will be some accounts for youngsters where the trustee doesn't need to be a parent/guardian. For example Yorkshire Bank's 'Jumpstart Savers' is,"Under 11, the account must be operated by a parent, guardian, grandparent or other responsible adult" and their Headstart Saver mentions "An Adult must open and operate the Account on behalf of the child" so you could check them out; account must be opened in branch.

Still, if the child is only 7 and won't know about his account for another 11 years, a cash saving account paying ~1% on balances over £1k seems pretty unsuitable because the value in real terms will be eroded by inflation and will quite possibly be worth less in a decade than it's worth today. If you don't intend for him to have access to the cash for spending purposes within the next decade you would be better looking at investment fund options (most mainstream providers will let you open an account in bare trust if you have ID for the child)

One option to save or invest 'on the sly' is simply to do it in your own name. However, while that works for new money, if the existing money is already theirs (i.e. it is an account for them with you as a trustee, rather than simply your own account with a designation on the end to help you keep track), you can't take it off them to put into your own accounts.

DiamondLil

I hold investment accounts, in my name but each one designated to a grandchild, with an online platform. Instructions in my will makes clear that these monies are for the grandchildren.

steampowered

You could open a separate savings account in your own name, and give the money to the children when they are an appropriate age.

As bowlhead99 says, for the 7 year old, you are probably going to be better off saving into a stocks & shares account (perhaps a stocks & shares ISA in a sensible investment fund) rather than into a cash savings account.

xylophone

https://www.bathbuildingsociety.co.uk/savings/personal-savings/Junior Saver
may be worth a look.

SandyN21

Thank you all for your advice

dunroving

Bear in mind that if the only way an account "belongs" to the grandchildren is in your mind, if you die the accounts will go into your estate. If your will leaves the accounts to the grandchildren, they might be subject to inheritance tax, depending on the total amount in your estate. One way to avoid the above is if the accounts are held in bare trust, with you as the trustee. This will only be exempt from inheritance tax if (a) you pay £3,000 or less per year into the account, or (b) if the amount is more than £3,000 per year, you live for at least 7 years after gifting.

The only problem with an account held in bare trust is that it is difficult to set one up without the parent knowing.

xylophone

 if you die the accounts will go into your estate. If your will leaves the accounts to the grandchildren,

Not if it is clear that the account is held by the grandparent (or indeed anybody else) "in bare trust".

dunroving

xylophone said:

 if you die the accounts will go into your estate. If your will leaves the accounts to the grandchildren,

Not if it is clear that the account is held by the grandparent (or indeed anybody else) "in bare trust".

Exactly. I think I said that ... (quote) "One way to avoid the above is if the accounts are held in bare trust, with you as the trustee."

xylophone

The only problem with an account held in bare trust is that it is difficult to set one up without the parent knowing.

when they were born I opened up and paid monthly amounts into a Halifax children's savings account without their parents knowledge.

Perhaps procedures were less strict sixteen years ago.

dunroving

xylophone said:

The only problem with an account held in bare trust is that it is difficult to set one up without the parent knowing.

when they were born I opened up and paid monthly amounts into a Halifax children's savings account without their parents knowledge.

Perhaps procedures were less strict sixteen years ago.

I don't see where the OP said he opened an account in the grandchildren's names 16 years ago, *held in bare trust*. I have no idea what the rules were 16 years ago, but if the OP wishes to switch to a different type of account today, with a different financial company, held in bare trust, surely he would have to follow whatever are the rules today?

I recently did just that, and many companies (e.g., Vanguard) simply don't do this, and the ones that do require some form of certified copy of the child's identity (e.g., passport). All I was pointing out is that the latter would be difficult to obtain without the parents' knowledge.

Hopefully the OP will come back and tell us what their experience was.