Investing for niece

2_4

I want to start a long term investment for my niece and given she's 10 it has plenty of time to grow and take on some risk. Is there any real benefit to starting a child/junior stocks and shares ISA as opposed to me simply including her money within my own ISA and then gifting it to her when I see fit. It would only be a relatively small amount, say £10pm (for now, hopefully rising) for 10 years or whatever, so I don't think there would be any tax issues would there?

I realise if it was in her name she could "see it grow" and be more involved but I think she may already have one and it's easier for me not to have to go through anyone else to set it up.

Thanks!

bowlhead99

If the money is in your own name rather than in her name, it remains yours for the purposes of things like benefits means-testing and being chased by your creditors / bankruptcy, and remains within your 'estate' if you died with an estate big enough for inheritance tax to be relevant.  But with the amount you're talking about those things seem like they would be pretty inconsequential.

Especially if the amount is a small £10pm (below the practical minimums for some providers) it makes sense to just allocate a portion of your own ISA investments to her and keep track of what bit is hers, retaining full control to give it to here whenever you like (rather than chipping in with her JISA and her automatically getting it at 18 as part of a lump with parents money and other people's money).

If you want here to be 'involved' you could always give her a periodic updated every month or quarter or birthday telling her how much 'her' bit of your ISA is worth - it only requires a calculator.

cloud_dog

We did much the same in our own account(s), simply because we didn't know how many nephews/nieces we would end up with.

2_4

Cheers. Maybe I'll just put in a lump sum of £120 pa as I think my provider is £25pm now you mention it.

bowlhead99

2_4 said:

Cheers. Maybe I'll just put in a lump sum of £120 pa as I think my provider is £25pm now you mention it.

If you want to put away £10 for niece, good opportunity to invest another £15pm for yourself. If you set up a direct debit you can probably spare the £15pm and it means your niece doesn't miss out on all the year's growth by the time you get around to dropping her £120 into the pot once a year

2_4

I'm revisiting this thread as my Dad has been looking into investing for his granddaughter/my niece. I'm the OP but not sure if I'm logged into a different MSE user here!

Anyway, he was told by Vanguard that she can't have a junior ISA as she has a child trust fund or something. He's possibly got the wrong end of the stick and I've probably not listened to what he said properly so quite how accurate this is (in terminology and, err, facts, is doubtful).

Anyway, my dad now seems to think that just saving money for her in his name will be the easiest option but he/we/I have a few questions.

1) If it's in an ISA it will be fine in terms of affecting his income tax/capital gains etc (ie it won't) but if it wasn't then it would?
2) If he dies before she turns 18 the money will obviously just be "his" and be part of his estate? 
3) Those first two bits might be a bit rhetorical really. Maybe i just want confirmation. But the last bit I'm more unclear about. Say we save the money, she gets to 18, Dad gives her the cash but then dies within 7 years (think that's the timeframe?). If his estate is under the inheritance tax threshold then that isn't an issue? is that right? So basically if you';re estate is under the inheritance tax threshold you can give a gift of any amount, any time and there will be no tax implications no matter when you die? The only other thing would be the issue of disposing of cash (again, sorry, can't remember the correct technical term) to avoid paying for care I guess? Hmmm!

Sorry if this is VERY waffly and vague, think my brain is fried this morn. This year. This decade.

Thanks in advance for any comments.

eskbanker

2_4 said:

Anyway, he was told by Vanguard that she can't have a junior ISA as she has a child trust fund or something. He's possibly got the wrong end of the stick and I've probably not listened to what he said properly so quite how accurate this is (in terminology and, err, facts, is doubtful).

If she was born before 2 January 2011 then yes, she will have had a child trust fund opened for her, and, while it's true that she can't have both a CTF and a JISA, the former can be converted into the latter, opening up access to currently available products: https://www.moneysavingexpert.com/savings/junior-isa/#tiplist-4

DiamondLil

I have investment accounts in my name, each one designated to a grandchild.

I've added instructions in my will that the monies held in these accounts are to go to the children. I pay any charges/tax on these accounts myself. It's (for me) the easiest option and means I can control when and how I dispose of the funds while I'm alive.

Albermarle

1) The idea of investing within in an ISA as that there is no liability at all for any capital gains or dividend tax . You do not need to declare anything on your tax return at all .
2) Yes
3) If the estate is unlikely to face an IHT bill, then any gifts made before death are not an issue in this respect. However the rules regarding 'deprivation of assets' to avoid care bills are less clear, and each local authority may take a different view regarding less blatant cases . Of course if you pay your own bills anyway then it is not an issue . Otherwise might depend on the amounts involved and the timeframe and how diligently the local authority follows things up. 

xylophone

if this is to be £125 a year, why not ask the parent for details of the child's CTF/JISA and contribute to that?

2_4

OK, it now transpires she does have a JISA so we are both going to contribute to that. Is a JISA the same as a normal ISA in that she can have multiple funds in it? So if my dad and I want to add our money to a Vanguard Life fund we can do that within her ISA even if it is just currently cash or anything else?

Thanks to all!