Should I move money into a LISA for my son?

Grum123

I currently have money in a Stocks and Shares ISA in my name but intend that some of it should go to my son as a deposit for a house when he is ready to buy (probably in a few years time). My question is, should I put the money into a LISA for him or leave it in my ISA?
Thanks

eskbanker

You can't put it into a LISA for him, he'd need to open a LISA himself and manage it thereafter, as they're adult accounts.  The 25% free government money is difficult to ignore though, so I can't think of any reason not to go down that route at the earliest opportunity, assuming you're happy for him to have access to the money.

md258

One reason you may not want to do it is the £450k limit on the LISA. Depending on your sons income, geographic area, relationship status etc, is there a risk that his first house will cost over that?

If that is not an issue and you're happy for him to have control of the money, then speak to him and send it over.

steampowered

How old is your son?

If he wants to buy in the next few years, a LISA could be a good idea.

If not, I think a standard S&S ISA is better. You don't know what he will want to do with the money - he may want to move abroad; he may want to use the money to pursue education opportunities; or he may want to buy a house worth more than the LISA limit. 

We don't know whether the £450k limit on the LISA will be increased - after a few years of inflation that £450k limit might look a lot lower than it does today.

JustAnotherSaver

You'll get some naysaying but if I was your son then I'd be happy and appreciative that you'd helped me out with my house purchase.

Never mind that I may want to piddle it down a drain to begin with. It's your cash so if you can give it to me in a way that does its best to stop that then great.

And there's always ways and means. Whether you can pay direct in to it from your account or not I don't know, but you could have him open an account which you manage. You put the cash in to it and then from that in to the L-ISA, job done. As I say - ways and means.

I help manage my brother and sisters (on their request) because they don't have a clue how it works so I know any poo-pooing is incorrect. Ways and means. 

eskbanker

JustAnotherSaver said:

I help manage my brother and sisters (on their request) because they don't have a clue how it works so I know any poo-pooing is incorrect. Ways and means. 

Depends exactly what or who you're having a pop at, but the definitive position enshrined in adult account Ts & Cs will be that the account holder mustn't disclose access details, etc, so is responsible for managing their own accounts, unless there is third party or attorney access formally set up for others.  Naturally in the real world there will be many who feel comfortable breaching such terms, but that doesn't make them 'correct'....

Without wishing to turn it into a debate about parenting skills, the default situation ought to be that an 18 year old adult is responsible enough to be entrusted with managing their own money and their own accounts, although of course parents should offer support and advice.

JustAnotherSaver

eskbanker said:

Depends exactly what or who you're having a pop at,

Anything or anyone where it fits.

eskbanker said:

but the definitive position enshrined in adult account Ts & Cs will be that the account holder mustn't disclose access details, etc, so is responsible for managing their own accounts, unless there is third party or attorney access formally set up for others.  Naturally in the real world there will be many who feel comfortable breaching such terms, but that doesn't make them 'correct'....

And you're quite right.

But i would question whether these people would apply this way of thinking to everything else in their lives. For example, do they never ever ever go 31mph in a 30mph zone? 51 in a 50?

Technically speaking I shouldn't really do what I do with my brothers & sisters accounts. I do it with their request and everything that is done is run through them. I tell them every suggestion. 99% of the time they go for it, very rarely do they not. If they don't agree then it doesn't happen as it's their money.

"Leave them to it" "Make/Let them learn". Yeah well I don't do it to please MSE'ers. I do it because I enjoy helping them and if I didn't do it then all their money would be held in the 1 account doing nothing and that's a fact. My brother for example has approx. £30k in his mid 20s set aside that of that 30k he by his own admission would have a grand total of £0.00 if I hadn't helped. It would've been down a drain somewhere or wasted on a load of stuff he didn't need - by his own admission.

So yes, while you are actually correct, there are still ways around it which aren't even that difficult at all.

Oh, and in the 10 years i've been doing this, I've had no police knocking at the door. I don't expect to see them any time soon either.

eskbanker said:

Without wishing to turn it into a debate about parenting skills, the default situation ought to be that an 18 year old adult is responsible enough to be entrusted with managing their own money and their own accounts, although of course parents should offer support and advice.

I would imagine that the parent probably has the best idea about their child and what they are like with money and not some randomers on a money forum.

For all these randomers know, that child could've said - you know what mum, i'm absolute crap with money, you know it and I know it. Can you lock that cash you were on about away until I get it all out of my system and can be more responsible.

Grum123

Thanks everyone. I was just wondering as it is likely to be several years before he buys a house and (hopefully) my investment will continue to perform well so I thought that over time it might return more than 25%, however on further reflection I will only be giving him £4,000 in any one year so it’s not such a big deal so we’ll go ahead with the LISA but still good to have peoples thoughts.

steampowered

The issue with LISAs is that you don't get the bonus on property over £450k.

That's not enough for many people who buy in London, and it isn't guaranteed that it will increase with inflation . That £450k will look a lot lower in 10 years time. The government has not committed to increase the LISA limits with inflation.

If it could be many years before your son gets to house ownership, there is no certainty about what the LISA limits will be in several years time. Personally I would personally stick with the S&S ISA. 

Based on historic averages the stock markets return 7.5% per year on average, so you would expect to get a 25% return after about 3 years in a S&S ISA (on average). Stocks & Shares LISAs are possible.