Investment account for new born baby - No access until 21/25 (preferably 25)

The_Real_Cheddar_Bob

Hi all,

I'm hoping to find an investment account I can open for my soon to be born son. I am aware he needs to be born in order for me to do this, he will arrive any day. 

I would like to invest £5,000 plus a regular monthly amount, but I do not want him to access it until he is 25. 

I have found a couple of investment accounts which prevent access until 18, so can you help with the following:

1. Are there age restricted accounts available which allow me to set the age limit over the age of 18?
2. In the absence of the above, I assume I could hold on to the account and not tell him? However it is unlikely to remain a secret, and i know what I would be like at 18, if I had money in an account I could legally access. 
3. Is it possible to have an account which allows him to access the money at 18, but I use some form of legal document to prevent access until 25? Like you see in the movies for the rich folk, no access until you earn X amount and are X years old (earning not required in my example)
4. Any other ideas

most appreciated in advance of your responses. 

JGB1955

AIUI you would need to place the money in some sort of discretionary trust if you want to keep it 'away' from your son past the age of 18.  Otherwise he would become liable for tax on any interest at that point.

Alexland

Yes if you put the money in his name then he would need to have access at 18 so if you want to control or delay access then it's likely easier to just invest the money in your own ISA and then gift it to him later. He might still need a Junior ISA to hold small gifts from others to receive at 18.

Albermarle

Similar questions have been asked many times before . The usual conclusions are .
Denying then access after 18 is difficult as they are legally an adult ( and they will probably resent you treating them like a child )
Just invest yourself and give them the money when you feel it is appropriate .
However doing the above means you lose out on some advantages with Junior ISA's etc .

In my personal opinion, you are thinking too far ahead as the child is not even born yet.

The_Real_Cheddar_Bob

I have an isa for myself and my fiance, so using an account in our name is not the best solution, although will allow us to control when he gets what.

I don't think you can plan too far ahead for this situation. If the housing situation gets worse, he will need all the help he can get. 

If i wasnt so stupid with money when i was a teenager, id have more confidence in the money not being wasted on girls, cars or similar as soon as possible. 

Swoosh84

With a Stocks and Shares ISA your child will get access at 16 to manage the fund but not withdraw. You could use this time before they turn 18 to drill into them the importance of keeping the funds invested until a later date. 

J

ratechaser

The_Real_Cheddar_Bob said:

I have an isa for myself and my fiance, so using an account in our name is not the best solution, although will allow us to control when he gets what.

I don't think you can plan too far ahead for this situation. If the housing situation gets worse, he will need all the help he can get. 

If i wasnt so stupid with money when i was a teenager, id have more confidence in the money not being wasted on girls, cars or similar as soon as possible. 

I was an utter moron with money when I was a teenager. With hindsight, I could have built up a BTL portfolio and retired a multi millionaire by 30, but guess what, I wanted to drink, party and generally enjoy myself rather than save and invest the money I was making. 

That said, did i learn a lot along the way - yes, and I think in my mid 40s I'm better for it. Mistakes were made, lessons were learned, I'm in a good position as a result...

So perhaps rather than trying to aim for a mythical point in the future where you think your offspring might suddenly acquire financial maturity, instead focus on educating them along the way and accept that no one gets it right first time. 

My own 2 have very large sums heading their way at 18, and yes - I'm crossing my fingers a bit, obviously. But I think we've given them enough information and advice that they won't go and fritter it all away. And if they do, well they will have to work to get it back. Just like I did!

Alexland

The_Real_Cheddar_Bob said:

I have an isa for myself and my fiance, so using an account in our name is not the best solution, although will allow us to control when he gets what.

Are you each using your full £20k annual ISA contribution allowance? Remember you are each allowed to contribute to one of each type of ISA during the tax year up to that overall limit. You might also for example chose to hold a different fund for the child in the same S&S ISA wrapper so you know the money is going towards a different objective.

The_Real_Cheddar_Bob said:

If the housing situation gets worse, he will need all the help he can get.

We are using our S&S Lifetime ISAs with 25% government bonuses to invest towards helping our kids with their house deposits. When we can withdraw without penalty from age 60 the kids will be in their 20s so the dates roughly align.

Eco_Miser

You have 18 years to influence your child's view of money invested versus money to be spent. The various Brewster's Millions films may be relevant.

JustAnotherSaver

The general view on here seems to be you can have a 5minute chat with a child and turn them in to a tight wad, being money wise and never peeing a penny down a drain.

My view is a little more realistic. So skim reading this I see mention of missing out on J-ISA perks as they'll be an adult at 18 and can legally access their money.

So invest early to bag the J-ISA perks and at whatever point before they hit 18 is suitable, withdraw the cash, invest in your own name until they hit 25 and then give it them.

"but there's ISA limits"... Well deposit it in your own name over a couple year spread or 3 year spread then.


Would be one way around it.

"the child will resent you for that though".... Well if that's the case and that far in to the future can be seen, tell me this weekends lotto numbers so I can retire. 

Albermarle

If i wasnt so stupid with money when i was a teenager, id have more confidence in the money not being wasted on girls, cars or similar as soon as possible. 

It is a right of passage for most 18 year olds  to 'waste' money on girls , cars , booze etc and trying to stop them is like trying to stop them staying out really late and spending too much screen time , or not tidying their bedroom - a lost cause.

As said above it does not necessarily follow that they turn out bad , it is just a phase for most.