NHS Lump sum on death benefit to minor

Eristhison

My brother worked for the NHS and passed away earlier this year. He has nominated his minor child as death benefit nominee. 

NHS Pensions is asking for a bank account number to receive the funds that is solely in the minor's name. They have rejected our proposal of a bare trust. 

I feel like I must be missing something here and wanted to ask for advice. I just don't understand how NHS pensions could think that putting a large sum of money in a minor's account is acceptable.

I am not English and new to the system and suitable bank accounts here. If anyone could give me some pointers, I would greatly appreciate it.
Thanks

MX5huggy

How old is the child how much is the money?

HSBC offer the My Saver for 7+ and My Accout for 11+ My children could not operate the account without my assistance. Then if you want to lock the money away away move it to Junoir ISA, £9000 limit per year. Should look at Stocks and Shares over Cash ISA if more than 5 years till 18. 

Eristhison

Thanks the child is 12 and the amount will be close to 100000 pounds. So if I understand correctly you can control your child's account even if you are not listed on it.

MX5huggy

Firstly a terrible situation my condolences.

If the child doesn’t know about the account or have access to the security details then they don’t have control, you do,  the account is legally theirs and letters are addressed to them but my 11 shows no interest in post. But I’m dealing with birthday money not £100k.

I think I would say we need to open an account for your dad’s money. Then you have the money and can discuss what should be done with dad’s money and the expectations around it’s use. In the end it’s theirs and if you don’t educate them at 18 they will do what they like with it. 

 

6 years till 18 is that horrible time period where investing is Stocks and Shares is considered a bit short term but leaving in cash will see inflation do its damage. Premium Bonds (max £50k) are a good option ATM for cash and can be held in a child’s name then £9000 per year to The JISA, although they will have a Child Trust Fund (presuming they were UK born) if nothing has been done to move it to a JISA. 

Can you see them wanting the money mid 20’s for a house so investment period is 10 years plus? 

Eristhison

Thanks MX5huggy. That is good information. One concern is inflation, next order of interest is growth but the situation is a little more tricky because I am not the guardian of the child. But am the executor of the will. The guardian - divorced partner - has a track record of financial negligence. So one of my goals is to try and keep this money safeguarded.

The accounts we have seen that are only in a minor child's name is limited to a daily withdrawal of a few hundred pounds a day.  

xylophone

An account held in the name of a child but controlled by an adult is in effect held in bare trust for the child.

It should be possible to open an account in the child's name (current and /or savings).

https://www.which.co.uk/money/banking/bank-accounts/best-childrens-bank-accounts-arspc9p7mk0y

https://www.thisismoney.co.uk/money/saving/article-1583863/Best-savings-rates-Junior-Isas-children-s-accounts.html

Does the child have a  CTF/JISA?

dunstonh

NHS Pensions is asking for a bank account number to receive the funds that is solely in the minor's name. They have rejected our proposal of a bare trust. 

They cant pay it straight into the trust as they are not creating the trust.  

I feel like I must be missing something here and wanted to ask for advice. I just don't understand how NHS pensions could think that putting a large sum of money in a minor's account is acceptable.

Its not up to the pension administrator to decide what happens to the money other than it goes to the right place.    The guardian of the child is responsible for then setting up the trust and appropriate provider/place for it.

The guardian - divorced partner - has a track record of financial negligence. So one of my goals is to try and keep this money safeguarded.

Unfortunately, you have no legal powers in respect of this money.    However, it is usually recommended that multiple trustees are created on the trust.   So, you could encourage the guardian to have you named as a trustee.  That way you will have legal authority.

Eristhison

Thanks for the links xylophone. No the child does not have CTF/JISA. 

Unfortunately, you have no legal powers in respect of this money.  

This is precisely what I fear. Though I am being advised differently by a solicitor. NHS has shown no interest in the will or grant of probate. I could encourage the guardian to setup a trust but suspect this will not be accepted.

 There are some children's accounts that allow only a limited some of a few hundred pounds a day to be withdrawn by the child, I am wondering if that is the best solution. Sure there are losses via inflation but at least not frittered away by the guardian. Though my concern is that the guardian could sue and take charge of the account from the child.

Or is there was some way to mandate that the funds can be transferred a trust or held in trust with a bank or solicitor. Really at this point, I am grasping at straws.

Thank you all for your time.

MX5huggy

If the child was In the UK and got Child Benefit  they will have a CTF. All children born between 2002 and 2011 had a £250 voucher issued for the guardian to set up the account, where the voucher expired after 1 year the government set up the account with one of a number of providers of equity investments without input from the parent. If they’ve moved house it could be “ lost”

https://www.gov.uk/government/organisations/hm-revenue-customs/contact/child-trust-fund

Involving the child fully sounds like one of the better ways to protect this money. 

MallyGirl

you could get a kids account that can't be accessed till 18 - my Mum set up one for my daughter with the Harpenden BS. This account doesn't exist any more but I am sure there are others around.

xylophone

You might try working with the parent.

First open a current account in the name of the child - in view of the sum involved, best for the parent to make an appointment  - you could accompany her.

The money can then be credited to the account.

Ask the parent to trace any CTF.

Once this is done, £9000 can be paid in to the CTF account.

It will then be possible to ask a JISA provider  (eg Coventry BS) to accept a transfer in of the CTF to a JISA and for an additional £9000 to be paid in in this tax year.

This will account for £18,000.

It might then be possible to open an account with Skipton BS to be held in trust for the child.

You and the parent could be Trustees and could arrange for £9000 to be subscribed to the JISA in subsequent tax years.

https://www.skipton.co.uk/savings/childrens/childrens-saver

A form specifically for Trustees can be downloaded from the Society.


Otherwise, your only option would be to  write to the Trustees of the NHS Scheme expressing your reservations about the payment of the money to the surviving parent?