Inheritance for Minors to be Invested until 18

nmappley

Hi, my children lost their father this year and as next of kin are due a death-in-service payment from his work. The money must be invested somewhere with no access by them or anyone else until their 18th birthdays. They all have Junior ISAs already which are full. ’m looking for some advice on what to do with their inheritance. They are 15,13 & 13 years old. Many thanks for any help. 

MX5huggy

Who’s putting these stipulations on it? Because there’s a thread on the Pensions board where NHS pensions will only pay the Death In Service to a clean bank account held in the child’s name, no trusts allowed. 

nmappley

The stipulations are from the board of Trustees at the company he was working for.  It was suicide (on site) after an announcement of being made redundant at a high profile charity, not NHS.  He was furloughed at the time.  The media were very interested and were at his inquest which is why I think they decided to pay the DIS, although it was at their discretion.  

I meant to add I am the mother of the children, his ex-wife, a personal representative to his intestacy will and trustee.  This Death in Service payment is not part of his estate.  I don't know what I have to do with his estate money or pension.  My co-executor has mental health issues and is not getting involved in any of it.  We have a solicitor dealing with everything, and they have been holding the money for over 6 months now and I just need to get the money away from them and in the children's names but I've searched and searched forums and websites and can't find anything.  I contacted an IFA but they want to charge 1% for the length of the investments which I don't want to do.

Any help would be greatly appreciated.

dunstonh

I contacted an IFA but they want to charge 1% for the length of the investments which I don't want to do.

That's ok.  IFAs are not allowed to charge ongoing servicing unless you agree to it.   So, you just tell them you dont want it.   However, the trustees are required to carry out periodic due diligence.  You can do that instead of the IFA if you know what you are doing.

We have a solicitor dealing with everything, and they have been holding the money for over 6 months now and I just need to get the money away from them and in the children's names but I've searched and searched forums and websites and can't find anything.  

Often the solicitors will insist on seeing the IFA report to protect themselves.  However, it all depends on how involved the solicitors are.

jimjames

It seems strange to insist that an inheritance is invested for 3 years which is what it would be for the 15 yo as it seems highly risky. Is that really what they have stipulated or have they said it can go into a savings account?

dunstonh

jimjames said:

It seems strange to insist that an inheritance is invested for 3 years which is what it would be for the 15 yo as it seems highly risky. Is that really what they have stipulated or have they said it can go into a savings account?

I agree.  I also find it strange that the pension administrators are making such a stipulation as that is not within their remit.  

nmappley

I think the stipulations came from the board of trustees of the charity rather than the DIS company. 

The exact wording was:

“Children x 3 Juniors ISAs              £90,000 (£30K for each ISA) To be transferred to ISA’s in each individual child’s name.  Funds to be protected from any access until the children reach 18 years of age, and then solely by the child (then adult they become at 18).”

As you can see it looks like they didn’t even know there was an annual limit to put into Junior ISAs and the children  have one each already. My solicitor advised me that the key point was protecting it so as long as the money is not accessible by anyone until they reach 18, it can go anywhere really. But where?

Nebulous2

I think we might make a distinction between saving and investing which was not intended by the trustees. I doubt they would be expecting the money to be put at risk. 

A term account for instance, would secure the money without access but wouldn't necessarily align with an 18th birthday. 

Has any attempt been made to go back to the board and say it is not possible to meet the conditions?

If you / the solicitor / an IFA came up with a plan then it would be sensible to say 'we cannot meet the condition in full but this is our proposal.' That should then clear the solicitor to hand it over if they rubber stamp it. 

Malthusian

Unless Scottish law applies, Junior ISAs are unsuitable. The money is in bare trust and must be prudently managed by the trustees until the beneficiaries are 18. Junior ISAs hand control of the investments to the owner at 16. Trustees cannot delegate their legal duties to minors.

The charity trustees appear to be incorrectly using "ISAs" when they mean "savings accounts" (an understandable mistake to make for a layperson).

How the money should be held is a tricky question because over 5 years investment is likely to beat cash but it is perfectly possible to get unlucky. Ideally the trustees would involve the beneficiaries in the conversation (even though they have no say yet) and take into account how likely they are to want to spend the money when they turn 18.

xylophone

Junior ISAs are unsuitable.

I disagree with this view in this particular case.

The Trustees of the Charity have clearly indicated that the important point is that the funds may not be accessed by the child until the age of 18.

The funds in a JISA cannot be accessed by the child until he turns 18 - therefore the stipulation of the Trustees would be fulfilled.

There is a difficulty here however in that the children's JISAs are fully subscribed for the current tax year and even if they were not, £30,000 per child is more than three years worth of subscriptions.

It may be that the Trustees of the charity would agree to the solicitor and the OP being co trustees of a bare trust for each child (both to sign for any transfers out to the children's JISAs).

The solicitor and OP might then approach eg the Skipton BS with a view to opening an account held in trust for each child.

They could then arrange (on 6 April next and in subsequent years) to transfer £9000 from the Trust accounts into each child's JISA.

ChilliBob

Malthusian said:

Junior ISAs hand control of the investments to the owner at 16.  

I didn't know that, I thought it was 18. Interesting.