Junior SIPPs for when junior doesn't make it to 18?

B0bbyEwing

I know it's one of those kinds of topics that people don't want to talk about or don't like talking about but fact is it happens & burying the head in the sand helps nobody - plus I like to know about as many possibilities as possible  so that nothing ends up as a surprise.

on that note - assume a junior SIPP opened. 

If I understand correctly then once they turn 18 it'll become a normal SIPP?

So say somewhere between birth & 18 then, the child for whatever reason dies. 

What happens to the money?

And in case the answer is different for a junior ISA - apply the same question to a junior ISA also.

dunstonh

on that note - assume a junior SIPP opened.

That is a marketing name for a provider.   However, all retail pensions that cater for minors (which is most of them) will work the same way.

If I understand correctly then once they turn 18 it'll become a normal SIPP?

There is no such thing as a SIPP for minors.  It is a normal SIPP to begin with.

What happens to the money?

It is paid to the beneficiaries as a lump sum (theoretically it could use beneficiary drawdown but that his unlikely to be the preferred option). Typically that would mean parents.

And in case the answer is different for a junior ISA - apply the same question to a junior ISA also.

Junior ISAs are an actual product.  It would form part of the deceased's estate and distributed accordingly (typically parents in that scenario).

Troxy

For junior ISA, it is laid out on the gov website
https://www.gov.uk/junior-individual-savings-accounts/if-your-child-is-terminally-ill-or-dies

For a SIPP, there isn’t any difference to a non junior SIPP. 

B0bbyEwing

dunstonh said:

on that note - assume a junior SIPP opened.

That is a marketing name for a provider.   However, all retail pensions that cater for minors (which is most of them) will work the same way.

If I understand correctly then once they turn 18 it'll become a normal SIPP?

There is no such thing as a SIPP for minors.  It is a normal SIPP to begin with.

What happens to the money?

It is paid to the beneficiaries as a lump sum (theoretically it could use beneficiary drawdown but that his unlikely to be the preferred option). Typically that would mean parents.

And in case the answer is different for a junior ISA - apply the same question to a junior ISA also.

Junior ISAs are an actual product.  It would form part of the deceased's estate and distributed accordingly (typically parents in that scenario).

Thanks. I've clearly misunderstood along the line then so thanks for clarifying.

Your end comment there - how would you specify that?

And to throw a curve ball in there - what about if you didn't want it to go to "the parents" but wanted it to go to "ONE OF the parents" 

Or even neither parent but a different relative/person?

Is this something specified within the Junior ISA setup? With an adult I imagine it's getting in to wills territory but as crazy as some things are, I don't imagine a 1 day/week/month/year old should have to make a will specifying.

dunstonh

And to throw a curve ball in there - what about if you didn't want it to go to "the parents" but wanted it to go to "ONE OF the parents" 

Generally speaking, under 18s cannot make a will.   So, the parents would have to agree between them.

Or even neither parent but a different relative/person?

Guardian can replace a parent.   But again, it would be between the parent/guardians once they have the money (in the case of the JISA) or with the administrator (in the case of the pension)

Is this something specified within the Junior ISA setup?

No. Because it forms part of the estate. 

B0bbyEwing

Ok I think I should be a bit more specific as not sure if you get where I'm coming from.

Person A - parent
Person B - The one who would like to put money in to something - SIPP, ISA, something.
Person C - me.

We can do person D if it helps - the other parent. They'll live together though it's questionable how long but that's another story.

On discussion, A has told me that if that happened, they'd say B should just have the money back rather than it go on to them (A) and certainly not on to the other parent (D).

Are you saying to me dunstonh, that if the worst happened then what anyone wanted is irrelevant - it would go to the parents (what if they're separated by then? Who'd get control?) & it would be for the parents at that moment in time to give the money back to Person B?

I know it's all what if and statistically unlikely I imagine, but as I say, no prizes for burying the head in the sand.

dunstonh

Are you saying to me dunstonh, that if the worst happened then what anyone wanted is irrelevant - it would go to the parents (what if they're separated by then? Who'd get control?) & it would be for the parents at that moment in time to give the money back to Person B?

Pretty much yes.
If they are separated/divorced then its paid out 50/50.
Once the parent has the money, they are free to do with it as they wish (keep, spend or gift to another).

Marcon

B0bbyEwing said:

Ok I think I should be a bit more specific as not sure if you get where I'm coming from.

Person A - parent
Person B - The one who would like to put money in to something - SIPP, ISA, something.
Person C - me.

We can do person D if it helps - the other parent. They'll live together though it's questionable how long but that's another story.

On discussion, A has told me that if that happened, they'd say B should just have the money back rather than it go on to them (A) and certainly not on to the other parent (D).

Are you saying to me dunstonh, that if the worst happened then what anyone wanted is irrelevant - it would go to the parents (what if they're separated by then? Who'd get control?) & it would be for the parents at that moment in time to give the money back to Person B?

I know it's all what if and statistically unlikely I imagine, but as I say, no prizes for burying the head in the sand.

Maybe the time has come for some proper legal advice based on a full understanding of all the facts, depending on the possible amounts involved? There are a surprising number of considerations/implications and I applaud you wholeheartedly for not burying your head in the sand (most people would do so, preferring not to contemplate the unthinkable), but nobody here has 'all the facts' - and they certainly don't have PI insurance you could claim under if you proceed on the basis of incorrect 'information'.

MX5huggy

Could you send the minor on active military service? Then they are allowed a will. 

Maybe some sort of bespoke trust would solve this conundrum. Or just keep the money until they need it. Remember most 18 year olds don’t have a will. From bitter experience it would be useful if they did. 

Marcon

MX5huggy said:

Could you send the minor on active military service? Then they are allowed a will. 

Maybe some sort of bespoke trust would solve this conundrum. Or just keep the money until they need it. Remember most 18 year olds don’t have a will. From bitter experience it would be useful if they did. 

OP isn't a parent - they are person C, but as the parents are A and D(!)  and B is going to be putting up the cash, it's not clear how or why C fits into the picture at all.

B0bbyEwing

Marcon said:

OP isn't a parent - they are person C, but as the parents are A and D(!)  and B is going to be putting up the cash, it's not clear how or why C fits into the picture at all.

C is the one who's looking in to what happens in such a situation.

To which one could argue well A could do that, B could do that, D could do that. Yes they could, but what's the point in arguing anyway? I'm the one that's here which (should be) ok?

If it is absolutely a necessity to know my exact position then I can give it, but I would like to know why it is a necessity as at the moment I don't believe it is.

Surely [something] would happen in such an event, irrespective of who was asking the question originally, no?