Savings held in trust

JennieDavies78

My ex-husband died when my daughter was 4 & left her £16,000 which has been in a savings account since (I took the conservative measure of saving rather than investing, as I wasn't prepared to accept any risk).

She's fast approaching 18, and under the terms of her account, she will be able to access the funds (currently £20k) on her 18th birthday.  I'm keen to avoid this as fiscal responsibility isn't her strong suit.  Whilst not a life changing sum, it is a lot of money for her circumstances, and I would like her to use it towards something meaningful.

I'm aware there's an option of setting up a trust, but this involves solicitors & not insignificant fees.  Are there any other options available to us?  Also, if we did choose to set up a trust would this need to be done before she turns 18?  Thanks.

artyboy

Unless the original terms of your late husband's will specifically said that the money should be held in trust beyond age 18, I don't think there is any way at all you can legally withhold access from your daughter?

Obviously ISTBC, but I think the best thing you can do now is to focus on some financial education for her...

xylophone

Unless the original terms of your late husband's will specifically said that the money should be held in trust beyond age 18, I don't think there is any way at all you can legally withhold access from your daughter?

https://www.gov.uk/hmrc-internal-manuals/trusts-settlements-and-estates-manual/tsem1563

Even where there is a beyond age  18 stipulation, the Trust  could be a Bare Trust and if so, the beneficiary could make a claim to access and control from age 18.

https://www.gov.uk/trusts-taxes/types-of-trust

In this particular case (and indeed the OP's statement 

She's fast approaching 18, and under the terms of her account, she will be able to access the funds

seems to confirm), this is indeed a simple bare trust - the child was too young to give good receipt for the bequest and therefore her mother gave receipt and held the bequest (which indefeasibly vested in her daughter) on her daughter's behalf until she reached her majority.

Albermarle

I'm keen to avoid this as fiscal responsibility isn't her strong suit.  Whilst not a life changing sum, it is a lot of money for her circumstances, and I would like her to use it towards something meaningful.

As said some discussion with her about financial responsibility is probably a good idea. However you have to be realistic that some of it will be 'wasted'. For an 18 year old  to blow some of the money would be pretty normal, I think your best objective is to limit this to a reasonable amount. Maybe you could aim for 
£3K 'wasted'
£4K into a LISA ( to help her buy her first home)
£5K for first car/lessons/insurance
£8K into a fixed term savings account so out of reach for 2 or 3 years.

You will need to persuade her of the positive aspects of such a plan, or something similar. Good Luck!

Richard1212

First, I am so sorry that you lost your husband so early and sorry for a 4 year old daughter.

Your daughter has the legal right to what is HER money when she reaches 18 years old. 
Parents can give advice ( and you should obviously do so, especially if you have doubts) but , at 18, your daughter is an adult and can do exactly what she wants to do with HER savings fund.
Personally, at that age, I'd have bought a little sports car for school and then university, instead of having to keep borrowing the family's second car, but the cost now means that option is out of her reach !

I trusted our children, including with their allowances and flats I bought for them at university------ and my wife and I were never disappointed. 

MEM62

JennieDavies78 said:

My ex-husband died when my daughter was 4 & left her £16,000 which has been in a savings account since (I took the conservative measure of saving rather than investing, as I wasn't prepared to accept any risk)

Inflation risk?   

JennieDavies78 said:

She's fast approaching 18, and under the terms of her account, she will be able to access the funds (currently £20k) on her 18th birthday.  I'm keen to avoid this as fiscal responsibility isn't her strong suit.  

She is 18, she is an adult. You cannot protect her forever and she needs to make her own mistakes.  Give her the best advice your can.  Encourage her to make sensible choices but, ultimately, there is little you can do now.