Children’s inheritance

Keep_pedalling

You should take advice on the wording of the will and the sort of trusts required. If the will actually puts the children’s inheritance into a discretionary trust, then you will have the more arduous task of managing that trust. Discretionary trusts are more complex than bare trusts and come with some eye watering taxation rules.

Unpensioned56

With that much money I would honestly take financial advice so you don't have to bear the responsibility all yourself - savings and premium bonds are surely going to lose a lot of value with inflation. And definitely take legal advice on the wording of the will and what kind of trust is involved.
Leeds BS and Skipton BS both have children's accounts with good interest rates that include an adult as trustee until age 18.

bakerlou1009

Thank you all for your advice. I’m currently finding an independent financial advisor 

bakerlou1009

wmb194 said:

bakerlou1009 said:

LHW99 said:

I suppose a 5 year fixed rate bond that doesn't allow withdrawals might be an option at least for the 16 year old, as it would be a cash account, which they could take possession of at 18, but not access till 21?

Great idea, but they might need to access some income from the capital before they reach 21 if they go to university

Many fixed rate savings bonds allow the interest to be paid away either monthly or annually.

That’s good to know and it will be perfect so they can have an income when they’re at uni

Grumpy_chap

As others have said, the restrictions on access may expire at age 18 and not 21.  Professional advice required.

These are large sums involved.  Anything done with the money has to be for the benefit of your children.  It is good that you are seeking the service of an IFA to give guidance.

One options that may be allowed (but the rules may prohibit this) would be to invest £2,880 each year (grossed up to £3,600) into pension for each of the children.  That will give them a great start on their retirement.  It would be even better if the children can be encouraged to continue making that contribution to a pension once they do have access - the future adults will be sooo grateful when they reach 57.  It may be possible that this annual pension input can be funded from the interest / return from the capital.

Obviously, with these large sums, the obvious purpose is the deposit on first house when required.  The 18 / 21 year olds gaining access to the funds may feel a flash car is more important.  It may be worth seeking an IFA that will provide a session on managing money to each child as they gain the access and control of the funds.  This will help to balance their immediate gratification against future wealth prospects.   That discussion coming from a professional may well be better received than a "lecture" from parents.

bakerlou1009

bakerlou1009 said:

wmb194 said:

bakerlou1009 said:

LHW99 said:

I suppose a 5 year fixed rate bond that doesn't allow withdrawals might be an option at least for the 16 year old, as it would be a cash account, which they could take possession of at 18, but not access till 21?

Great idea, but they might need to access some income from the capital before they reach 21 if they go to university

Many fixed rate savings bonds allow the interest to be paid away either monthly or annually.

That’s good to know and it will be perfect so they can have an income when they’re at uni

Although I want to avoid any liability for me paying any tax on the interest. The kids probably won’t have to pay any tax as it won’t earn enough interest to be taxable 

wmb194

bakerlou1009 said:

bakerlou1009 said:

wmb194 said:

bakerlou1009 said:

LHW99 said:

I suppose a 5 year fixed rate bond that doesn't allow withdrawals might be an option at least for the 16 year old, as it would be a cash account, which they could take possession of at 18, but not access till 21?

Great idea, but they might need to access some income from the capital before they reach 21 if they go to university

Many fixed rate savings bonds allow the interest to be paid away either monthly or annually.

That’s good to know and it will be perfect so they can have an income when they’re at uni

Although I want to avoid any liability for me paying any tax on the interest. The kids probably won’t have to pay any tax as it won’t earn enough interest to be taxable 

You tax situation won't factor into it as the money shouldn't be held in your name.

xylophone

The kids probably won’t have to pay any tax as it won’t earn enough interest to be taxable 

You don't seem to have read the links concerning types of trust and trusts and taxation.

It is essential that you establish what type of Trust this is and how it is taxed.

You might prefer to check this with a solicitor.

https://www.step.org/directory/members

See also the note on registration of trusts.

 Re financial advice, you might try

https://adviserbook.co.uk/

You would tick "confirmed independent"/tax and trust planning/investments and such other specialisms required when the menu comes up.

Keep_pedalling

Grumpy_chap said:

One options that may be allowed (but the rules may prohibit this) would be to invest £2,880 each year (grossed up to £3,600) into pension for each of the children.  That will give them a great start on their retirement.  It would be even better if the children can be encouraged to continue making that contribution to a pension once they do have access - the future adults will be sooo grateful when they reach 57.  It may be possible that this annual pension input can be funded from the interest / return from the capital.

That is an absolute non-starter a trustee cannot lock away a beneficiaries inheritance for decades.

Cornish_mum

Hi I would advise taking professional advice, on the terms of the will and your responsibilities.

I have been a discretionary trustee and it’s an absolute pain & frankly prevented myself and the other trustee from being able to manage the money efficiently- because there aren’t many institutions who will manage trustee accounts (especially for small amounts, in our case ~150k). I am posting this as a note to others thinking of leaving discretionary trusts to think very long and hard about it.

Best of luck CM