Junior S&S ISAs

B0bbyEwing

Couple questions here...

1) So say one of these is opened up in the parents name. What happens once the child turns 18? Is it auto-transferred in to the child's name, even though the child themselves obviously wont have created an account? How does it work?

2) Say a family member invests for said child but in their own name so that they can decide when to hand that money over (such as beyond 18). How does that one work?
Say once the child is 21, 25, whatever and the investment is £10k, £20k, £50k, whatever, can that just be withdrawn & handed over to the child (adult) no problem? 
Though it'd then be in cash form outside of the ISA wrapper. Is there a better way of dealing with the transfer of the money in this instance?


Where this is coming from is my mother is wanting to set aside for her grandchild & is considering paying it direct in to the S&S ISA my sister will be setting up or investing it in her own name & handing it over at a later date and is wanting to know a bit more about it so that she can make a decision as to which she feels is best.

Albermarle

Any investment in an adults name, will belong to them. They can do what they want with it in future. 
They can give it to another adult, blow it on holiday, or give it to the Dogs home.

A JISA is opened by the parent on behalf of the child. It belongs to the child although they can not access it until 18.

So if you want to keep money from the child after 18, you have to keep it in your own name ( or another adult). The problem is that it uses up your ISA allowance, that you may want to use for yourself. If it is invested outside an ISA you maybe liable for CGT and dividend tax. 

eskbanker

B0bbyEwing said:

1) So say one of these is opened up in the parents name. What happens once the child turns 18? Is it auto-transferred in to the child's name, even though the child themselves obviously wont have created an account? How does it work?

A JISA is opened in the child's name but by the parent - the provider writes to the child shortly before their 18th birthday advising of options, with the default one being to convert it to an adult S&S ISA.

B0bbyEwing said:

2) Say a family member invests for said child but in their own name so that they can decide when to hand that money over (such as beyond 18). How does that one work?
Say once the child is 21, 25, whatever and the investment is £10k, £20k, £50k, whatever, can that just be withdrawn & handed over to the child (adult) no problem? 
Though it'd then be in cash form outside of the ISA wrapper. Is there a better way of dealing with the transfer of the money in this instance?

If someone saves or invests for a child but in their own name then it remains the adult's money (and uses their ISA allowance (or is taxable if not using that wrapper), counts as an asset in the event of divorcing or needing care, etc), but can be gifted to the child at any stage with no tax ramifications, although as you say it can't stay within an ISA wrapper so would probably be less suitable for substantial sums unless drip-feeding to the child over multiple tax years.

B0bbyEwing

Thanks for the info.

Shame there's nothing that is ideal (yep, appreciate we will all have different ideals).

Divorce isn't a factor in this case but care home is more likely so that's a handy one to know.

I'll pass this on & a decision can be made. 

Best solution is 18 years to educate my niece on money management & hope she doesn't go nuts at 18. 

Albermarle

B0bbyEwing said:

Thanks for the info.

Shame there's nothing that is ideal (yep, appreciate we will all have different ideals).

Divorce isn't a factor in this case but care home is more likely so that's a handy one to know.

I'll pass this on & a decision can be made. 

Best solution is 18 years to educate my niece on money management & hope she doesn't go nuts at 18. 

An 18 year old going nuts with money at 18 is actually a quite normal part of growing up. 

B0bbyEwing

Albermarle said:

B0bbyEwing said:

Thanks for the info.

Shame there's nothing that is ideal (yep, appreciate we will all have different ideals).

Divorce isn't a factor in this case but care home is more likely so that's a handy one to know.

I'll pass this on & a decision can be made. 

Best solution is 18 years to educate my niece on money management & hope she doesn't go nuts at 18. 

An 18 year old going nuts with money at 18 is actually a quite normal part of growing up. 

I know, I did it. It's what turned me in to a bit of a tightwad when I saw £1000s suddenly turn in to £3.65 & I couldn't withdraw any more money from the cash machine.

Albermarle

B0bbyEwing said:

Albermarle said:

B0bbyEwing said:

Thanks for the info.

Shame there's nothing that is ideal (yep, appreciate we will all have different ideals).

Divorce isn't a factor in this case but care home is more likely so that's a handy one to know.

I'll pass this on & a decision can be made. 

Best solution is 18 years to educate my niece on money management & hope she doesn't go nuts at 18. 

An 18 year old going nuts with money at 18 is actually a quite normal part of growing up. 

I know, I did it. It's what turned me in to a bit of a tightwad when I saw £1000s suddenly turn in to £3.65 & I couldn't withdraw any more money from the cash machine.

So it was a good lesson of 'When its gone, its gone' 

B0bbyEwing

Albermarle said:

B0bbyEwing said:

Albermarle said:

B0bbyEwing said:

Thanks for the info.

Shame there's nothing that is ideal (yep, appreciate we will all have different ideals).

Divorce isn't a factor in this case but care home is more likely so that's a handy one to know.

I'll pass this on & a decision can be made. 

Best solution is 18 years to educate my niece on money management & hope she doesn't go nuts at 18. 

An 18 year old going nuts with money at 18 is actually a quite normal part of growing up. 

I know, I did it. It's what turned me in to a bit of a tightwad when I saw £1000s suddenly turn in to £3.65 & I couldn't withdraw any more money from the cash machine.

So it was a good lesson of 'When its gone, its gone' 

Yes indeed. It worked for me. I hated it at the time but I'm glad I did it. While having the £1000s I was also working so earning more on top of that & blew the lot. Difficult to get, easy to lose.

My brother on the other hand is an example of where it's not a good lesson. Same with some other members of my extended family. Get money, spend money, complain they have no money. Living for today because "I could be dead tomorrow". 
Maybe they'll be right one day (well, they will, one day, but you know what I mean - sooner than 'expected') & it will have worked out for them. Or maybe they'll live to be old & disgraceful & wish they'd planned for later life.