Trust for grandchildren

Keep_pedalling

Malthusian said:

tetrarch said:

I don't quite agree with the "house should be sold" comment. There is a £300K property with 5 new owners, only one of whom is an adult. Any decision about any "sale" should be with their parents so they can do whatever they deem best.

The trustees have a statutory duty to invest the trust's capital as a prudent person of business would, in the beneficiaries' interests.
A prudent person of business would not tie 5 beneficiaries' money up in a single random residential property, with all the unnecessary risk, hassle and tax-inefficiency that involves. Nor is it in the interests of the beneficiaries to have their money tied up in an illiquid asset, given the different ages at which they become eligible to withdraw (with one already eligible).

I would also say that because of the wide age range each child’s inheritance needs to be treated differently.

For the 6 year old the 12 year time frame would be more suited to investing to avoid losing value through inflation, but the 14 year old would be more suited to holding in cash as 4 years is too risky for investments. The 10 & 12 year olds fall between those two stalls so maybe a mixture.

Hopefully there is a financial savvy adult who can advise the 19 year old on things like LISAs, and now should be a good time to start advising before they suddenly have lots of money in their bank account.

Malthusian

Keep_pedalling said:

For the 6 year old the 12 year time frame would be more suited to investing to avoid losing value through inflation, but the 14 year old would be more suited to holding in cash as 4 years is too risky for investments. 

Assuming that the 14 year old is going to draw the whole £60k (+ growth) and splurge it at the earliest opportunity. If they are likely to leave it invested for house purchase or other life goals, their investment timeframe could also be 10-15 years or longer.
The trustees should involve them in the discussion of how to invest the money if it at all possible, or failing that their parents.

Keep_pedalling

Malthusian said:

Keep_pedalling said:

For the 6 year old the 12 year time frame would be more suited to investing to avoid losing value through inflation, but the 14 year old would be more suited to holding in cash as 4 years is too risky for investments. 

Assuming that the 14 year old is going to draw the whole £60k (+ growth) and splurge it at the earliest opportunity. If they are likely to leave it invested for house purchase or other life goals, their investment timeframe could also be 10-15 years or longer.
The trustees should involve them in the discussion of how to invest the money if it at all possible, or failing that their parents.

Hopefully over the next 4 years he / she will get some good financial education, not too early to start with the 10 year old either.

kensiko

Thanks so much for all your input on this, a massive help!

Some education to be dished out.....