Leaving my Grandchildren money but not in a will

Two of my grandchildren would have received a legacy in my will but due to family reasons I now want to remove them from it and instead set up an account that I can fund before my time comes.

I want the funds to have a long term, with one child being nine and the other six, and to mature when they are twenty one years old each. I do not want their parents to have access.

My intention would be to start each account off with a large lump sum and then add a couple of hundred each year while I can. It would also need to have a good interest rate.

Obviously all the relevant details would be kept by my solicitor.

What should I be looking at?
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Comments

  • Neil49
    Neil49 Posts: 3,023
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    I don't want to depress you but the first thing that came to mind was that you could pop your clogs tomorrow and they wouldn't get a penny. 

    Possibly you could make some contribution in your will to ensure they receive a minimum amount of money and set up another arrangement where you contribute on a regular basis. 


  • xylophone
    xylophone Posts: 43,847
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    edited 23 November 2023 at 9:30PM
    You could set up accounts in bare trust for each grandchild but they would have the right to access and control from the age of 18.

    Otherwise a discretionary trust would be a possibility.

    Either way, you would be best advised to discuss this with your solicitor who would need to have regard to Trust law and who might wish you to take advice from a specialist in Trust taxation.

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

     Otherwise, one of the parents could open a Junior ISA for each child - once done, you could contribute.

     From your point of view the trouble with this is that the parent would control ( although  could not access)  the account  - access to the money would be available only to the child but this would be from the age of 18.

    The child could control the account from the age of 16.

    https://www.gov.uk/junior-individual-savings-accounts
  • MikeJXE
    MikeJXE Posts: 3,029
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    I did just that 2 years ago

    I gave my grandkids £10,000 each, the eldest 21 got it as a Christmas present the other 3,  14,13 and 12 years old I deposited in a Junior Isa they get at age 18, it has to be set up by the mothers but can't be touched till 18 years old 

    I was 81 years old and yes I can pop my clogs anytime but you can put things off forever 

  • surreysaver
    surreysaver Posts: 3,985
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    MikeJXE said:
    I did just that 2 years ago

    I gave my grandkids £10,000 each, the eldest 21 got it as a Christmas present the other 3,  14,13 and 12 years old I deposited in a Junior Isa they get at age 18, it has to be set up by the mothers but can't be touched till 18 years old 

    I was 81 years old and yes I can pop my clogs anytime but you can put things off forever 

    Can be set up by anyone with parental responsibility, not just the mother 
    I consider myself to be a male feminist. Is that allowed?
  • MikeJXE
    MikeJXE Posts: 3,029
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    MikeJXE said:
    I did just that 2 years ago

    I gave my grandkids £10,000 each, the eldest 21 got it as a Christmas present the other 3,  14,13 and 12 years old I deposited in a Junior Isa they get at age 18, it has to be set up by the mothers but can't be touched till 18 years old 

    I was 81 years old and yes I can pop my clogs anytime but you can put things off forever 

    Can be set up by anyone with parental responsibility, not just the mother 
    I believe so

    Take a look at Coventry Building Society 
  • The only way to absolutely guarantee they can’t get the money before they reach 21 is through a discretionary trust doer set up now or through your will. The problem with those is that they are subject to some pretty hefty taxation and there are few places that will hold the trust assets especially if you are planning to hold in cash accounts.

    Speaking of which, holding these savings in for 12-15 years in cash will see the real value cut considerably as any interest earned  is going to be outstripped by inflation, especially as you wont get the best interest rates in a trust account. 
  • LHW99
    LHW99 Posts: 4,055
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    I suppose you could set up something as a bare trust, but then just before age 16, perhaps transfer the money to a fixed 5 year bond (also as bare trust).
    It wouldn't prevent access at 18, but it would make it more difficult / less attractive depending on the conditions of the savings bond.
  • MikeJXE said:
    MikeJXE said:
    I did just that 2 years ago

    I gave my grandkids £10,000 each, the eldest 21 got it as a Christmas present the other 3,  14,13 and 12 years old I deposited in a Junior Isa they get at age 18, it has to be set up by the mothers but can't be touched till 18 years old 

    I was 81 years old and yes I can pop my clogs anytime but you can put things off forever 

    Can be set up by anyone with parental responsibility, not just the mother 
    I believe so

    Take a look at Coventry Building Society 
    I know so.  Sex discrimination was made unlawful in 1970.
    I consider myself to be a male feminist. Is that allowed?
  • Malthusian
    Malthusian Posts: 10,833
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    LHW99 said:
    I suppose you could set up something as a bare trust, but then just before age 16, perhaps transfer the money to a fixed 5 year bond (also as bare trust).
    It wouldn't prevent access at 18, but it would make it more difficult / less attractive depending on the conditions of the savings bond.
    That is not a good idea as the beneficiary is absolutely entitled to access the capital in the trust at 18 (16 in Scotland). The trustee has a legal duty to invest the capital as a prudent businessperson would in the beneficiary's interest. Not in accordance with their personal views on what the beneficiary should do with it when they are an adult. 

    21 year olds are as capable of wasting money as 18 year olds, often more so. 

    When they turn 18 the beneficiary is free to put the money in a 3 year fixed term deposit if they want. 

    One option not mentioned in detail so far is that the OP can open an account in their own name and "earmark" it for the intended beneficiary. If they are still alive and compos mentis when the beneficiary reaches 21 they can hand it over, or not, as they choose. The "what if the OP pops their clogs first" question can be partially addressed by leaving the account to the beneficiary in their Will. (Or a discretionary trust as mentioned above, which would be much more complicated and tax-inefficient.) This still leaves the question of "what if the earmarked account gets sold, meaning the bequest fails", but you can't control everything. 

    The OP may pay more tax than the beneficiary would if it was their money in bare trust, but if you want money to be taxed on the basis it belongs to the child then it has to belong to the child.
  • B0bbyEwing
    B0bbyEwing Posts: 1,177
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    From your OP, I'd suggest speaking to a solicitor regarding any of this being fought/contested in any way.

    Experienced it ourselves. So I'd speak to them to see if you can make your plans watertight. 
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