Investing for children

Chunky_monkey_7

Hi, not sure if this is the right place, so apologies if not. Not looking for advice as such but just ideas to consider.  Some background info - My husband and I are in our 40's, we have three young children. My in laws are in the early 80's. 
 My in laws today have asked us how we would like them to invest 50k per child for when they are older. We have never had this amount of money ourselves to invest so we're quite clueless.
The one thing we have all agreed on is that the children should not have access to the money when they turn 18.
My in laws live away and my husband is their only child. What would you suggest given the option?

El_Torro

If you don't want your children to access the money when they are 18 then having it in their name isn't a good idea, legally they will be able to access it at 18. 

One option would be to have it in your / your husband's / your in-laws names. So it's effectively that person's money until they give it to the child / adult. 

There are problems in doing this. If the money isn't in an ISA or other tax free wrapper then whoever owns the money would be liable for any Capital Gains Tax or other taxes. Also if your in-laws keep it in their names then it might be part of their estate for inheritance tax purposes. This is only relevant if they die before they give the money away. 

Have your in-laws looked at the rule about deprivation of assets? If they give away a sizeable amount of money (I think this qualifies) then there might be issues in getting the local council to pay for care home fees. Assuming they ever go into a care home, also assuming they don't have enough other assets to pay for a suitable care home.

sevenhills

How about putting the maximum in your pensions, which would be available when you are 57?

Chunky_monkey_7

Thank you for the replies. 
We discussed it last night in more detail and both of us are actually quite against the idea of them each having a sizeable amount. We feel quite strongly they won't understand the value of money and strive to achieve. Am I wrong for thinking this? 

Albermarle

Chunky_monkey_7 said:

Thank you for the replies. 
We discussed it last night in more detail and both of us are actually quite against the idea of them each having a sizeable amount. We feel quite strongly they won't understand the value of money and strive to achieve. Am I wrong for thinking this? 

This topic comes up quite regularly, and as you can imagine there are a variety of different opinions expressed.
If there was some kind of consensus/average opinion I would say it was this.

The child should be taught about money from as young an age as practical. One good way is for them to have their own savings account, that they can put birthday money in and later draw it out again. The amounts involved could be increased as they get older.
Money can be invested in their name in a JISA. This will become available at 18 . They may or may not blow it.
If they did blow it all quickly on parties, unsuitable partners etc this is not the end of the world ( you are only young once) and in itself could be a valuable life lesson . In that when its gone its gone.
However just in case it could be wise for the parents/adults to keep some money back in their own names, for when they are older.

As I said opinions will vary.

artyboy

Albermarle said:

Chunky_monkey_7 said:

Thank you for the replies. 
We discussed it last night in more detail and both of us are actually quite against the idea of them each having a sizeable amount. We feel quite strongly they won't understand the value of money and strive to achieve. Am I wrong for thinking this? 

This topic comes up quite regularly, and as you can imagine there are a variety of different opinions expressed.
If there was some kind of consensus/average opinion I would say it was this.

The child should be taught about money from as young an age as practical. One good way is for them to have their own savings account, that they can put birthday money in and later draw it out again. The amounts involved could be increased as they get older.
Money can be invested in their name in a JISA. This will become available at 18 . They may or may not blow it.
If they did blow it all quickly on parties, unsuitable partners etc this is not the end of the world ( you are only young once) and in itself could be a valuable life lesson . In that when its gone its gone.
However just in case it could be wise for the parents/adults to keep some money back in their own names, for when they are older.

As I said opinions will vary.

I think that's a very good summary. Our 2 have access to very substantial sums now they are over 18, but neither want to touch it in a hurry - we may have been lucky, but I like to think that some of the financial education we provided along the way rubbed off...