Daughter's Savings

tomg9009

Hi all,

My wife and I are looking to set up a savings account for our 7 month old daughter. We're looking to pay in £100 per month, plus lump sums from birthdays and Christmas etc. Having read the MSE articles it looks as though the Children's ISAs are the best option long term, noting money can't be withdrawn until she's 18.

My concern is that as my understanding is the control of the account will automatically go to our daughter on her 18th birthday, and hopefully there may be a significant sum of money in the account at that point, is there is a method of stopping this happening automatically, delaying this transfer or a better approach altogether? We're conscious at 18 you don't necessarily make the best financial choices etc. 

Any help and advice would be massively appreciated, thank you.
Tom

Albermarle

A question asked very regularly on here.
The only practical options are to either teach your daughter the value of money when she is older, or save the money in your own name and then give to here when you think is the right time.
Or a mix where you save some in her name, and some in yours.
Due to the time scale involved a Stocks and shares JISA,would normally  be better than a cash JISA.

Olinda99

yes don't choose cash as inflation will eat aeay at it

xylophone

The JISA belongs to the child who has an absolute right to access  at the age of 18.

https://www.gov.uk/junior-individual-savings-accounts


If you are unhappy about this,  you could save in your own/your spouse's ISA and gift when you think appropriate. 


If you go the JISA route, as the child is so young, you might wish to consider the stocks and shares option (as well as the cash option).

Fidelity has received a favourable mention - you might choose a global mixed asset fund.

https://monevator.com/best-global-tracker-funds/

https://www.thisismoney.co.uk/money/saving/article-1583863/Best-savings-rates-Junior-Isas-children-s-accounts.html

EthicsGradient

You could start with a JISA, and when you think it's built up close to the amount you think an 18 year old will be trustable with, you could then just move the regular saving to under your own names, and choose when to pass that on to her. Or you could even switch to the ultimate long term saving, which is a SIPP in her name, which gets tax relief, and she won't be able to access until her late 50s (depending on the rules in the long term, of course) - and tell her that's there as a backstop, so she can use her income in her 20s for what's good for her at the time.

Nurse2047

Pay a small amount into a child SIPP Also and let compounding do its thing! She will thank you in years to come! 

tomg9009

Albermarle said:

A question asked very regularly on here.
The only practical options are to either teach your daughter the value of money when she is older, or save the money in your own name and then give to here when you think is the right time.
Or a mix where you save some in her name, and some in yours.
Due to the time scale involved a Stocks and shares JISA, would normally  be better than a cash JISA.

Enormous thanks everyone, massively appreciated.
Regarding saving the money in an ISA in our name an transferring it to our daughter at some point in the future e.g. as a deposit on her first house etc. would there be any issues or tax implications with transferring the money?
Apologies if this is a daft question and thank you again!
Tom

El_Torro

tomg9009 said:

Albermarle said:

A question asked very regularly on here.
The only practical options are to either teach your daughter the value of money when she is older, or save the money in your own name and then give to here when you think is the right time.
Or a mix where you save some in her name, and some in yours.
Due to the time scale involved a Stocks and shares JISA, would normally  be better than a cash JISA.

Enormous thanks everyone, massively appreciated.
Regarding saving the money in an ISA in our name an transferring it to our daughter at some point in the future e.g. as a deposit on her first house etc. would there be any issues or tax implications with transferring the money?
Apologies if this is a daft question and thank you again!
Tom

There is no gift tax in the UK, so you can give money to your daughter (or anyone else) without tax being an issue. 

One thing to consider is deprivation of assets, which is more of an issue the older you get. Probably won't be a problem in this case but worth knowing about. Essentially if you give a load of money away and then go into a care home your local council will expect the money you gave away to be used to pay for your care home costs.

daveyjp

People make bad choices if they aren't fully informed.

Teach her about money during her teen years, encourage her to get Saturday job etc and  she will have the education to make informed choices.  At what point do you decide she is responsible enough to receive the money?  At 18 or 28 it could all be spent in an afternoon!

brucefan_2

@tomg9009

For both of our daughters we began drip-feeding money into a SIPP for them at an early age.

Apart from the occasional grumble at not being able to access the money until age whenever, they generally are grateful that the funds are growing and that they have an additional safety net for later in life.

If you're worried about that being too limiting, do a 50/50 split into a JISA and a SIPP and get something like the best of both worlds.

cloud_dog

As per life in general, a little bit of everything is probably the best option.

We (they) started with and ended up with:

• a cash savings account (bare trust) for gifts to be used earlier in life
• S&S CTF then JISA for gifts for adulthood, plus our own money
• When the S&S JISA reached a certain amount we stopped contributing to it.
• We then switched to contributing in to S&S in our name(s) for their benefit.
• When they were abut age 15 or 16 we started contributing into a cash savings account
• When they were about 17 we opened a SIPP and started contributing the minimum amount (£25pm) simply to know one existed and to help divert money into it should we wish to.
• As they approached 18 we discussed the cash savings account and the S&S JISA; we suggested that the cash savings could be used for Uni etc (pithing it up against the wall if they wish), but that the S&S JISA should remain invested (S&S ISA) with the potential to move some/all in to a LISA as their future progresses.

Two years into Uni, and the cash savings is sat around the 90% level and the S&S ISA remains invested, although half has been moved in to a S&S LISA.