Helping Grandchildren 20 years from now

horsewithnoname

Albermarle said:

horsewithnoname said:

Can you not just invest your money and make a Will leaving it to your grandchildren with some proviso as to age of inheritance so they don’t blow it on Barbie dolls or something if you are unfortunate enough to die young?

To do this you have to do it properly, with discretionary trusts etc., so will be not simple or cheap.
It seems many people just make a statement in their will that money left to Niece etc should be withheld from them until they are 25 say, but it does not hold any water legally AFAIK. Probably these are DIY or cheap wills, rather than one drawn up by a solicitor.

I assumed they have enough money to do it properly. 

Keep_pedalling

Albermarle said:

horsewithnoname said:

Can you not just invest your money and make a Will leaving it to your grandchildren with some proviso as to age of inheritance so they don’t blow it on Barbie dolls or something if you are unfortunate enough to die young?

To do this you have to do it properly, with discretionary trusts etc., so will be not simple or cheap.
It seems many people just make a statement in their will that money left to Niece etc should be withheld from them until they are 25 say, but it does not hold any water legally AFAIK. Probably these are DIY or cheap wills, rather than one drawn up by a solicitor.

It often gets puts in professionally drawn up wills as well even though they know legally it is no more than a wish. Discretionary trusts are not practical for most estates as the cost of managing them and the high tax rates that apply to them just does not make them worthwhile. 

dothenumbersaddup

IanManc said:

dothenumbersaddup said:

 As an example -  In a different world we would buy a house now, rent it, and give half each to the grand children when they reach 18,- 

Thank goodness for your grandchildren that we're not in a different world". At 18 I'd have hated being dumped with the responsibility of a tenanted rental property and the de facto burden of running a letting business, half owned with a sibling with who I might or might not see eye to eye, when the alternative was that I might have been left a sum of money or a basket of investments which could I liquidate parts of as and when I needed it to help me through university or towards buying a car and then insuring it year by year.

All good and realistic points. Thankyiu

dothenumbersaddup

dunstonh said:

 I’m uneasy about stocks and shares, as I don’t expect the markets to behave as they have done in the past, although I acknowledge I could be wrong about this

300 years of history covers most events except armageddon.   And in that scenario, nobody will be caring out money any more.  Using cash for 20 years would be a really bad option.   

and similarly feel uneasy that we might inadvertently render the grandchildren ineligible for student grants or entry to certain institutions because of the assets we give them.

And this sort of thinking is why tax keeps going up and why Labour want to tax people with excess wealth more.    Wanting wealth and benefits simultaneously is not how it should be.

Either you want to set up your grandchildren up for a head start or you don't.   That is really what it needs to boil down to.   Gifting in your 60s is statistically more likely to avoid IHT than gifting it in your 80s.  Even if limits change.  Gifts from income are exempt.   So, regular contributions to a Junior ISA would be fine.

Or you could just retain the money and gift it when you are older and risk rules that will almost certainly be different at the time but you have no way of telling what they will be.

I think you have hit the nail on the head saying that I want to give my grandchildren a head start, and that there is a lot of technical uncertainty in the future as to the best way of doing this.  Thankyou

Albermarle

dothenumbersaddup said:

dunstonh said:

 I’m uneasy about stocks and shares, as I don’t expect the markets to behave as they have done in the past, although I acknowledge I could be wrong about this

300 years of history covers most events except armageddon.   And in that scenario, nobody will be caring out money any more.  Using cash for 20 years would be a really bad option.   

and similarly feel uneasy that we might inadvertently render the grandchildren ineligible for student grants or entry to certain institutions because of the assets we give them.

And this sort of thinking is why tax keeps going up and why Labour want to tax people with excess wealth more.    Wanting wealth and benefits simultaneously is not how it should be.

Either you want to set up your grandchildren up for a head start or you don't.   That is really what it needs to boil down to.   Gifting in your 60s is statistically more likely to avoid IHT than gifting it in your 80s.  Even if limits change.  Gifts from income are exempt.   So, regular contributions to a Junior ISA would be fine.

Or you could just retain the money and gift it when you are older and risk rules that will almost certainly be different at the time but you have no way of telling what they will be.

I think you have hit the nail on the head saying that I want to give my grandchildren a head start, and that there is a lot of technical uncertainty in the future as to the best way of doing this.  Thankyou

There is always uncertainty about the future. Not just about legislation, but ones own life can be turned upside down very easily.
All you can really do is plan based on the info/situation you have today. Even if it does not work out exactly as planned, it is still better than no plan at all.

DiamondLil

I have investment accounts with Hargreaves Lansdown; each account is in my name, designated to a particular grandchild, and I am liable for any and all tax due. I add to the accounts fairly regularly, as and when I have spare cash. Been doing this for years now.

Albermarle

DiamondLil said:

I have investment accounts with Hargreaves Lansdown; each account is in my name, designated to a particular grandchild, and I am liable for any and all tax due. I add to the accounts fairly regularly, as and when I have spare cash. Been doing this for years now.

If the investments were able to be in  S&S ISA's there would be no tax .

lr1277

Please think of the following some of which are scenarios that would be tough to be in.

I don't know but I think only a parent can be responsible for  for funds invested for their children in the childrens' names. I am not sure grandparents are granted that privilege. So you would need the agreement of the parent(s) to setting this stuff up if you want these things in your grand kids names. Also I think they would have to run it.

If you do go down the route of saving/investing yourself with the intention of giving the money to the grandkids at a time you deem appropriate, think about if you and your partner die before the kids reach 18. In your wills you will need to appoint trustees to look after the money till the grandkids are 18. The trustees are normally the excutors and if they are your children that is fine, but at least worth thinking about. Perhaps worth taking legal advice about this situation, especially if your wills need writing or re-writing.

Finally and this is a really bad scenario, should the kids die before 18, any assets they hold revert to the parents. And if your son or daughter died in say the same car crash as both your grand kids, then the assets would revert to the other parent. If you have a great relationship with them, fine. But if not..... Anyway I am thinking of savings, ISA's and SIPPs.

DiamondLil

Albermarle said:

DiamondLil said:

I have investment accounts with Hargreaves Lansdown; each account is in my name, designated to a particular grandchild, and I am liable for any and all tax due. I add to the accounts fairly regularly, as and when I have spare cash. Been doing this for years now.

If the investments were able to be in  S&S ISA's there would be no tax .

@Albermarle - yes indeed; up until this current year I couldn't do this as I have ISAs which I contribute to now and again. But since April this year I'm able to contribute to another ISA which I am now doing.

wmb194

lr1277 said:

I don't know but I think only a parent can be responsible for  for funds invested for their children in the childrens' names. I am not sure grandparents are granted that privilege.

No, grandparents can and any other adult. To open e.g., a bare trust savings account or GIA they'll need to get their hands on the child's birth certificate, though. The exception is that Jisas have to be opened and managed by parents.