Saving for child with disability

GixxerDan

Hi,

I have a 5 year old with a learning disability and medical issues. We are looking at options where we can start putting a little bit of money away for their future to either support once they turn 18 or before hand if there's anything required such as wheelchair/supportive pram if required which they may not necessarily qualify for through NHS funding. What sort of options do we have past a regular savings account?

Ideally would need to be easy to withdraw money (not locked away until 18), tax incentivised with opportunity for money to grow over time. It is critical that we can manage it as parents as they are unlikely to have the mental ability to manage it themselves once they are old enough to own the account.

jim1999

There aren't many great options, unfortunately.

Standard kids savings accounts are a decent option, but if they generate >£100 per year in interest that interest will be treated as yours and taxed as such.  That can be a good option if grandparents etc want to give them money.

To my mind, the two obvious options are:

1) Premium bonds - these can be held in a child's name, and aren't taxed.  And it's as safe as accounts will get. Downsides are that you will most likely get very poor growth.

2) Using parents' ISA allowances - to create some better long-term growth, invest in ISAs belonging to the parents.  That way in the long run you can generate some decent growth, e.g. to buy something when they're in their twenties, and you don't have to worry about the nightmare of them having a load of assets in their name.

There are trusts etc, but unless you're going to be putting in tens of thousands, need multiple people to put money in, have maxed out ISAs etc I don't think it's worth the costs and hassle.

elsien

Once they hit 18, whatever account you have, you’re not going be able to manage it for them without applying for the legal authority to do so if it is on their name and if they lack capacity at that point. 

Grey_Critic

I was going to suggest having a word with your Bank Manager but there are no banks these days. Building societies do offer a variety of accounts for children so perhaps have a word with them and they would not charge you for the advice

Albermarle

I would just save/invest the money in my own name ( or partners name) .
In that case the usual guidance applies.
If the money is likely to be needed in the next few years, use cash savings.
Savings | MoneySavingExpert
If it is more long term, then normally better to invest the money for a better return.
Pensions & Investing | MoneySavingExpert

Plus this forum could be useful.
Savings & investments — MoneySavingExpert Forum

Another advantage to doing it this way is that it sounds like your child may well end up getting some benefits due to their disability ( have you applied for any yet?) In this case it is better that the child/adult has no/little savings/assets of their own, as this could mean reduced benefits.

Savvy_Sue

You may not (yet) be talking about sufficiently large sums to warrant a trust, but I believe that Mencap is well regarded for offering advice in this area (for all sorts of disabilities). And although it may seem a long way off, making the right provision in your wills could be very sensible. https://www.mencap.org.uk/advice-and-support/wills-and-trusts-service

Albermarle

Savvy_Sue said:

You may not (yet) be talking about sufficiently large sums to warrant a trust, but I believe that Mencap is well regarded for offering advice in this area (for all sorts of disabilities). And although it may seem a long way off, making the right provision in your wills could be very sensible. https://www.mencap.org.uk/advice-and-support/wills-and-trusts-service

Setting up a disabled persons trust to be activated on your death ( or subsequent death of a partner ) is generally recommended, and they are not subject to all the rules and taxes that incur with trusts generally.
However I would not be actively looking at other trusts whilst still alive. They can be expensive and complicated and often bring little or no benefit.

Grey_Critic

Albermarle said:

I would just save/invest the money in my own name ( or partners name) .
In that case the usual guidance applies.
If the money is likely to be needed in the next few years, use cash savings.
Savings | MoneySavingExpert
If it is more long term, then normally better to invest the money for a better return.
Pensions & Investing | MoneySavingExpert

Plus this forum could be useful.
Savings & investments — MoneySavingExpert Forum

Another advantage to doing it this way is that it sounds like your child may well end up getting some benefits due to their disability ( have you applied for any yet?) In this case it is better that the child/adult has no/little savings/assets of their own, as this could mean reduced benefits.

Any monies paid t a disbaled person has to be accounted for so needs to be seperate to your own Any benefits/grants there was mention of a wheelchair would not be paid to you but to an account for the disabled person although you would manage it.

You can invest monies for children which is one reason I suggested a Building Society - they are aware of the various rules as Grandparents often want to settle sums on granchildren We have just become Great Grandparents and together with Grandad and parents we are looking to do so. 

The alternative is a financial adviser but then that will cost.

Albermarle

Grey_Critic said:

Albermarle said:

I would just save/invest the money in my own name ( or partners name) .
In that case the usual guidance applies.
If the money is likely to be needed in the next few years, use cash savings.
Savings | MoneySavingExpert
If it is more long term, then normally better to invest the money for a better return.
Pensions & Investing | MoneySavingExpert

Plus this forum could be useful.
Savings & investments — MoneySavingExpert Forum

Another advantage to doing it this way is that it sounds like your child may well end up getting some benefits due to their disability ( have you applied for any yet?) In this case it is better that the child/adult has no/little savings/assets of their own, as this could mean reduced benefits.

Any monies paid t a disbaled person has to be accounted for so needs to be seperate to your own Any benefits/grants there was mention of a wheelchair would not be paid to you but to an account for the disabled person although you would manage it.

You can invest monies for children which is one reason I suggested a Building Society - they are aware of the various rules as Grandparents often want to settle sums on granchildren We have just become Great Grandparents and together with Grandad and parents we are looking to do so. 

The alternative is a financial adviser but then that will cost.

A financial advisor would normally not be interested in this type of situation, or be far too expensive.
Normally you need a minimum of £50K in investable money ( not cash savings), often more like £100K, to get them interested. Plus they would be reluctant to advise on any benefits issues.

Any monies paid t a disbaled person has to be accounted for so needs to be seperate to your own Any benefits/grants there was mention of a wheelchair would not be paid to you but to an account for the disabled person although you would manage it.

You are right that specific payments from social services to buy care, equipment etc does have to be accounted for.
However with benefits it is more of a grey area and usually you do not have to account in detail how it is spent. Maybe in theory you do, but in my experience nobody ever asks. They just assume that the benefits are spent on living costs etc.
I guess if there were signs that parents were abusing the system, then more questions would be asked. 

EnPointe

Grey_Critic said:

I was going to suggest having a word with your Bank Manager but there are no banks these days. Building societies do offer a variety of accounts for children so perhaps have a word with them and they would not charge you for the advice

this is a patently untruthful statement 

JuzaMum

I would suggest looking at the Scope website as they are able to offer valuable help and advice. I would look into a trust for your child (something I need to do myself!).