Investing for our children's future

MetManMark

My wife and I are reasonably financially secure. We don't have a mortgage and are debt free. We max out our ISA and pay into a SIPP as well as a DB scheme.

We have received an inheritance - some of this we would like to use to help our teenagers through uni and to buy their first property. What is the best way of doing this? I am aware of the Junior ISA but this has a 9k limit / year. If we were want to put, say £100k into some form of investment for our children what would people recommend? Note that we do have a financial adviser to help with stuff like this but thought that crowd sourcing ideas would also be helpful.

Thanks

M

El_Torro

The first thing to do is decide whether you want to invest or save this money for your kids. Investing is best for the long term, 10 years or more. You say they’re teenagers so it might be better to save at least some of the money.

I would certainly make use of JISAs, especially since we’re almost at the start of a new tax year.

Remember that any money in your kids’ names will be legally theirs once they are 18, to do with as they wish.

Asking for opinions on a forum is fine, though do ask your FA / IFA about it too.

Keep_pedalling

How old are the children?

poseidon1

https://forums.moneysavingexpert.com/discussion/6658591/investing-for-our-children-039-s-future

You need to clarify what you are trying to do here, ie do you want to set up arrangements in your children's names ( which they become entitled to at age 18)? Alternatively, do you want to retain absolute control of the investments concerned and only encash them ( or transfer to your children) when needed for the different purposes you have in mind?

You identify JISAs but query the £9k annual restriction as if this this were your only objection to this option. However bear in mind over the next 30 days, you actually have an £18k allowance per child if you are happy for them to take control of those invested funds at age 18.

I would also remind you that if you still retain a significant proportion of the Quilter Investment bond you queried in a post back in 2023, and are happy with the capital appreciation it has been acheiving, you do have the option of gifting it to your children tax efficiently in future.

The advantage to you of gifting this to them ( by way of assignment) is that you do not trigger a personal chargeable event income tax exposure on yourself. Your children, as owners of the bond can personally then proceed to encash in their personal names, and if they are zero or lower rate income tax payers at that time, they escape any possibility of an income tax liability you are currently exposed to.

In this respect, investment bonds are fairly unique as a capital asset you can own personally, but avoid tax on the accrued profits by later gifting to zero or lower rate taxpayers. Therefore, worth looking at your Quilter bond ( if you still hold it) as a pre- exsisting investment you can earmark for your children but retain control and ownership in the interim. In the meantime you should review the fund link you have chosen to determine if changes may be appropriate for an investment you may ultimately gift to them.

It is the kind of strategy I would have expected any half way decent financial adviser to identify on your behalf, so may be worth raising this possibility in a future review.

MetManMark

https://forums.moneysavingexpert.com/discussion/comment/81914352#Comment_81914352

12 and 15 years

MetManMark

Yes we still have Quilter bonds. One each for my wife and I and one for each of our children.

Essentially, I want to invest in a way that is tax efficient such that our children can access the money to help them with the major financial challenges that they face in life, namely uni (if they chose to go) and purchasing a property.

I am not massively stressed about whether they can access them at 18 years as I think they are both reasonably sensible. We do not know the sums involved re inheritance - if it can be added to a Junior ISA then great, but I suspect it will be a more significant inheritance, hence thinking about how best to invest it for their future.

Thanks

M

jimjames

If the money hasn't already been distributed then getting the will amended to direct it to the children rather than via you will avoid any potential IHT issues down the line.

As well as JISA you can also pay into a SIPP for each of them, obviously very long term but could get them setup with a decent pot.