Investing a legacy for a child

whisper_quietly

I’m the executor of a Will. The Will states that beneficiaries aren’t able to receive their legacy until they are 21 years. One of the beneficiaries is 13 years old. I need to invest a relatively small sum (less than £10k) for a number of years. I’d like the investment to be in the child’s name, not mine. I’ve looked online to see how this could be done but most financial institutions talk about trust funds.

All advice and suggestions welcomed. Thanks

Keep_pedalling

Can you post the exact wording of the age 21 clause (redacting any personal information) in most cases these clauses are not enforceable and the beneficiary is actually entitled to their inheritance on their 18th birthday.

The reason for this is that keeping a small amount in trust for an adult is not simple and can be expensive. If the child is entitled to recieve the bequest on when they are 18 then a JISA is the simplest option for such a small sum.

Albermarle

£10K is a very small sum when you talk about trusts, due to all the costs and admin involved.

As said in the previous post, these requests not to pass on money until people reach a certain age are usually more of a wish, than a legally binding matter.

whisper_quietly

”Can you post the exact wording of the age 21 clause (redacting any personal information) in most cases these clauses are not enforceable and the beneficiary is actually entitled to their inheritance on their 18th birthday”.

I’m aware that a child can inherit at 18 years. I’m not interested in the age related why’s & wherefores, just looking for an institution that will accept the funds.

Dead_keen

I’m aware that a child can inherit at 18 years. I’m not interested in the age related why’s & wherefores, just looking for an institution that will accept the funds.

I guess it matters. If child gets the cash absolutely (i.e. without any conditions whatsoever) you are investing it as the child's nominee (also known as a bare trust). Easy to find an institution for that by googling. Someone like HL comes up high on google. While the account will note the child's interest in the funds, an adult will still need to be involved with the account. That could be a parent though.

If the child only gets it if they reach age 21 (and if they don't, someone else does), then it is not being invested by you as the child's nominee. In that case, it is harder to find somewhere that accepts the cash.

silvercar

If everyone is trustworthy, I’d open a JISA for the kid, with the parent as the account controller. Ask the parent to sign something that they are aware that the will states that the child shouldn’t have the money until they are 21. Then leave them get on with it. Worst that can happen is that the child gets hold of the money earlier than intended.

If there are difficult relationships within the family then I may be more thorough, otherwise the costs outweigh the risks IMHO.

poseidon1

https://forums.moneysavingexpert.com/discussion/comment/82100751#Comment_82100751

The vast majority of savings institutions have no interest in on boarding third party child trust funds where trustees are expressly required to hold until age 21.

The responders to your post were merely trying to find ways that would relieve you of the hassle of having to seek out the very small handful of providers who could assist, and the JISA suggestion was a very sensible one for the small amount in question assuming the age 21 requirement could be legally circumvented.

However having shut down that avenue and assuming you are willing to navigate what is possible, I would suggest you consider risk free National Savings Growth bonds currently offering fixed rates up to 5 years, at which point you then see what your options are then.

With NSI you will require a trust bank account with cheque book facility to make the investment and receive the eventual maturity proceeds. Finding a suitable bank will be a challenge, since the mainstream high street banks are not interested.

The lack of banking was discussed amongst trust professionals and a list was exchanged in the following professional forum -

https://trustsdiscussionforum.co.uk/t/list-of-organisations-that-offer-accounts-for-trusts/26152

In the meantime, see attached the trustee application form for NSI growth bonds

https://www.nsandi.com/files/asset/pdf/guaranteed-growth-bonds-application-form-trustee.pdf

Just one last thing, since you do not want to explore age 18 vesting options, this trust does not qualify as a bare trust so likely caught by the requirement to register the trust on HMRC's trust register as set out below

https://www.gov.uk/guidance/check-if-you-need-to-register-a-trust

The trust does not qualify for the Schedule 3A exclusion, and although only £10k at outset, will eventually exceed the cumulative £10k threshold by virtue of future interest.