How to invest for kids

Thenewme

hi

I’m in a bit of a strange situation, a close family member has given me a very large amount of money to invest for my kids future, massively kind and totally unexpected.

The situation however isn’t as simple as adding the money to their existing savings accounts. I’m part of a joint UC claim as my partner hasn’t been able to work for the last few years due to illness. He’s now been granted PIP after a battle. He had a backdated payment which is being used for much needed home improvements and taking the kids on holiday for the first time so it has pretty much gone now. I do work but p/t around school hours so things have been very tight. I’m a carer for my partner and my mum.

I know how strict the rules are on UC and I don’t want to find myself in trouble due to not handling this properly. I’ve been so skint for the last few years that my biggest worry was dealing with the debt that has crept up on me and savings limits haven’t even crossed my mind.

I know I can invest £9k per child in a junior ISA which will be deemed as theirs only however there is a large amount left over once I do this. What else could/should I do? I can put £6k shared in their existing account to add in next tax year I believe. I wondered about a SIPP but the max limit will still leave a lot left over.

Any help would be greatly appreciated as I’m tying myself up in knots worrying about this. It’s a whole different level of anxiety I’m feeling! I don’t want to go immediately to DWP to discuss it and wanted to see if there were any ideas before I either return the money or close the claim.

eskbanker

I think the first thing to do is to highlight to the close family member that some planning is needed in order to ensure that the money is gifted straight to the children, without it ever being deposited into any account in your name - you can open accounts in their names, and it should then be possible for the payments to be made directly to these.

JISAs are indeed an obvious first step before populating taxable savings accounts but pensions are best avoided unless the donor is happy with the idea that the money would be tied up for a very long time. How old are the children?

Thenewme

The problem is that it’s already in my account, I was expecting a couple of hundred max which would have been easily explainable as a gift and put away but it’s in the tens of thousands. I’m so grateful and it’s an amazing gesture but it’s already there!

We’re going through a review at the moment so it’s not going to be seen immediately but may be in the next one. It’s an account UC are aware of but not my main account.

They’re 7&8 so very young still.

eskbanker

I'm not sure if returning the money to the donor (temporarily, while you sort out next steps) is enough to avoid UC-related issues, so hopefully someone who knows the answer to that will be along soon…

LHW99

You can buy premium bonds for children (up to £50k per child), and eg use as a temporary home pending adding to JISA etc in the next (few) financial years.

You have to "manage" them, but they would presumably be in the child's name

https://www.nsandi.com/campaign/gifting

Thenewme

thank you for your help though. I may add to the UC forum also for more specific advice on how much trouble I’m going to be in!

Thenewme

https://forums.moneysavingexpert.com/discussion/comment/82128747#Comment_82128747

I did wonder this but as I’d be in control of them I think it would still count as it being my money. Sadly they’re too young for a trust fund, that stopped before they were born else that would have been a great option.

I’d move it to my mums account but that would be depreciation of capital which would get me in too much trouble. I wish I’d just given her details now for the credit and had her store it in savings to tf to an ISA for them annually. Hindsight 🤦‍♀️

Keep_pedalling

I think you are going to need to be upfront with the UC people. Your relative may need to provide evidence that the money they transferred to you is a gift for your children not to you.

Newly_retired

It might be worth posting the UC aspect of this situation on the Benefits board.

daveyjp

A simple childs savings account can be home to any balance over and above ISA investments. The account is managed as a bare trust so the cash belongs to the child.

Thenewme

https://forums.moneysavingexpert.com/discussion/comment/82128790#Comment_82128790

Ah thanks! has anyone got any suggestions on what may be a good account? I’ll be adding in around £20k each and it needs to be in their name only, preferably no access until 18. I’ll be also trying to add to it as and when I can.
The opportunity of knowing they’ll have a nest egg for studying or a house deposit in the future is something I never thought they’d get so I really want to set something in motion if I can.