20k to invest for my childrens inheritance

autonomy

I have just had news that my children aged 18 and 16 are to receive 20k as inheritance from their recently deceased mothers pension fund. I believe they will share the money 50/50. I would be grateful for any advice on how they can invest the money in the best way or would it be easier to just give it to the tax man now? All help appreciated. Thanks!:o

zzzLazyDaisy

Hi, I am sure someone will come along soon who is able to give you more information.

But do remember that youngsters aged 16 and over have an ISA allowance now. This means that £3600 can be invested in a cash ISA for each of them and will earn the interest tax free. At the moment it may not seem like an issue, as if they are both in education or not earning they can register to receive interest tax free with any bank account. The difference, though, is that with a cash ISA, that tax free entitlement remains even when they start earning. So you could top the ISA up again next tax year, which will take care of £7200 for each of them, and give them a nice tax free nest egg.

Just a suggestion, as I say I'm sure other people more knowledgable than I will be along later

dunstonh

invest or save?

If invest, you are looking at holding the money back from them for at least 5 years. As the pension fund is payable outside of the estate and disregards the Will, there is almost certainly no restrictions or instructions on this money. So, I assume you are acting as trustee for the 16 year old and adviser for the 18 year old. In which case what age it to be passed to the children for their responsbility?

autonomy

Thank you for your reply LazyDaisy. I am happier in the knowledge that the tax man will not be getting his hands on any just yet

autonomy

Thank you for your reply Dunstonh. My daughter will be 19 in may and will be finishing her full time education around that time and will be having her first child. She is about to move to her first home and im sure will spend a proportion on fixtures and fittings and getting through her driving test I expect she will save at least £3,600 for a cash ISA. My son will be looking to save the money rather than a long term investment.

notis7

ISA's and ISA's again.....top them up annually - when you reach the 7200 limit for your children - put the rest in an instant access - high rate or 1 year fixed product - once matured put another 7200 in your childrens ISAs and again the same the following year....3 years and they have maximised returns