JISA or ISA?

Morning

Looking at starting a share savings account for a child.

Can anybody explain the benefit of setting up a JISA in the childs name, rather than an ISA in the parents name and then have them gift the money when they are 18? from what I have read you cannot take money out of a JISA until the child turns 18, but this isnt the same for a regular ISA.

I know the parents very well, so trust isnt an issue. I think it would be good if they had early access to the money for example if the child took up a hobby in their early teens and it needed financing.

Dont want to use a cash savings account as they are still very young and I am wary of inflation eroding the relative value. Obviously I am aware shares go up and down.

Any advice would be much appreciated.

Comments

  • eskbanker
    eskbanker Posts: 30,393
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    As you say, access to JISA contents isn't possible until the child is 18 - many see this as a positive but if you take the opposite view then that's a good reason not to use a JISA!

    Using a parent's ISA allowance instead is certainly possible but leaves the money legally owned by the parent, using up some of their own ISA allowance and counting as parental assets in the event of means testing, divorce or even death. When the child turns 18, JISA money can be transferred directly into other ISAs for the child (i.e. without being subject to annual ISA allowances), whereas if the money was in someone else's account it would count as new contributions into an adult ISA if that was desired.

    There are no right or wrong answers though....
  • xylophone
    xylophone Posts: 44,139
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    It would be possible to set up a bare trust account for the child - the trustees would be able to withdraw funds for the benefit of the child before he was 18 but at 18 he would have the legal right to access and control of what was left.

    Example

    https://www.hl.co.uk/news/articles/archive/bare-trusts-and-investing-for-future-school-fees
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