What to do with 10k for child?
bytheseas
Posts: 51 Forumite
I have a 3 year old daughter who's just inherited 10k, currently sitting in my own bank account.
Looking for something which is 100% safe. Literally 0 risk, I would hate myself forever if I lost her money. But also something that I can keep control of. I want to give it to her for a first car or maybe deposit on a house but not just for it to automatically become hers at 18 and be wasted on parties (that's what I would have done at 18)
Something which will also increase in value over time would be a bonus too.
Thanks everyone.
Looking for something which is 100% safe. Literally 0 risk, I would hate myself forever if I lost her money. But also something that I can keep control of. I want to give it to her for a first car or maybe deposit on a house but not just for it to automatically become hers at 18 and be wasted on parties (that's what I would have done at 18)
Something which will also increase in value over time would be a bonus too.
Thanks everyone.
Mortgage: £60,744.22 Student Loans:£16,726.59
Joining Debt (08/04/2018) : £90,283.01 Current Debt: £77,470.81
Goal: Debt free by 2033
Joining Debt (08/04/2018) : £90,283.01 Current Debt: £77,470.81
Goal: Debt free by 2033
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Comments
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What you may like to do with the money (age 18) and what the terms of the inheritance stipulate may be two completely different things.
How was the inheritance worded?
EDIT:Looking for something which is 100% safe. Literally 0 riskSomething which will also increase in value over time would be a bonus too.Personal Responsibility - Sad but True
Sometimes.... I am like a dog with a bone0 -
who's just inherited 10k,But also something that I can keep control
If this bequest has "indefeasibly vested" in your child (that is to say that it is hers absolutely and the only reason that she cannot control it now is by reason of the fact of her minority so that she cannot give good receipt), then you have no legal right to keep control beyond her 18th birthday.
Strictly speaking, you should have opened an account in her name with you as bare trustee into which the money should have been paid.
You can make the maximum contribution into a JISA now - if you wish to stay in cash the best rate is currently offered by Coventry BS.
https://www.coventrybuildingsociety.co.uk/consumer/product/savings/children/junior-cash-isa.html
If you have (or are prepared to open) a current account with Nationwide,
a Future Saver (at 3.5%) can be opened for your child (£5000).
https://www.nationwide.co.uk/products/savings/future-saver/features-and-benefits
You can transfer out of this into the JISA in the next tax year.
The small balance can be held in a child account and transferred into the NW account in the new tax year.
https://www.thisismoney.co.uk/money/saving/article-1583863/Best-savings-rates-Junior-Isas-children-s-accounts.html
Obviously you would keep an eye on interest rates and move as required.0 -
in 15 years time your no risk strategy would lower the value of her inheritance dramatically as inflation would eat away much of its value in that time.
Junior cash ISAs would just about keep up with inflation at the moment, but you will have to feed the money in over 3 separate payments in separate financial years. 15 years is certainly long term enough to put at least some of it in equities to have a decent chance of some growth.0 -
I will clarify. There's no will. This was just a verbal request for it to go to my daughter before passing.Mortgage: £60,744.22 Student Loans:£16,726.59
Joining Debt (08/04/2018) : £90,283.01 Current Debt: £77,470.81
Goal: Debt free by 20330 -
This could add additional complexity. For example if you put it in to a savings account in your daughters name, from your account, then the tax man is likely to invoke the £100 income taxation rule on it.
Additionally, any money you deposit in to an account in your daughters name (bare trust) will legally belong to your daughter and you will no longer have any say over the money.
Going back to basics, I assume the intention of the inheritance was clearly articulated, i.e. does it mean that your daughter can have access to the money as she gets older, i.e. when she's 7 and wants a new bike you would use some of the money to allow her to purchase it? If not, was it an inheritance that belongs to your daughter and she becomes legally responsible for the money on her 18th birthday. Either way, this is looking far from an ideal situation.
Based on what you have said I do not think you have any alternative other than the money belongs to your daughter come age 18.
Going back to the side issue of what to do with it.... Based on her age my opinion is that some of it should be invested (possibly a JISA) and some of it should be put in to a savings account. If it were my DD then the majority of it would be invested, 80%. But I am comfortable with investment risk, although for 15 years this risk is hugely mitigated.Personal Responsibility - Sad but True
Sometimes.... I am like a dog with a bone0 -
A JISA can have a cash component and a shares component if desired.
https://www.gov.uk/junior-individual-savings-accounts
https://www.vanguardinvestor.co.uk/investing-explained/stocks-shares-junior-isa
Are you saying that the deceased gave the money to you before death saying that it was an unconditional gift for your daughter?0 -
Here we go again! Somebody who's au fait with the legality should consider proposing this topic as a sticky?
I think the crucial point is this: was the money given to you YOU, as the child's guardian, to be spent/saved/invested as seen fit, or was it given to your daughter, with you as the trustee?
If the former: you say you want zero risk. That's very boring but so be it. Use savings bonds, interest-paying current account, regular savings accounts, and possibly your own ISA allowance to maximise the interest while keeping a portion of the funds instantly accessible.
If the latter: shove it all into a Junior ISA(s) ASAP. There are also some good Regular Savers available for children, one of the best is by Halifax and pays 4.5%. The downside here is that the money *will* be controlled by your daughter at age 16 (for example, if she wishes to choose a new ISA provider) and can be freely accessed at 18. If the money was a gift to *her*, there's not much you can do about that.: )0 -
Just to clarify If You are acting as trustee for the money then you have certain legal responsibilities you need to Google what are the responsibilities of a trustee or something similar
to answer your specific question given that you are investing for a 15 year period you need to put all of the money into equities as soon as possible
you should really speak to a financial advisor in fact if you are a trustee then you have a duty to get financial advice it doesn't necessarily mean paid for financial advice but you need to speak to someone
don't even think of putting it in a savings account you might as well stand in the shower and start tearing up banknotes - over a 15-year period I would suggest on a £10,000 inheritance standng in the shower and tear up £250 of it very yearwould be about right0 -
I will clarify. There's no will. This was just a verbal request for it to go to my daughter before passing.
Sorry to ask about a sensitive subject, but could you tell us whether:- the deceased gave you the money before they died, telling you it was for your daughter?
- or they didn't give you the money before death, but told you verbally "£10k of what you will inherit from me should go to your daughter"?
Also, are you saying there was literally no will at all, i.e. the estate was distributed in accordance with the laws of intestacy?
If it's (1), then I believe the money really is hers with you as a trustee, and she legally must have control of it at 18.
If it's (2) and there was no will, then the deceased's request is a wish that is not legally binding on you - of course, you feel (as you should!) a morally binding obligation to do what's best for her. But legally the money is yours and you can choose when to gift it to her, which doesn't have to be at 18. You should be aware in that case that if you open a "child account" or JISA, then at that point it becomes hers and she has to have control at 18. So those accounts may not be what you want.
If the money wasn't given to you before death, and there was a will, this can get uncertain, because verbal alterations to a will can be binding - which would make the money legally your daughter's, and put you in the role only of a trustee until 18. That would definitely be something to talk to a solicitor about.0 -
Here's what happened. She was diagnosed with terminal cancer. Had no will up until that point. Decided to make one and send it off. She passed away much faster than was expected when we got in touch with them the will had apparently failed processing.
Prior to her death we had had a conversation where she had told me I would be getting such and such and my daughter would be getting such and such. These monies mainly came from life insurance with a little savings too.
We didn't have to go through probate and my step father passed me a cheque for mine and my daughters money once the insurance paid.Mortgage: £60,744.22 Student Loans:£16,726.59
Joining Debt (08/04/2018) : £90,283.01 Current Debt: £77,470.81
Goal: Debt free by 20330
This discussion has been closed.
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