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  • FIRST POST
    • mcsteely
    • By mcsteely 7th Mar 18, 1:15 PM
    • 6Posts
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    mcsteely
    Saving for grandchildren, but keeping control..
    • #1
    • 7th Mar 18, 1:15 PM
    Saving for grandchildren, but keeping control.. 7th Mar 18 at 1:15 PM
    I have recently become a father for the first time and my parents would like to open a savings account for their grandson.

    My wife and I would like to keep control of this account so we can decide when he gets access to the money.

    What is the best type of account for these purposes?

    With a JISA the child automatically gets access to it on their 18th birthday, but what other options are there?
Page 1
    • xylophone
    • By xylophone 7th Mar 18, 1:30 PM
    • 25,565 Posts
    • 15,099 Thanks
    xylophone
    • #2
    • 7th Mar 18, 1:30 PM
    • #2
    • 7th Mar 18, 1:30 PM
    Your parents can decide to keep the money in their own hands (perhaps in their own ISAs) and gift the money at a time of their choosing.

    They can set up a discretionary trust. They should take legal advice if going this route.

    Otherwise, whether in a JISA or in an account in bare trust, the child has the absolute legal right to access at the age of 18.
    • mcsteely
    • By mcsteely 7th Mar 18, 1:46 PM
    • 6 Posts
    • 1 Thanks
    mcsteely
    • #3
    • 7th Mar 18, 1:46 PM
    • #3
    • 7th Mar 18, 1:46 PM
    Thanks for your response.

    Am I right in thinking gifting the money at a later date have an impact on inheritance tax?

    Can you have both a JISA and an ISA?
    • AnotherJoe
    • By AnotherJoe 7th Mar 18, 1:58 PM
    • 9,601 Posts
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    AnotherJoe
    • #4
    • 7th Mar 18, 1:58 PM
    • #4
    • 7th Mar 18, 1:58 PM
    Depends how much money and when they die.
    If its less than £3k a year its not an issue.

    If you save into an ISA on her behalf, but in your name, you then have control. The main reason not to do that would already be using up full ISA allowance.

    If GP or you opened an ISA up for them but mentioned in wills as to be given to her (or even given to you but on the understanding you would pass it on) that would work.

    If you/they contribute to an ISA but under the £20k limit, they could allocate a particular fund within the ISA to keep it clear which is which and mention that in the will
    • xylophone
    • By xylophone 7th Mar 18, 1:59 PM
    • 25,565 Posts
    • 15,099 Thanks
    xylophone
    • #5
    • 7th Mar 18, 1:59 PM
    • #5
    • 7th Mar 18, 1:59 PM
    Am I right in thinking gifting the money at a later date have an impact on inheritance tax?
    This might be the case depending on individual circumstances.

    Can you have both a JISA and an ISA?
    Under current rules, it would be possible for the child to have both his JISA and an ISA once he reaches the age of 16.

    Both the JISA and the ISA would be in the sole name of the child.

    https://moneyfacts.co.uk/guides/savings/junior-isa-loophole-for-16-and-17-year-olds020212/

    https://www.gov.uk/junior-individual-savings-accounts
    • bowlhead99
    • By bowlhead99 7th Mar 18, 2:21 PM
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    bowlhead99
    • #6
    • 7th Mar 18, 2:21 PM
    • #6
    • 7th Mar 18, 2:21 PM
    Am I right in thinking gifting the money at a later date have an impact on inheritance tax?
    Originally posted by mcsteely
    Can you have both a JISA and an ISA?
    Who do you mean by "you" in that sentence.

    A child can have a JISA (junior ISA) but can't control it until they are old enough

    An adult can have an ISA

    A 16-yr old could have both, but that's not relevant here as you're talking about a new born.

    So: you could or your parents could put a bit of money for them in a stocks and shares JISA in the name of the grandson, which you will control for now but the son will be able to access at 18, and separately you or your parents can invest some more money in your own ISAs which is still your )their money rather than the child's money and the child doesn't have automatic right to access it unless you later gift it to them.

    The money that's the child's money (eg in a JISA) belongs absolutely to the child (even though they can't withdraw until 18) and so if you have debt collectors chasing you or you're claiming means-tested benefits, the money won't be seen as yours. A potential advantage. Another is the fact that if you get it into the child's name now it counts as a gift *now* for inheritance tax purposes... while if instead they only gift it in 2038 and then die in 2039 it would be included in their estate for IHT because recent gifts are added back to the value of an estate before calculating how big it is (to stop people giving away money on their deathbed to avoid IHT).

    If IHT is not going to be a problem because the grandparents' estate won't be bigger than the IHT allowances anyway, the 'advantage' of doing an early gift is not really an advantage from that perspective unless they win the lottery and have a surprisingly large estate at the end. So they may prefer to not worry about getting it out of their name and your name, and just keep control in their own ISA or have you keep control in your own ISA.

    A compelling reason to have someone other than the child keeping control of it, would be in case you raise the child to be a disrespectful idiot who would blow it all on something stupid as soon as he hits his 18th and grabs the money. If they are old fashioned and think that he won't be brought up to be able to make responsible life choices until he's 21 or 25, they might prefer to ignore the JISA opportunity and keep control (or have you keep control) until you are all satisfied he is a nice responsible young man. After all, the adult ISA limit is £20k per person per year which is more than enough for most people to accommodate some grandson money within their own Investments.

    However if they can't trust you to raise him well, they probably can't trust you with the money either
    • AnotherJoe
    • By AnotherJoe 7th Mar 18, 4:53 PM
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    AnotherJoe
    • #7
    • 7th Mar 18, 4:53 PM
    • #7
    • 7th Mar 18, 4:53 PM
    However if they can't trust you to raise him well, they probably can't trust you with the money either
    Originally posted by bowlhead99
    Easy to be glib, but i know a few people with out of control teenagers/young adults making stupid (and in one case close to suicidal) life decisions where there are either mental health issues or simply a child "that's always been like that" from a very early age, whilst other siblings are well within the middle of the bell curve of behaviour.
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