What long-term savings vehicle to set up for out daughter?

[CoolHands]

Please help. I don't want a savings vehicle as in stocks & shares or whatever, what I need is:

For myself and my wife to save a regular amount each into an account (for the long term benefit of our daughter - likely to pay for or towards her university fees). However a) the account must not belong to my daughter ie a Junior ISA as we don't want her to have control of it when she turns 18 and b) it must require both mine and my wife's signature to get the money out (to protect it if we get divorced and one of us goes do-lally and wants to blow it on holiday).

Do we just open a joint account in our own names and pay into it? Is this bad tax-wise? Should we look into a bare trust? (paying a solicitor to draw this up puts me off)

Any advice (simple) please. We are not well off and have no ISAs of our own (if that makes a difference to potential advice). And can only afford to start putting £100 a month each towards this for the next year or so. I MUST do something soon as we talked about this for about 5 years already and we've done nothing.

thanks

[davepoth]

If you are willing to put a bit of work in there is money to be made. I definitely think putting it in her name is the way to go - at least until a week before she's 16

There are much better rates available for kids than there are for adults. For example, this:

http://www.halifax.co.uk/savings/accounts/junior-s...

6% is a fantastic return in the current climate, and it's tax free to boot since kids don't pay interest on savings income.

If you want to maximise your returns there will be an element of shopping around - taking the above as an example, after 12 months the good rate ends and the money is deposited into a standard account which will have a rubbish rate. You'll need to withdraw the money and put it elsewhere to keep it accruing.

ISA-wise you can get around 3.25% at the moment, but again there are deals around. Back to the Halifax again (I'm not advertising!) and you can get 4% so long as you are an existing ISA holder.

http://www.halifax.co.uk/isas/cash-isas/junior-cas...

However, you only need to put £1 into an adult ISA for that to work, so it's not a great loss.

All of the above was stolen shamelessly from moneysavingexpert.com, which is a great website for what you want to do.

[Simpo Two]

These interest rates represent discrimination against adults!

Anyone fancy a legal scrap?

At best it is discriminating against people on grounds of age.





Jeeper, PC crap is cool when you can spin it the way you want... where do I sign?

[fido]

Simpo Two said:

Anyone fancy a legal scrap?

At best it is discriminating against people on grounds of age.

Price discrimination is legal for age / status (e.g. students)!

[PhilboSE]

davepoth said:

6% is a fantastic return in the current climate, and it's tax free to boot since kids don't pay interest on savings income.

OP just needs to be aware that if the annual interest on the child account is over £100 AND the money came from the parents then the parents have to declare the interest on their Self Assessment (and pay the tax).

At 6% that would be a balance of £1667, so well within the "university fees" zone the OP quoted.

If the money comes from a grandparent then it's all OK, so maybe the parents & grandparents could come to an arrangement...

[CoolHands]

thanks all

but that means the money is the childs and we specifically don't want that. I think we're going to have to just open an isa in our own names so we can control it

[keith333]

My dad used to put money in an account for my sister and I when we were kids and occasionally had to sign stuff, but we had no idea which bank or any details so parents had complete control.

[coetzeeh]

Completely left field but I remember laughing when I read an article 10 years ago where a chap bought a Carrera 2.7 RS for £45k as an inventment for his 3 yo son...what a wise decision that turned out to be!

[Fatrat]

I know you said no stocks and shares but we put away a monthly amount in a section of funds for our son (via Fidelity but there are plenty of people out there offering that service) and as we could take a long-term view the returns have been handsome and far out-stripped anything we could have got in just a savings account.

Wrapped in a ISA in my name its meant that I keep control and can filter the money to him as he requires it

[williaa68]

Niot sure why you say no funds for such a long term investment but if you can get past that, as you don't use your own ISA allowances, you could save £100 a month into an ISA and invest in a cheap ETF. You can the pass the money along as you wish. I don't think you can do s joint ISA though so one of you is going to have to trust the other.

My wife and I each use our ISA allowances so we save £100 a month into the foreign and colonial investment trust via their bare trust scheme. Been doing that for about 8 years and the pot is growing nicely. I haven't benchmarked it but it is simple and low cost.

[BoRED S2upid]

CoolHands said:

thanks all

but that means the money is the childs and we specifically don't want that. I think we're going to have to just open an isa in our own names so we can control it

You can control it until they are old enough then hand it over to them. Isn't that what you want to do anyway? no different to saving in your name then on their 16th or 18th birthday you hand them a cheque or in the case of this ISA you hand them the account numbers.

[944fan]

We have childrens stakeholder pensions for both our daughters. We pay in each month and get the 40% tax relief on top of what we get on our own pensions. When they get old enough they can take it over.

Might not be what you are looking for as it is very long term but another option.

[Paul O]

BoRED S2upid said:

You can control it until they are old enough then hand it over to them. Isn't that what you want to do anyway? no different to saving in your name then on their 16th or 18th birthday you hand them a cheque or in the case of this ISA you hand them the account numbers.

Not quite the same. I think the OP wants to be able to choose when to gift the money to his daughter, as would I. At 18 years old, they might not be financially responsible enough to do their future-selves proud with the cash. With the childs ISA you have no choice in that either - and once its in, you can't take it out.

[CoolHands]

Hi

for future reference we used HSBC 'Future Saver for Children' account. It is in my wifes name (ie her account) with our daughter as the reference or something. (To allow you to open it I suppose - so adults don't open one in their own name as it pays better interest rates).

http://www.hsbc.co.uk/1/2/savings-accounts/future-...

With an R85 form filled out in the child's name (as the beneficiary of the interest) the interest will be paid gross ie won'y be taxed as if it was our own adult account.

https://www.gov.uk/government/publications/income-...

cheers all

[Welshbeef]

coetzeeh said:

Completely left field but I remember laughing when I read an article 10 years ago where a chap bought a Carrera 2.7 RS for £45k as an inventment for his 3 yo son...what a wise decision that turned out to be!

13yo at secondary school his mates dreaming about C2 VTS's or such like as their first car - hey what about you? Oh only a 911 2.7 RS