Lump sum gift to grandchildren - what to do?

[TheInternet]

Grandparent wishes to gift lump sum to each of their grandchildren which is intended to be used to pay for education.

Grandchildren currently 0-5yrs, money will not be needed for 7 years minimum.

What is the best way to make a gift of this sort?

Whose name should any account be in (child/parent/grandparent)?

Any recommended trusts/investments/accounts to look at? Lower risk preferred, but not necessarily zero risk.

TIA, and a happy new year!

[xeny]

Probably equities to at least some extent for that duration.

Probably not in the grandparent's name - get started on getting it safe from inheritance tax.

If you're happy for the children to have control at 16/18, a JISA maybe?

If you don't trust the child and have spare adult ISA allowance, then the parents' names.

[red_slr]

How old is grandparent, how is their health?

[Hoofy]

xeny said:

Probably equities to at least some extent for that duration.

Probably not in the grandparent's name - get started on getting it safe from inheritance tax.

If you're happy for the children to have control at 16/18, a JISA maybe?

If you don't trust the child and have spare adult ISA allowance, then the parents' names.

Isn't doing any of that subject to IHT? (Genuine question.)

[TheInternet]

Grandparent in good health, thanks.

The money cannot be locked away until the grandchildren are 18 as it is to pay for school fees as opposed to university fees. In light of that presumably it needs to be in the parents name so they can spend it accordingly?

[BoRED S2upid]

We opened a child isa with HL which anyone can pay into as cash then we invest in a few funds for long term. Lump sums have the 7 year rule so if they are in good health then inheritance tax won’t be a problem.

[xeny]

Hoofy said:

Isn't doing any of that subject to IHT? (Genuine question.)

If they survive for 7 years after the date of the gift, there's no IHT. If less, the tax is incurred on a sliding scale.

[red_slr]

TheInternet said:

Grandparent in good health, thanks.

In which case just send the cash to the parents and let them sort it if you are willing to take the gamble. Assuming:

The parents don't die also within 7 years
The parents are trust worthy to keep the money for the child.

IYSWIM.

IANAFA!!

[TFP]

xeny said:

Hoofy said:

Isn't doing any of that subject to IHT? (Genuine question.)

If they survive for 7 years after the date of the gift, there's no IHT. If less, the tax is incurred on a sliding scale.

No, this isn’t quite right, but I am sure we’ll intentioned.

Taper Relief will only apply to gifts in excess of the Nil Rate Band, so only where cumulative gifts in the preceding 7 years total £325,000 the gift over this amount may benefit from a sliding scale.

[xeny]

Apologies and thanks - your post is perfectly correct - I really wanted to get across the point that it saves paperwork (and potentially tax) if you move any monetary gifts like this around at least 7 years before a death certificate.

I've known too many people who because they were reluctant to talk about mortality with their relatives left them paying entirely unnecessary IHT :-/

Of course do your own research, and in particular understand the situation with gifts with reservation of benefit before going crazy with assets though.

[Hoofy]

xeny said:

Hoofy said:

Isn't doing any of that subject to IHT? (Genuine question.)

If they survive for 7 years after the date of the gift, there's no IHT.

That's what I thought. I am not sure of the benefit of the suggestions you made then.

[xeny]

Hoofy said:

xeny said:

Hoofy said:

Isn't doing any of that subject to IHT? (Genuine question.)

If they survive for 7 years after the date of the gift, there's no IHT.

That's what I thought. I am not sure of the benefit of the suggestions you made then.

If it remains in the grandparents' name I suspect it wouldn't be considered a gift, and hence the 7 year clock wouldn't start. - hence either JISA or parental ISA if there is space.

[Jockman]

Instead of a lump sum make it a regular payment out of surplus income.

[Hoofy]

xeny said:

Hoofy said:

xeny said:

Hoofy said:

Isn't doing any of that subject to IHT? (Genuine question.)

If they survive for 7 years after the date of the gift, there's no IHT.

That's what I thought. I am not sure of the benefit of the suggestions you made then.

If it remains in the grandparents' name I suspect it wouldn't be considered a gift, and hence the 7 year clock wouldn't start. - hence either JISA or parental ISA if there is space.

But if that's the case, at the moment it is transferred doesn't the IHT issue kick in? Sorry, I'm having a thicko moment here.

[xeny]

Hoofy said:

But if that's the case, at the moment it is transferred doesn't the IHT issue kick in? Sorry, I'm having a thicko moment here.

It feels like we're missing each other's point somehow - what exactly do you mean when you say "doesn't the IHT issue kick in" ?

[Hoofy]

xeny said:

Hoofy said:

But if that's the case, at the moment it is transferred doesn't the IHT issue kick in? Sorry, I'm having a thicko moment here.

It feels like we're missing each other's point somehow - what exactly do you mean when you say "doesn't the IHT issue kick in" ?

The 7 year rule kicks in from the moment you give someone some money doesn't it?

[xeny]

Hoofy said:

The 7 year rule kicks in from the moment you give someone some money doesn't it?

Yes - my reasoning is that you want it to kick in as soon as possible, so you've got the best possible chance of 7 years passing between the transfer and anything unfortunate happening to the giver.

[Hoofy]

xeny said:

Hoofy said:

The 7 year rule kicks in from the moment you give someone some money doesn't it?

Yes - my reasoning is that you want it to kick in as soon as possible, so you've got the best possible chance of 7 years passing between the transfer and anything unfortunate happening to the giver.

Ahh, I am with you now. Yes, that's my thinking, too. I guess it's the issue of giving a lump sum to the grandchildren who might just by £20k's worth of Ninjago toys.

[anonymous-user]

Jockman said:

Instead of a lump sum make it a regular payment out of surplus income.

This is well worth looking into, my step mother does it for my cousin and if planned is totally free of tax.

[Jockman]

Inkyfingers said:

Jockman said:

Instead of a lump sum make it a regular payment out of surplus income.

This is well worth looking into, my step mother does it for my cousin and if planned is totally free of tax.

Glad someone’s paying attention