Putting share in trust for Grandkids
Discussion
Dear All,
I have been looking into matters as to how I can help provide for my Grandkids future, both in the long and medium terms.
Long term, I'm looking at SIPPS for each of them (3 in number) and hope to be able to allocate £20k each for them , enough to max out their plan, for at least the first 7 years. I would also be interested to hear if that could be carried on in any manner after , potentially my demise. Because at the end of the day , you just do not know what tomorrow could bring. I'm thinking if monies could be allocated from my estate to continue paying into the pensions,but, I'm mindfull that fees for enabling such (if it can be done) may be considerable.
However, I digress. In the medium term, I've been trying to suss out an effective method of investing for when they are 18. The first thing I thought of was shares in their name, but was truly miffed to find that if the shares earn more than £150 a year, our glorious politicians tax the childs parents. A nasty piece of legislation for sure.
I've been looking at junior isa's , et al, and to be honest , I'm not overly impressed, nor by potential fees when going through a management company. So,part of the situation for me at the moment, is that I hold a share portfolio, which I manage myself, current value approx £120k .I'm pondering allocating approx half of that value, and putting the shares into trust for the 3 of them. If this can be done, would it shield them from tax liabilities ?
The particular shares I am looking at all receive drip or scrip dividends , shares received, instead of cash . Hence compound interest comes into play.
I'd look at stipulating that when the eldest turns 18 , they would receive one third of the shares immediately after the first dividend payment after their 18th birthday.The second would receive half the remaining shares under the same terms as the first, and the youngest to receive the remainder of the shares in their entirety,again, same terms as the other 2.
So, can it be done? I'm baseing all this on the fact that property can be put in trust, so hopefully other assets as well? If possible, who do I consult, an FA , or is this lawyer territory? Whilst I can readily imagine their could be tidy cost in setting up such trust, could I be letting myself into fees ongoing? Part of the reasoning behind scrip/dripdividends is that there is no reinvestment to be done, all that the share manager would need to do is recieve dividend notifications and file them, so to speak.
Batting on another leg, once set up, could I manage the fund myself, as a trustee, with other trustees of the shares taking over should I snuff it? Obviously avoiding ongoing fees from a management perspective altogether.
All a bit complex, but hope it makes some sort of sense. Very likely that those with more knowledge than I are tutting and shaking their heads , but if you don't ask, you don't find out, any comments and/or potential pitfalls received with ears wide open.
Cheers
I have been looking into matters as to how I can help provide for my Grandkids future, both in the long and medium terms.
Long term, I'm looking at SIPPS for each of them (3 in number) and hope to be able to allocate £20k each for them , enough to max out their plan, for at least the first 7 years. I would also be interested to hear if that could be carried on in any manner after , potentially my demise. Because at the end of the day , you just do not know what tomorrow could bring. I'm thinking if monies could be allocated from my estate to continue paying into the pensions,but, I'm mindfull that fees for enabling such (if it can be done) may be considerable.
However, I digress. In the medium term, I've been trying to suss out an effective method of investing for when they are 18. The first thing I thought of was shares in their name, but was truly miffed to find that if the shares earn more than £150 a year, our glorious politicians tax the childs parents. A nasty piece of legislation for sure.
I've been looking at junior isa's , et al, and to be honest , I'm not overly impressed, nor by potential fees when going through a management company. So,part of the situation for me at the moment, is that I hold a share portfolio, which I manage myself, current value approx £120k .I'm pondering allocating approx half of that value, and putting the shares into trust for the 3 of them. If this can be done, would it shield them from tax liabilities ?
The particular shares I am looking at all receive drip or scrip dividends , shares received, instead of cash . Hence compound interest comes into play.
I'd look at stipulating that when the eldest turns 18 , they would receive one third of the shares immediately after the first dividend payment after their 18th birthday.The second would receive half the remaining shares under the same terms as the first, and the youngest to receive the remainder of the shares in their entirety,again, same terms as the other 2.
So, can it be done? I'm baseing all this on the fact that property can be put in trust, so hopefully other assets as well? If possible, who do I consult, an FA , or is this lawyer territory? Whilst I can readily imagine their could be tidy cost in setting up such trust, could I be letting myself into fees ongoing? Part of the reasoning behind scrip/dripdividends is that there is no reinvestment to be done, all that the share manager would need to do is recieve dividend notifications and file them, so to speak.
Batting on another leg, once set up, could I manage the fund myself, as a trustee, with other trustees of the shares taking over should I snuff it? Obviously avoiding ongoing fees from a management perspective altogether.
All a bit complex, but hope it makes some sort of sense. Very likely that those with more knowledge than I are tutting and shaking their heads , but if you don't ask, you don't find out, any comments and/or potential pitfalls received with ears wide open.
Cheers
Google ‘Bare Trust’ - this is a means of putting shares/investments into a trust for the benefit of a child that they can access when they come of age. This should be perfect for you as a grand parent to achieve what you want (my father has setup the same for each of his grand children).
The main things remember about these are that the child’s own parents cannot put money into the child’s bare trust or it will invoke tax liabilities as if it were the parent’s account.
The main things remember about these are that the child’s own parents cannot put money into the child’s bare trust or it will invoke tax liabilities as if it were the parent’s account.
Hosenbugler said:
Dear All,
I have been looking into matters as to how I can help provide for my Grandkids future, both in the long and medium terms.
Long term, I'm looking at SIPPS for each of them (3 in number) and hope to be able to allocate £20k each for them , enough to max out their plan, for at least the first 7 years. I would also be interested to hear if that could be carried on in any manner after , potentially my demise. Because at the end of the day , you just do not know what tomorrow could bring. I'm thinking if monies could be allocated from my estate to continue paying into the pensions,but, I'm mindfull that fees for enabling such (if it can be done) may be considerable.
However, I digress. In the medium term, I've been trying to suss out an effective method of investing for when they are 18. The first thing I thought of was shares in their name, but was truly miffed to find that if the shares earn more than £150 a year, our glorious politicians tax the childs parents. A nasty piece of legislation for sure.
I've been looking at junior isa's , et al, and to be honest , I'm not overly impressed, nor by potential fees when going through a management company. So,part of the situation for me at the moment, is that I hold a share portfolio, which I manage myself, current value approx £120k .I'm pondering allocating approx half of that value, and putting the shares into trust for the 3 of them. If this can be done, would it shield them from tax liabilities ?
The particular shares I am looking at all receive drip or scrip dividends , shares received, instead of cash . Hence compound interest comes into play.
I'd look at stipulating that when the eldest turns 18 , they would receive one third of the shares immediately after the first dividend payment after their 18th birthday.The second would receive half the remaining shares under the same terms as the first, and the youngest to receive the remainder of the shares in their entirety,again, same terms as the other 2.
So, can it be done? I'm baseing all this on the fact that property can be put in trust, so hopefully other assets as well? If possible, who do I consult, an FA , or is this lawyer territory? Whilst I can readily imagine their could be tidy cost in setting up such trust, could I be letting myself into fees ongoing? Part of the reasoning behind scrip/dripdividends is that there is no reinvestment to be done, all that the share manager would need to do is recieve dividend notifications and file them, so to speak.
Batting on another leg, once set up, could I manage the fund myself, as a trustee, with other trustees of the shares taking over should I snuff it? Obviously avoiding ongoing fees from a management perspective altogether.
All a bit complex, but hope it makes some sort of sense. Very likely that those with more knowledge than I are tutting and shaking their heads , but if you don't ask, you don't find out, any comments and/or potential pitfalls received with ears wide open.
Cheers
Get some proper advice. The cost of cocking it up could quickly outweigh the professional fees.I have been looking into matters as to how I can help provide for my Grandkids future, both in the long and medium terms.
Long term, I'm looking at SIPPS for each of them (3 in number) and hope to be able to allocate £20k each for them , enough to max out their plan, for at least the first 7 years. I would also be interested to hear if that could be carried on in any manner after , potentially my demise. Because at the end of the day , you just do not know what tomorrow could bring. I'm thinking if monies could be allocated from my estate to continue paying into the pensions,but, I'm mindfull that fees for enabling such (if it can be done) may be considerable.
However, I digress. In the medium term, I've been trying to suss out an effective method of investing for when they are 18. The first thing I thought of was shares in their name, but was truly miffed to find that if the shares earn more than £150 a year, our glorious politicians tax the childs parents. A nasty piece of legislation for sure.
I've been looking at junior isa's , et al, and to be honest , I'm not overly impressed, nor by potential fees when going through a management company. So,part of the situation for me at the moment, is that I hold a share portfolio, which I manage myself, current value approx £120k .I'm pondering allocating approx half of that value, and putting the shares into trust for the 3 of them. If this can be done, would it shield them from tax liabilities ?
The particular shares I am looking at all receive drip or scrip dividends , shares received, instead of cash . Hence compound interest comes into play.
I'd look at stipulating that when the eldest turns 18 , they would receive one third of the shares immediately after the first dividend payment after their 18th birthday.The second would receive half the remaining shares under the same terms as the first, and the youngest to receive the remainder of the shares in their entirety,again, same terms as the other 2.
So, can it be done? I'm baseing all this on the fact that property can be put in trust, so hopefully other assets as well? If possible, who do I consult, an FA , or is this lawyer territory? Whilst I can readily imagine their could be tidy cost in setting up such trust, could I be letting myself into fees ongoing? Part of the reasoning behind scrip/dripdividends is that there is no reinvestment to be done, all that the share manager would need to do is recieve dividend notifications and file them, so to speak.
Batting on another leg, once set up, could I manage the fund myself, as a trustee, with other trustees of the shares taking over should I snuff it? Obviously avoiding ongoing fees from a management perspective altogether.
All a bit complex, but hope it makes some sort of sense. Very likely that those with more knowledge than I are tutting and shaking their heads , but if you don't ask, you don't find out, any comments and/or potential pitfalls received with ears wide open.
Cheers
There are several ways to do this and others have said, getting the right, professional advice after maybe getting some steers on here is probably the best route.
The one thing that I would add that hasn’t been covered is to consider how the portfolios will be managed when you are kaput.
For example, I tend to favour the personal pension route as it is a trust that is pre defined and has close to zero set up and maintenance costs compared to many other forms of trusts. At the same time, it is probably more politically protected than other forms of trusts given the size of the electorate that would be being attacked.
The icing on the cake being also that tax rebate that will massively accelerate growth potential above and beyond any other solution.
To cap it all, you are giving your grandchildren an amazing start in life and it might encourage them to add to their pension sooner in life than later. It can even help them in their 20s to buy their first home as it leaves them free to decide not to pay in to a pension for a few years while they get their first mortgage under control.
More importantly, it helps alleviate life long worry with regards to doing what they want to do for a living as opposed to feeling obliged to take a slightly different job for a bit more money to save for their retirement.
Anyway, back to the actual investment aspect. You buy them a portfolio of shares or trusts or ETFs etc and you can manage that all too well while compos mentis but when making the initial investments you need to consider what happens to the investment management and planning when you are no longer capable.
It’s not uncommon for grandchildren to inherit a portfolio of worthless junk from a well meaning grandparent who bought shares that were right to buy decades ago but have since failed.
I would suggest that the initial asset structure needs a lot of intelligent thought but also so does deciding in advance on the market professional that you would want to take over the basic management.
I think it may actually be prudent to consider setting this up with an IFA at the outset so that your remit can be continued by an impartial professional after you are no longer able to and until your grandchildren reach the age of making their own decisions re the management.
Something else to consider is that I think you can PET more than £3k into a child’s pensionnper annum you just don’t get the tax breaks but part of what you are wanting to achieve is a very secure and cost effective trust that will have the highest positive impact on the entire lifespan of your grandchildren? One of the pension gurus on here can confirm if that is possible etc.
The one thing that I would add that hasn’t been covered is to consider how the portfolios will be managed when you are kaput.
For example, I tend to favour the personal pension route as it is a trust that is pre defined and has close to zero set up and maintenance costs compared to many other forms of trusts. At the same time, it is probably more politically protected than other forms of trusts given the size of the electorate that would be being attacked.
The icing on the cake being also that tax rebate that will massively accelerate growth potential above and beyond any other solution.
To cap it all, you are giving your grandchildren an amazing start in life and it might encourage them to add to their pension sooner in life than later. It can even help them in their 20s to buy their first home as it leaves them free to decide not to pay in to a pension for a few years while they get their first mortgage under control.
More importantly, it helps alleviate life long worry with regards to doing what they want to do for a living as opposed to feeling obliged to take a slightly different job for a bit more money to save for their retirement.
Anyway, back to the actual investment aspect. You buy them a portfolio of shares or trusts or ETFs etc and you can manage that all too well while compos mentis but when making the initial investments you need to consider what happens to the investment management and planning when you are no longer capable.
It’s not uncommon for grandchildren to inherit a portfolio of worthless junk from a well meaning grandparent who bought shares that were right to buy decades ago but have since failed.
I would suggest that the initial asset structure needs a lot of intelligent thought but also so does deciding in advance on the market professional that you would want to take over the basic management.
I think it may actually be prudent to consider setting this up with an IFA at the outset so that your remit can be continued by an impartial professional after you are no longer able to and until your grandchildren reach the age of making their own decisions re the management.
Something else to consider is that I think you can PET more than £3k into a child’s pensionnper annum you just don’t get the tax breaks but part of what you are wanting to achieve is a very secure and cost effective trust that will have the highest positive impact on the entire lifespan of your grandchildren? One of the pension gurus on here can confirm if that is possible etc.
I would suggest you reconsider the Junior ISA as you can get the sums you are looking at in within 5 years and there are no tax issues to worry about (other than PETs).
We have recently been working with a client whose husband used to run a share portfolio for them both (ISAs and GIAs) and who before his death told here to find someone she could trust to manage it when he was gone (it was quite sizeable).
So you may want to consider including such an instruction in your own will. You are also perfectly free to set out how your estate is passed on regarding continuing such contributions from it after death (though I would suggest a solicitor is best place to set this up for you for a one off fee, rather than a financial adviser who will take an annual fee on top of any initial fee).
You can also get some very low cost investment managers. My own company would charge a fully inclusive fee from £20.52 a year per £3,600 (the maximum annual contribution) in a Junior Pension (I say this as a factual point, not by way of advertising) and Vanguard would be a few pounds cheaper for a £4,368 Junior ISA contribution (again, the maximum allowable and I didn't reference them for a pension as they don't offer one).
I don't know how this compares with the brokerage and platform costs of buying the shares directly, but it is something to consider (particularly when you factor in any tax that may be due - to you personally - on these investments).
The final thing I would add is to further clarify that whilst a trust would potentially generate a CGT and Income Tax liability for you as an individual, using a Junior Pension/SIPP or a JISA would utilize the tax free allowance of each grandchild on an individual basis and therefore not be connected at all to your own personal taxation.
We have recently been working with a client whose husband used to run a share portfolio for them both (ISAs and GIAs) and who before his death told here to find someone she could trust to manage it when he was gone (it was quite sizeable).
So you may want to consider including such an instruction in your own will. You are also perfectly free to set out how your estate is passed on regarding continuing such contributions from it after death (though I would suggest a solicitor is best place to set this up for you for a one off fee, rather than a financial adviser who will take an annual fee on top of any initial fee).
You can also get some very low cost investment managers. My own company would charge a fully inclusive fee from £20.52 a year per £3,600 (the maximum annual contribution) in a Junior Pension (I say this as a factual point, not by way of advertising) and Vanguard would be a few pounds cheaper for a £4,368 Junior ISA contribution (again, the maximum allowable and I didn't reference them for a pension as they don't offer one).
I don't know how this compares with the brokerage and platform costs of buying the shares directly, but it is something to consider (particularly when you factor in any tax that may be due - to you personally - on these investments).
The final thing I would add is to further clarify that whilst a trust would potentially generate a CGT and Income Tax liability for you as an individual, using a Junior Pension/SIPP or a JISA would utilize the tax free allowance of each grandchild on an individual basis and therefore not be connected at all to your own personal taxation.
DonkeyApple said:
To cap it all, you are giving your grandchildren an amazing start in life and it might encourage them to add to their pension sooner in life than later. It can even help them in their 20s to buy their first home as it leaves them free to decide not to pay in to a pension for a few years while they get their first mortgage under control.
I would temper this by saying that your grandchildren will likely thank you more for giving them immediate liquidity (ie unrestricted access to the principal) as a deposit than a locked-up accreting sum that they can’t access for the next (?) 50 years. By which time you will have been dead for 70 years!They might hit the lifetime allowance through their own contributions anyway.
NickCQ said:
DonkeyApple said:
To cap it all, you are giving your grandchildren an amazing start in life and it might encourage them to add to their pension sooner in life than later. It can even help them in their 20s to buy their first home as it leaves them free to decide not to pay in to a pension for a few years while they get their first mortgage under control.
I would temper this by saying that your grandchildren will likely thank you more for giving them immediate liquidity (ie unrestricted access to the principal) as a deposit than a locked-up accreting sum that they can’t access for the next (?) 50 years. By which time you will have been dead for 70 years!They might hit the lifetime allowance through their own contributions anyway.
Many thanks to all , some very valid points made. It looks like that a "Bare" trust is exactly what I'm looking at. I will of course be taking professional advice, regarding trustees to take over should I croak before the trust is entirely paid out. Of the 3 grandkids the eldest is 8 and the youngest a year in December. So the trust looks at existing for 17 years before being fully paid out. I'm hoping to still be here then (I'm 60's) but you never know. I know that the grandkids parents would not be able to put funds into the trust as tax laws change , but hopefully they can act as trustees, again, professional advice will be my guidance.
As for the actual shares to put in the trust, I've provisionally earmarked Shell "B" and Glaxo. Both pay dividends 4 times a year and offer Drip/Scrip, to my mind essential to help growth. I'd like a financial as a third, and maybe engineering for the fourth , we'll see. Perhaps finding shares in those sectors that give both good dividends and the Drip/Scrip facility may be difficult.Maybe a different investment vehicle other than shares may fit better , we will see, much brainstorming to do.
As for the junior sipps, I've not done a great deal of digging as yet but as said in my origianl post I can allocate funds to fully pay their allowance for 7 years, and am hoping to be able to invest at least £1500 a year in each sipp after that , hopefully more. As for managed funds in those 7 years, I 'm thinking maybe 4 low risk funds, 2 medium risk, and one higher risk.Well, thats as what I know at present. A lot more work yet to be done regarding actual investments, much research into charges and of course pick a provider. For most of my research I've been using the HL website some handy guides on there. Does anyone have any opinion regarding sipps providers, any that stand out for giving long term performance?
Cheers
P/S Regarding the Bare trust, I'm hoping to be able to set up just one trust in all three names , as against a trust for each of them. I'm sure I read that one trust can have more than one benificiary . Obviously, professional advice will explain the matter , but just in case does anyone know?
As for the actual shares to put in the trust, I've provisionally earmarked Shell "B" and Glaxo. Both pay dividends 4 times a year and offer Drip/Scrip, to my mind essential to help growth. I'd like a financial as a third, and maybe engineering for the fourth , we'll see. Perhaps finding shares in those sectors that give both good dividends and the Drip/Scrip facility may be difficult.Maybe a different investment vehicle other than shares may fit better , we will see, much brainstorming to do.
As for the junior sipps, I've not done a great deal of digging as yet but as said in my origianl post I can allocate funds to fully pay their allowance for 7 years, and am hoping to be able to invest at least £1500 a year in each sipp after that , hopefully more. As for managed funds in those 7 years, I 'm thinking maybe 4 low risk funds, 2 medium risk, and one higher risk.Well, thats as what I know at present. A lot more work yet to be done regarding actual investments, much research into charges and of course pick a provider. For most of my research I've been using the HL website some handy guides on there. Does anyone have any opinion regarding sipps providers, any that stand out for giving long term performance?
Cheers
P/S Regarding the Bare trust, I'm hoping to be able to set up just one trust in all three names , as against a trust for each of them. I'm sure I read that one trust can have more than one benificiary . Obviously, professional advice will explain the matter , but just in case does anyone know?
I would just add that your post is coming over as not fully appreciating that sipps and ISAs are just containers into which you put your investments.
The way that you have tied individual equities to one type of trust but seemingly switched to funds for another seems at odds to me.
In my mind you need to make two decisions, one is which is the right container/wrapper for what you want to achieve and the other is what you want to put into it/them. The two things are exclusive within the boundaries of what you can legally put in etc.
The question to ask is if you considered individual equities the best route for one trust type why did you then switch to funds when considering another trust type?
The wrapper choice is about which wrapper achieves the desired effect in the most cost efficient way. Three ISA’s with three fees and three minimum ticket dealing charges might transpire to be a hideous cost. Three SIPPs the same but offset by the huge tax advantage. A bare trust where all three pots are amalgamated, if that is possible, would save large amounts on dealing fees potentially but may have higher operational fees and fewer tax advantages.
The investment side has its own considerations. Do you choose individual equities or funds or a manager etc? You need to look at the dealing costs of each, the ongoing costs, the taxes and as you’ve already contemplated the risk aspect for the size of pot you are considering.
Equities may incur minimum tickets when dealing that make the comms huge. They also have SDRT to pay. And you’re rolling the dice on stock selection and very limited exposure. Funds have their own risks (how many grandparents have money intended for their grandchildren with Woodford?), they also have costs to hold and open that need to be understood. Plus, the similar risk to equities, depending on their structure and objectives, of going out of favour. The manager route seems unlikely due to the size of the funds involved and frankly, if you look at the sort of firms that specialisenin managing very small accounts such as Nutmeg Inwould hazard that an annuity underwriter would price you personally as a much better bet than Nutmeg
Going back to the equity side, if you pick the 6/7 most appropriate UK stocks then you’ve probably picked the 6/7 stocks that basically define the FTsE100 sonar that point why not look at the FTsE iShare as it’s the equity portfolio that you want but without Stamp Duty, cheaper dealing and it self manages its constituents. Performance would probably be less but mostly because risk was less.
The way that you have tied individual equities to one type of trust but seemingly switched to funds for another seems at odds to me.
In my mind you need to make two decisions, one is which is the right container/wrapper for what you want to achieve and the other is what you want to put into it/them. The two things are exclusive within the boundaries of what you can legally put in etc.
The question to ask is if you considered individual equities the best route for one trust type why did you then switch to funds when considering another trust type?
The wrapper choice is about which wrapper achieves the desired effect in the most cost efficient way. Three ISA’s with three fees and three minimum ticket dealing charges might transpire to be a hideous cost. Three SIPPs the same but offset by the huge tax advantage. A bare trust where all three pots are amalgamated, if that is possible, would save large amounts on dealing fees potentially but may have higher operational fees and fewer tax advantages.
The investment side has its own considerations. Do you choose individual equities or funds or a manager etc? You need to look at the dealing costs of each, the ongoing costs, the taxes and as you’ve already contemplated the risk aspect for the size of pot you are considering.
Equities may incur minimum tickets when dealing that make the comms huge. They also have SDRT to pay. And you’re rolling the dice on stock selection and very limited exposure. Funds have their own risks (how many grandparents have money intended for their grandchildren with Woodford?), they also have costs to hold and open that need to be understood. Plus, the similar risk to equities, depending on their structure and objectives, of going out of favour. The manager route seems unlikely due to the size of the funds involved and frankly, if you look at the sort of firms that specialisenin managing very small accounts such as Nutmeg Inwould hazard that an annuity underwriter would price you personally as a much better bet than Nutmeg
Going back to the equity side, if you pick the 6/7 most appropriate UK stocks then you’ve probably picked the 6/7 stocks that basically define the FTsE100 sonar that point why not look at the FTsE iShare as it’s the equity portfolio that you want but without Stamp Duty, cheaper dealing and it self manages its constituents. Performance would probably be less but mostly because risk was less.
Morning
Thanks all for your contributions. I t suddenly dawned on me over the weekend, that I really am making things hard for myself, by looking at 2 sets of investment strategy at the same time. With the inevitable result that I become overwhemmed with information, and getting the specifics of the strategies muddled up. So, I'm clearing my head for a week, and reaproaching matters, by addressing one at a time. I've already decided that it will be the long term investment addressed first, that 20% "bonus" on Junior sipps, can't be ignored. Assessing the different providers will be my first step. Still, thats for next week.
Cheers
Thanks all for your contributions. I t suddenly dawned on me over the weekend, that I really am making things hard for myself, by looking at 2 sets of investment strategy at the same time. With the inevitable result that I become overwhemmed with information, and getting the specifics of the strategies muddled up. So, I'm clearing my head for a week, and reaproaching matters, by addressing one at a time. I've already decided that it will be the long term investment addressed first, that 20% "bonus" on Junior sipps, can't be ignored. Assessing the different providers will be my first step. Still, thats for next week.
Cheers
JulianPH said:
I would suggest you reconsider the Junior ISA as you can get the sums you are looking at in within 5 years and there are no tax issues to worry about (other than PETs).
We have recently been working with a client whose husband used to run a share portfolio for them both (ISAs and GIAs) and who before his death told here to find someone she could trust to manage it when he was gone (it was quite sizeable).
So you may want to consider including such an instruction in your own will. You are also perfectly free to set out how your estate is passed on regarding continuing such contributions from it after death (though I would suggest a solicitor is best place to set this up for you for a one off fee, rather than a financial adviser who will take an annual fee on top of any initial fee).
You can also get some very low cost investment managers. My own company would charge a fully inclusive fee from £20.52 a year per £3,600 (the maximum annual contribution) in a Junior Pension (I say this as a factual point, not by way of advertising) and Vanguard would be a few pounds cheaper for a £4,368 Junior ISA contribution (again, the maximum allowable and I didn't reference them for a pension as they don't offer one).
I don't know how this compares with the brokerage and platform costs of buying the shares directly, but it is something to consider (particularly when you factor in any tax that may be due - to you personally - on these investments).
The final thing I would add is to further clarify that whilst a trust would potentially generate a CGT and Income Tax liability for you as an individual, using a Junior Pension/SIPP or a JISA would utilize the tax free allowance of each grandchild on an individual basis and therefore not be connected at all to your own personal taxation.
Junior ISAs are a very tax efficient vehicle and hold much attraction.We have recently been working with a client whose husband used to run a share portfolio for them both (ISAs and GIAs) and who before his death told here to find someone she could trust to manage it when he was gone (it was quite sizeable).
So you may want to consider including such an instruction in your own will. You are also perfectly free to set out how your estate is passed on regarding continuing such contributions from it after death (though I would suggest a solicitor is best place to set this up for you for a one off fee, rather than a financial adviser who will take an annual fee on top of any initial fee).
You can also get some very low cost investment managers. My own company would charge a fully inclusive fee from £20.52 a year per £3,600 (the maximum annual contribution) in a Junior Pension (I say this as a factual point, not by way of advertising) and Vanguard would be a few pounds cheaper for a £4,368 Junior ISA contribution (again, the maximum allowable and I didn't reference them for a pension as they don't offer one).
I don't know how this compares with the brokerage and platform costs of buying the shares directly, but it is something to consider (particularly when you factor in any tax that may be due - to you personally - on these investments).
The final thing I would add is to further clarify that whilst a trust would potentially generate a CGT and Income Tax liability for you as an individual, using a Junior Pension/SIPP or a JISA would utilize the tax free allowance of each grandchild on an individual basis and therefore not be connected at all to your own personal taxation.
BUT, your grandchildren will become absolutely entitled to the capital at age 18, which may or my not be ideal.
If you want a little more control, then using a discretionary Trust is very worthwhile. Tax within the Trust itself is easily dealt with by investing via an Investment Bond.
Hosenbugler said:
...... The first thing I thought of was shares in their name, but was truly miffed to find that if the shares earn more than £150 a year, our glorious politicians tax the childs parents. A nasty piece of legislation for sure.
That applies when the gift to child is from parents.You mentioned grandparent gift to grandchild, which makes the assets independent of parents.
You do not necessarily need a formal trust arrangement. It worked successfully in my family, and now it is beginning again for the next generation, with equities being gifted once more. Dividends paid quarterly or reinvesting dividends when paid, are not important aspects to be sidetracked by, when selecting good businesses to invest in.
This may a helpful read for you, including the designated account system.
https://www.thepfs.org/learning-index/articles/inv...
Asking a question here though, seems to immediately produce suggestions about putting money in pensions for your one year old grandchildren. Wonder why!
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