SAVINGS ACCOUNT FOR GRANDCHILD

I would like to do the same cobden28but Martin Lewis said we have no control over how the money at 18 can be spent eg a wild time in Barcelona with friends.

I realise that once my grandson turns 18 he's a legal adult and can do what he likes with any mpney he has, but I just want advice on the best type of savings account to set up for him, so that when he does become adult he has a tidy sum to use however he wants, as a gift from his grandma.

Junior Isa is my recommendation.

Congratulations on your new grandson - enjoy meeting him for the first time. Hope you get a little cuddle too given he's in the NICU.
I've opened a stocks and shares Isa specifically for the grandchildren and put money in there monthly. It's in my name and I intend to decide where, when and to whom it is distributed when the time comes [assuming I live long enough!]. Hoping it will compound well in the coming years.

Junior ISA

We did bare trusts for grandchildren . While it is to help with university fees it has been an absolute nightmare to get to the children. The banks feel it is their money and blocked our accounts when we tried to send instalments once they were 18. This has now been going on for two years. I think an isa is best .
The banks insist on knowing what it is for( none of their business) and pretend it’s for our safety! We had to speak to the fraud department and verify ourselves. With passports. Go for the junior isa but I think you need parents validation if I remember rightly. I was thoroughly sick of the whole business.

The bank is absolutely correct.

A bare trust is where the beneficiary has an immediate and absolute right to both the capital and income of the trust, with the trustee holding the assets solely for the beneficiary's benefit. They have no discretionary power. The beneficiary is treated for tax purposes as if they owned the property themselves, meaning they are liable for any tax arising as if they held the property directly.

If OP is not sure, then they should seek professional advice so they set up the right account for whatever they intend. Best not to take advice from unqualified people on social media.

This from Hargreaves Lansdown. I have no affiliation. They are simply a well-known firm who advertise in the mainstream media.

www.hl.co.uk/investment-services/investing-for-children

Note: grandparents cannot open a Junior ISA or SIPP directly. They can only do so through a parent or legal guardian.

Some of the building societies do children’s accounts. Halifax used to pay 6% interest but it’s less now.

My DGSs already have Junior ISAs, set up by their parents, so that was a non-starter for me. Instead, I save monthly for them in Halifax accounts in joint names, and you’ll need a birth certificate to open anything with their name on.
What they do with it when they’re old enough to access it, is up to them,

I've set up savings accounts for my grandkids. 1 I can set up a junior ISA because I have legal custody and the other is just a regular savings that can't be accessed till they're 18.

Now the issue was how much and what it's for ( everybody's finances are different).
I'm not sure how many grandkids I'm going to have and I want to try as best as I can to keep things equal which is why I put £15 a month in each account, a extra £20 for birthdays, Christmas, Easter n when I've been on the JD and get nostalgic. I've also opened a separate account in my name where I put £50 a month in.
As has been said I can't control what they spend their personal accounts on but hope they will be sensible with it. (I bought a second hand car and went to Ibiza. Best time of my life!) the other account is to top up if they want to go to uni etc.

It's scary thinking of 18 years in advance and what the world will be like. It's certainly different from when I was 18.

All the accounts are with Halifax, as that's who I bank with, and at the time for like for like accounts there wasn't much difference.

I opened a tax free, child's account with the Halifax twenty years ago. This was for my first grandchild.
When my granddaughter was eighteen it was easy to transfer the money to her account.

I did the same for my grandsons. I used to look after them quite a lot and collected them from school several days a week and so decided to help them understand a little about money. When taking my youngest 5 year old grandson I gave him a ten pound note and his book ( this was monthly and 20 years ago). He handed this to the lady at the counter and then said with some indignation “What is she doing with my money?”The lady explained to him that they were looking after it for him and they would be putting a little more into his book as a thank you. I showed him the amount in the book and every time there was a deposit. After a birthday when he had quite a bit of birthday money given by relatives (7 years old) he asked me to put some in his book. I tried to persuade him that it was his birthday and he could buy something. No was the answer and he said quite seriously “ that’s too much for a kid like me”. I checked with mum and dad and I put it in. When he was 18 I asked them both if they would like to have their books or would they like me to keep their new accounts. I said in which case I would continue to put money in and by this time it was once a year. They both asked me to keep them for awhile. They then opted to have them and told me what they intended to do with it. The youngest said he would like to buy some shares and I encouraged him as he was studying financial economics at university and the interest rate was small. He is now 26 and has his own home with his partner and a good job in finance. His older brother has also done well and has his own home and has savings. So I found it was a good idea to involve them from the beginning but times have changed and circumstances so not saying it’s what anyone else should do.

I don't know what category of accounts our grandchildren's savings are in as our daughter opened them herself when they were babies.
I pay a standing order in each month, at a slightly lower level than her contribution so as not to rain on her parade. It was easier to do this than trying to open an account in their name myself.

One of her concerns when choosing an account was that our granddaughter couldn't access the funds unsupervised herself at 18, and blow the lot on handbags and shoes 👛👠😂

FTGD with the first one I was also conscious that I didn't know how many grandchildren we would have and wanted to be sure we'd be able to contribute the same to all.
I love the thought of you getting nostalgic over the JD and popping an extra payment in 🤗🥰

Hi Cobden28 - we are just setting things up for our grandchildren.

You can't open a Junior ISA for a child unless you are their parent/legal guardian, but we had the option of paying our contribution into a Junior ISA that my son had set up for each child. However, having had personal experience of a friend's son blowing the whole lot on parties/ holidays/ treating friends at the pub when he received the whole amount at 18, we didn't want to go down that route.

Instead, we are setting up discretionary trusts for each child, where we pay the money in to it whenever we wish and at whatever amount, and they will be able to apply for a payout from it at any stage after the age of 25 (that is the age we have chosen, you can choose any age). You can also add a clause to the effect that it must be spent on education or housing, for instance. We and their parents will be trustees, and so we will all also have the ultimate say over what any distributions from the trust will be spent on. Hope that helps!

mokryna

I would like to do the same cobden28but Martin Lewis said we have no control over how the money at 18 can be spent eg a wild time in Barcelona with friends.

Two separate families I know very well, have children who came into huge life-changing "Trust" wealth at age 18..... with devastating consequences for both the teens and their families.

mokryna

I would like to do the same cobden28but Martin Lewis said we have no control over how the money at 18 can be spent eg a wild time in Barcelona with friends.

My In Laws bought NS&I Children’s bonds for ours, I don’t think they exist today. Both DCs reinvested them at 18 and drew them out at 21 to go travelling.
We just give the money to our DG on their birthdays and let the parents invest for them. We also pay for all the school trips abroad that they want to go on. Seems a good use of financial gifts to broaden their horizons.

Just remember there may be more grandchildren I opened one for my first grandchild and then 6 more came along quite quickly and you can’t put seven lots of money away each month (well I couldn’t) So that idea went out the window