Providing advice for insistent client

GolfPutt21

I have a client who has a GIA under bare trust for his granddaughter that was set up by another adviser back in 2021, he pays small premiums of £50 per month into the trust. He now has another grandchild and wants to set up another bare trust for the other grandchild that is identically set up to the existing one. In my opinion a JISA would be more beneficial and tax efficient and I don't see any reason (other than he has an existing one) why a GIA bare trust would be better.

My query is, if he insists to set up another GIA Bare Trust same as the existing one even after I have discussed with him and pitched the JISA, is it still suitable for me to recommend even though I think the JISA would be more efficient?

richardgough

Grandparents cannot contribute to a JISA; funds would have to go through parents, and that isn't always what grandparents want. Given the amounts involved, why would a JISA be better anyway, especially as bare trust removes access control to age 18, while under JISA control passes at 16?

Radnor

@richardgough said:
Grandparents cannot contribute to a JISA; funds would have to go through parents, and that isn't always what grandparents want. Given the amounts involved, why would a JISA be better anyway, especially as bare trust removes access control to age 18, while under JISA control passes at 16?

That hasn't been my experience. Grandparents can contribute to a JISA - but they cannot open one - the parents have to do that.

benjaminfabi

@Radnor I agree with this. Contributions can be added by anyone with the account number, but they can't open the account or control it.

@GolfPutt21 There are a few very good reasons to stick with a GIA, including:

• Contributions from grandparents aren't caught by parental settlement (overcoming a major positive of a JISA vs GIA when a parent is funding)
• Tax is paid by the child and unless they have some other significant income streams that aren't caught by the above, or the amount in the GIA is itself large enough to exceed personal allowance, personal savings allowance, dividend allowance and CGT exempt amount, the GIA is effectively tax-free.
• The grandparents have full control of it as trustees, unlike JISA where a parent is effectively a trustee.
• Access to the capital can be at any age, unlike JISA which is locked in place to age 18.

Why might a JISA be better?

• Anyone can fund a JISA - only the settlor of the GIA in trust can add money to that trust.
• JISA carries over all the tax advantages to a normal ISA at 18 without using any adult subscription amounts.

I would say that you have two suitable options in front of you and you have what I'd call a 'planning constrain' from the client. In other words, you can use what the client has said "I'd like to mirror what I've already got for granddaughter 1 if that's possible" as enough reason to discount a JISA, because the GIA is perfectly suitable and doesn't have any major downsides given the amounts you're talking about.

This doesn't need to get close to being an insistent client in my opinion.

GolfPutt21

Thanks all. Yes my understanding was that parents have to open the JISA but grandparents can contribute. On the current trust set up the parent is a trustee anyway so I thought the set up was vastly similar to what a JISA set up would be.

@benjaminfabi - some great points here I didn't consider, I don't have a strong opinion one way or the other as the existing one works quite well. Main thing is finding a provider that can set this up with internal trust documents because his existing provider used to have internal trust docs and no longer!