Investments for 17 (nearly 18) year old
Andy_Schleider
Member
Hi
I have a couple of youngsters (siblings) who have just inherited some cash from their father. One of them is age 17 so she can't hold a GIA in her own name. I've been looking at the mother opening it up with her as the nominee and then switching into her name in May when she turns 18.
Apart from the obvious leaving it in cash for 4 months, are there any other solutions to consider? She doesn't want to tie the money up but wants to invest it to protect against inflation. I'm looking at a 5 year investment horizon initially.
I'm wondering whether there are likely to be any CGT issues with the mother when she transfers it to her daughter's control, plus the fact that it's not actually the mother's money. The amount in question is £75,000 so too much for an ISA
Any suggestions welcome!
Comments
Bare Trust.... will revert to kid's name at age 18 (rather she can claim it)
Parental Gifting £100 interest rule will apply, but on 75K on a 4 month period.
I understand about the parental gifting rule, but the money doesn't belong to the mother - it came from a life assurance policy when the father died (the parents weren't together).
The estate executors should be able to set up the Trust.....
Assuming the life policy was not in trust, and the gift arises by virtue of Dad's Will, the money is already in a bare trust by virtue of the gift to a minor. It is the child's money and they are the taxable entity at all times. Parental gifting does not apply as the donor parent is deceased.
Investment (initially) is in name of executors of the Will as trustees for the child. Ownership reverts to the child at age 18.
Not sure how you can state a 5 year time horizon - child may want to surrender and spend when they tun 18, which they can do, so you have a 4 to 5 month investment time horizon at the moment for the 17 year old.
The child has the cash in her account now so it's not currently in any sort of trust. She's looking at an initial 5 year term with a view to purchasing a house
If the cash is in the minor child's hands then you are somewhat stymied.
Pay it to mum - mum holds it for her until she needs it......
Beg's the question of what the estate executors where thinking...
Interesting that the money is in the child's name. The executors cannot have had legal discharge (I'm assuming the child isn't Scottish) so not the most sensible thing to do; hey ho!
Given what the child says, I would wait until she is 18 and then you can contract with her legally; if you were to invest in mother's name designated for the child then you create far more problems than you solve.
At 17 she could stick a good chunk in premiums bonds for a bit and help to buy ISAs are from 16 aren't they? so a bit in there too
If the goal is a house purchase, lifetime ISA contributing 4k each year would result in an addition £5,000 from the government