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Are there any childrens accounts where money paid in is treated legally as the childrens and not mine?

(23 Posts)
stressed2007 Tue 23-Jun-09 08:45:22

Hi - I try to save any monies that my children are given - birthday money etc. However I have just found out that the children's account I have for each of them with HSBC is in fact my money not theirs even though both our names are on the accounts. If anything were to happen to me it would be treated as my money for inheritance tax purposes and not theirs and so might be taxed away when it is in reality totally their money.

Does anyone know of any accounts which don't work like this? I am not interested in a CTF as this money can't be touched for any reason until the child is 18 and though we never intend to touch the money in an emergency it would be good to know that you could. Many thanks

whomovedmychocolate Tue 23-Jun-09 08:48:23

Well the problem is you either have it held in trust and then you can't touch it or you have an account you share responsibility for. Talk to your bank they may well have an option which will fit you.

stressed2007 Tue 23-Jun-09 08:55:52

you are on all my threads today - thanks for all the advice!

My bank HSBC - can't even get their head round the point I am making.

AS far as I am aware other then CTF there is no trust (as in bank products) for kids - there must be some a way round this as the CTF is a recentish thing and people have aleays saved for their children.

titchy Tue 23-Jun-09 09:08:45

As whomoved said you either hold it in trust till they're 18 and can't get hold of it, which people have always been able to do, even before CTF, or you can access it in which case it is regarded as part of your estate.

Tis the law I'm afraid so you won't find another banking product that works like you want. The words cake and eat it spring to mind grin

titchy Tue 23-Jun-09 09:09:19

Oh and interst earned from thier accounts over £100 a year will count as yours too and so be taxable.

clumsymum Tue 23-Jun-09 09:09:51

"people have always saved for their children"

Yes, but while the children are minors, the money still remains the responsibility/property of the parent/guardian.

What whomoved means is that you could set up a trust fund, (you need to talk to your solicitor about that), whereby the money would no longer be yours, but the property of the trust fund. You appoint trustees (which can include yourself), who can decide when the money can be withdrawn, until your children reach such an age that the fund can be closed and the money passed on to the children in full.

stressed2007 Tue 23-Jun-09 09:24:45

titchy - that is only if the money came from a parent - if it comes from others that is not the case.

for the few thousand I am talking about the cost of a trust find via solicitor is totally out of the question.

"Yes, but while the children are minors, the money still remains the responsibility/property of the parent/guardian." that is not quite true either. At 11 the money does become theirs in certain types of bank accounts.

I know not a lot of this makes sense does it - it seems like it works by being a load of exceptions hence my original question as to whether anyone knew of a product.


HSMM Tue 23-Jun-09 09:44:15

Why don't you buy them premium bonds in their own names?

whomovedmychocolate Tue 23-Jun-09 10:51:57

How about a co-sign account where both you and the kids need to sign? That may solve your problem - providing they are old enough to squiggle - if you take their ID it's no prob if they aren't though!

MrLSG Tue 23-Jun-09 11:04:15

Regardless of what the bank say, it's not your money if they had it given to them by friends/relatives - if that was true you must have stolen it from them.

What you want is either a designated account or a bare trust (very similar in practice)

Normal way of getting the inland revenue to recognise these is by designating the account as belonging to the child (usually by putting their initials or "For <child's name>" after the account name). A few savings providers do have Bare Trust forms which can be used to formalise a trust, but this isn't really necessary.

VERY few bank staff are aware of this.

But do be aware, that if there is more that £100 of interest per year (outside a CTF), the IR will still tax the money as yours - if they know.

Nationwide have good children's accounts that you can designate as belonging to them.

Sunshinemummy Tue 23-Jun-09 11:18:32

Stressed2007 all my children's extra money is either added to their Child Trust Fund or to a Post Office investment account. I don't believe I'm able to access the money in either of these - it belongs to the children.

mumoverseas Tue 23-Jun-09 14:34:17

agree with MrLSG ref Nationwide. My DCs have a few accounts there which they don't know about. When they were younger I opened the 'smart to save' accounts for them and I am the named trustee on them although in their names and I have access to the money. 4 years ago when my dad died I they received a lump sum each (which they don't yet know about) I wanted it to go into an account that would be in their names only so opened new 'smart accounts' and got them to sign a form pretending it was something else. DD is 13 now so must have been 9 when this was done and the accounts are totally theirs and they are the only ones who can sign for the money. I just have to be very careful when the annual statements come and have to hide them before they see them as I'd like to keep their inheritance secret until they are around 21 and hopefully a little more sensible than they are now

stressed2007 Tue 23-Jun-09 15:25:59

MRLSG I have one of these designated accounts.It is my name..for their name. However I have still been told it is my £ if I go under a bus.

And I disagree about the £100 thing - I spoke to HMRC and and they said as long as I keep record of where £ from it is not taxed as my £ - do you think this is wrong then- if you do I think I am going to ask them to confirm in writing.

Going to check out the position with the Nationwide accounts - thank you.

ChasingSquirrels Wed 24-Jun-09 07:18:31

stressed - you are right about the £100 thing - only taxed on the parent if the capital came from the parent in the first place.

janinlondon Wed 24-Jun-09 11:53:29

We keep a copy of the cheques deposited, or have an electronic transfer record from another person's bank to prove that the money did not come from the parents. IR have told us that's the only way they'll accept that its not our money. Seems reasonable

stressed2007 Wed 24-Jun-09 12:30:31

they never told me that - I have just made a hand written note by the side on any paymnets in on the statemeent. Do you think this is no good? Oh dear - I thought I was being so good.

janinlondon Wed 24-Jun-09 14:33:05

Stressed - you need whatever evidence you can get, but it will only apply if they audit you or challenge this specifically. Keep it all from now on!

AttilaTheMeerkat Thu 25-Jun-09 16:11:57

If the account is in your sole name i.e Mrs Stressed2007 then the money is treated as solely yours.

If it said "Mrs Stressed 2007 Re (or For) Child A" then you can complete an Inland Revenue Form (at that time these were R85 forms, they may be different now) to claim the interest as gross rather than net so the interest accrued is not taxed. In these cases the adult i.e you is solely responsible for the account.

You cannot use "Trustee for Child A" "Mrs Stressed 2007" unless there is an actual trust deed in place.

I used to set up childrens accounts in the building society I worked for and none of them to my recollection earnt anything close to £100 a year interest.

mumoverseas Thu 25-Jun-09 17:25:08

ds1 earnt £114.41 in interest last year. he has more money in the bank than me at the moment envy

RockinSockBunnies Thu 25-Jun-09 17:39:32

I vaguely looked into this last year to safeguard DD's money. In the end it was easier just to use an ISA to save tax free. However, here's a link for investing for children which gives guidance on tax-free savings etc for children as well as trusts for them.

stressed2007 Thu 25-Jun-09 20:44:24

Thanks all. I will look at that link when I get a mo.

Not sure I understand what

"You cannot use "Trustee for Child A" "Mrs Stressed 2007" unless there is an actual trust deed in place." means?

I have a "Mrs Stressed 2007 Re (or For) Child A" account. I have a R185 for my child - i.e. it is taxed based on childs tax position. That is why I do not understand why the money is deemed to be mine if I were to die. It seems to be at odds - on one hand it is my childs but then on the other it is mine.

popsycal Thu 25-Jun-09 20:47:38

this is interesteing

the only accounts my byos havee are the ones the in laws regularly pay into by standign order
but I am 'trustee' on the accounts...
where do we stand

AttilaTheMeerkat Sat 27-Jun-09 16:02:52

Basically you cannot use the word "Trustee" as part of the title on any account unless there is an actual trust deed in place.

What you've got Mrs Stressed is absolutely fine - "MrsStressed 2007 re/for Child A".

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