to give child control of savings or keep control as parent?

[fundornottofund]

My DC (13) has a child trust fund, the ones that were set up by the government with a payment given in babyhood when they were born (I know this has since changed). It currently has about £2000 in there, mainly a gift from grandparents. It is now earning 4% interest tax free.
We moved some years back to another country in Europe. We have saved an amount each month towards college in order to have an amount put by when DC is 18. We save around £120 per month but the interest rate is very low at 1.5% and there aren't really any alternatives without then being liable for tax.
Since the child trust fund interest rate is so much better, I'm considering moving the funds in there (about a further £15k plus an additional £1500 per year until 18).
This all makes absolute financial sense with the big BUT that the money would all be in DC's name at 18. In the current set up, everything apart from the £2000 is in our name as parents. This means if DC is a complete idiot at 18, we can hold onto the money and ensure it is used for something sensible. On the other hand, DC genuinely seems like a sensible kid and it's hard to imagine them doing something reckless with it.
Any thoughts? It seems by transferring it we could accumulate thousands more in interest so I feel I have to really consider it.

We used Junior ISA. Totally happy my 19 yo now controls it. You have x years to raise a man you can trust. From your post I suspect you will succeed 😊.

Thank you for your reply! We can't switch it to a Junior ISA (or open any ISAs ourselves sadly) as we are no longer resident in the UK. But we can continue to add to the child trust fund from abroad (I have checked). I am hopeful that he will be a man I can trust! I was previously very much in favour of maintaining parental control but interest rates were incredibly low in recent years and the 4% rate that's come in recent months now seems amazing.

I get what you mean. Regardless of how sensible they are, we plan to hold the majority of our kids savings back until they're mid 20s and thinking of moving out - if it works out that way of course.

They can have a couple of hundred to prepare for uni/work/driving, then hopefully a larger contribution towards a house deposit when they need it.

I know by that stage it's "their" money, but it's hard earned and I'm determined it will go on an investment for them, rather than a few wardrobes and holidays.

It may be helpful as he grows up, before he has access, for him to know that this will one day be his to manage.

He can prepare himself for the responsibility, and have in his mind an expected use e.g. a house deposit.

We let our children have their life savings, present money etc at 18 to use towards university costs etc and they all found it helpful to have the money at that stage.

No I wouldn’t and didn’t give mine free access to their savings.
I saved that money for specific purposes for them to go to uni and made sure that’s what it got spent on

How would they find out about the existence of the savings? In the event they become an idiot, could you simply not inform them about the money, until they become no longer an idiot?

My dd recently turned 18 and accessed her child trust fund. We did not add to it as we have another child who wasn't entitled to one (born before they were set up). The amount she got barely exceeded the government investment, so it was a terrible deal. She transferred all the money to her bank account and it was gone within weeks- she is a bit of a spendaholic which was one of the reasons. The other was she was targeted by scammers and lost several hundred pounds that way. Bank also closed the account as it was dodgy in some way/ they didn't believe she didnt know what was happening (we don't know if she did as she was too mortified to talk about it).

So totally useless as far as we are concerned. We are glad we didnt put our own money in. We decided we would rather save money in our own names and pass it to our children as we see fit, than risk having them spend it on drugs or whatever at 18. You don't know how they will turn out - dd has been rather wild since she hit 18.

Anyway,so to answer your question, I'd advise keeping hold of your money and passing it on when they are ready for it. Not all 18 year olds are sensible (dd was very sensible at 13).

My DC unexpectedly inherited nearly 100k each at 18 and almost 16. They were youngest of 10 beneficiaries, with no age specified, so they both got it at 18 (eldest turned 18 whilst estate was still being sorted).

As soon as we knew the extent of the estate (we were thinking they may get 20k each😲) we discussed how lucky they were, about house prices etc and they have both been happy to drip feed it into their existing ISAs (junior ones which turned to adult at 18). They are now 23 and almost 26 with a decent sum waiting for when they buy houses.

I know some DC are reckless at 18, but we worked on the premise of educating them, discussing what we had already saved for them, looking at investments with them, etc., so they didn’t burn through it. It helped that some of the other beneficiaries were in 30s and 40s and were able to get on the housing ladder for first time with the money, so a good example to them.

Youngest has since been travelling but used money she had saved working in retail for a few years, she had no intention of touching her ISA.

So like pp said, maybe use the next few years to help him understand what he will get and how important it is not to fritter it.

Thanks, these different perspectives are very useful. It's such a minefield. I think it would be hard to keep a secret, he knows about the UK trust fund. The dilemma is keeping control of it at a low interest rate vs handing over control of it at 18 but getting a much better interest rate in the meantime.
I haven't had any thought to keep hold of the money beyond initial university years and it going towards fees/ costs associated with that.

A very interesting thread about an forgotten trust fund came up months ago
Guessing the amount in it.

Many posters came on to say how much their child's trust fund was now worth.
Obviously those who couldn't add to it had the lowest amount but..... Those who couldn't add to it but had it in a good stocks and shares investment had a good few 100.

Those who added to it in sticks and shares had many 1000.

I would spilt it all up and put 10 grand into stocks and shares junior isa.
I
Keep some back k for car, lessons uni... In a cash isa you can have both.

Put rest into pb then you have best of all worlds.

Wow @Vickythevan63 100k!! That makes the maybe 25k not seem such a daunting amount. I am taking on board the advice about discussing and preparing though. He is quite interested in business/ money and I could start to talk to him about interest rates etc.

And teach him about money.... Teach him about investment.

Thanks @LimboNovember we can't access any of those products unfortunately as no longer tax resident in the UK. Believe me I would love to be able to use them myself, where we live has dismal interest rates and a high rate of tax payable on the paltry interest, it's very frustrating as it gives little incentive to save.

Sorry one more thing obviously my own dc have what I advised for you and cash and stocks isa... The isa cash interest rate was v low 3% now it's 4.

And the stocks is actually quite low for stocks but around 15%.. So yes a very good teaching tool for them

If he decided at 18 that he wanted to save it towards a deposit on a flat or even a year travelling around the world, I would actually be ok with that. I just couldn't bear the thought of it going on booze and nights out. That's my one concern and seems incredibly unlikely looking at him at 13 but there's no way of knowing.

You were allowed to move the child trust fund into junior isa the rules allowed it.

Still separate up the money so he has some for adding too thru working die spending and some for car or whatever and some as hard capital for life stuff

Op while some kids are sensible others just don't get it.
I know a kid who blew their savings at 18 on xbox games etc.
And I read about a kid on here who was a drug addict. The mum was trying desperately trying to find a way to stop them blowing an inheritance with the hope they'll be able to get clean and put it to better use later.

I think teaching them about investment is good but some teens live for the moment and don't think about the future. I wasn't like that but my brother defintely was. To him money meant he could buy X or go to Y and he couldn't resist the urge to spend it. He was late 20s before he became sensible with money. We both had access to the same parenting which encouraged us to open savings accounts etc.

My 18 year old, whose CTF was gone within weeks (see above), has suffered from depression and anxiety over the past few years. She sometimes says she won't be alive at X point in the future. She's not suicidal but has self harmed in the past, and that has made it hard for her to imagine the future and take it seriously. (She does have therapy sessions and meds for depression and isn't actually doing badly, but has been involved in some risk-taking behaviours).

These are all very good points. @Onelifeonly I'm sorry to hear of your daughter's struggles and hope there are better times ahead for her.
Maybe another option would be to transfer only part of it and keep some back in our name, thereby spreading the risk a bit.

I think if your child is half sensible now that’s a good sign. I would personally talk to them now about the fact that you’re putting a lot of trust in them by putting everything into this account which they will be in charge of, but you expect it to be used for eg Uni/house deposit/travelling etc. And not frittered away.

If you start teaching them about finances now and they start planning for how to use it now, then by age 18 it’s likely they’ll have a very clear plan in their heads for the money and know what they want to use it for, and will be less likely to fritter it. And if they do then they do, on their head be it, they’ll be an adult by then and able to understand consequences! And they can’t say they weren’t warned!

I was had an account that my great uncle had set up for me as a child when I was at uni (so lucky I know!). There wasn’t crazy money in there, a couple of thousand, but my parents told me that although it was in my name, they wanted me to keep the capital in there and just lift the interest every year to help with everyday living costs while at uni. I totally respected that and the money came in so handy. In my 5th year at uni (I’m a doctor so was at uni for 6 years) I decided I wanted to cash it in completely towards doing a medical elective abroad and for travelling. But even then (bear in mind I was 23 by then) I discussed it with my parents before doing it and if they’d been dead set against it I wouldn’t have taken out the money. They were 50/50 on whether it was a good idea but said it was my decision at that point. I don’t regret using the money for that at all and would have struggled to afford it otherwise without taking a loan or working myself into the ground risking my uni grades.

Someone I know saved for years for child future. Unfortunately child took up with undesirable. At 18 child got the money and was able to leave home and move in with abusive older man, against parents wishes. Money used to subsidise his dependant life style and substances. Fortunately only long term damage was the loss of the saved funds. For every young person that will be wise another will waste it. You will have no control if money in their name. You have no way of nknowing how your hike will be.

We've never contributed to eldest two dc's CTF. They'll have whatever is in there at 18 but any other savings we have for them will be distributed by us when we feel it's needed.

I think it's a huge risk to trust an 18 year old with a big lump of money, it's not one I'd take.

The bank told me they write to them at 18 to inform them they have x amount in a trust fund etc, so the money becomes theirs.