AIBU to avoid junior ISAs because children get access at 18?

[flipfloplaugh]

I was about to start a junior ISA for my kids when I realised they would get the money no strings attached at 18. That's insane!! They're small at the moment, and I have no idea what they will be like at 18... I would have probably wasted a bit of it at 18, but several of my friends would have blown it all almost instantly on absolute nonsense. The v few people I know who have trust funds have trustees to stop daft usage and don't get the money until at least 25 and possibly later. Why on earth would I save money now to have it potentially wasted by some dingbat 18 year old??

Is this a joke?! 🤦‍♀️

But this is wildly illegal. I’ve no idea how you possibly did it in practice as you have to fill in the ISA transfer paperwork and it can’t move to a parent’s name, quite aside from whatever FA gave you that advice!!

Ah I’ve just realised I misunderstood your post and it sounds like you hadn’t actually started the JISA! Sorry!

I have 2 kids, both received £10k in an ISA at 18 with a request they use it to support themselves at uni. One spaffed the entire lot in year 1, the other still has it all in an ISA.

I have an 18 year old and a 21 year old. Both had JISA's and it has been fine. Neither have tried to access the money. We set up stocks and shares JISA's via a financial adviser and they would need to go to the financial adviser to access the money - it cannot be done directly. Obviously this acts as an obstacle and as a sensible check. Both had £30k when they turned 18. The 21 year now has £40k in her ISA just from share growth over teh past 3 years and the 18 year old now has £32k. It will be enough for a house deposit for both when they are ready. Using a financial adviser to set up a stocks and shares JISA acts as a sensible middle ground.

This.
It's for parents to teach their children financial management just as much as brushing teeth or tying laces,
Mine didn't get child trust funds but we paid into junior ISAs for them which they got at 18. Neither touched it until they bought houses, one at 24 and the other at 27 .

Mine have been told that when they turn 18 the money in their JISAs will be put into a 3-year bond (which we will help them to do) and they can access it when they’re 21.

Yes legally they can say ‘no, we want it now’ once they’re 18, but they know this is the plan, and how hard we’ve saved to fill their ISAs, so I’m not expecting them to question it. They’re late teens now and pretty sensible & prudent, it may be a different story otherwise!

Shit, I just opened one for my foster child at the beginning of the year. What happens when they are 18, do the bank contact them? I haven't told them about it. What should I do? Obviously I do not know what an 18yr old them is going to look like!
Help!

My DC has an ISA that was a child trust fund. It has a lot of money in it and when they were 18 we transferred it into an ISA. I still basically have control over it as they don’t know the password to the online account ( I don’t think they even know where the money is held). They know this and aren’t bothered. We have sat down with them though and discussed everything and they do know how much is in it but have no interest in accessing the money. I did have other savings accounts set up for them were also controlled by me. They do have access to this as they are a sensible 18 year old. The younger one I’m not so convinced so will hold on to control of that for longer…

I had an isa when i was young, my parents told me it was for uni/ house deposit. I used it for uni. Never even occured to me that i could have access and blow it all.

But then i also had a savings account that my parents put into. Then when i had a part time job i paid into it.

Suppose what i am saying is as long as you teach good financial sense and also maybe have an easily accessable savings account too which they have control over.

If what you are saying is accurate, that the money was in a Junior ISA and you moved the money to an account in your own name, that is illegal, no matter how well intentioned. It is unlikely, but the child would have grounds to take legal action against you and the providers involved.

I am a Financial Adviser. The owner (adult child) would simply contact the provider directly and withdraw the money. They could cut out the adviser, sack the adviser, and you would be liable for any outstanding fees.

It all depends how you bring them up, with what values.
If you constantly show them that money is there to spend foolishly on pleasures, they will grow up to be like this.
I was very responsible at 18, but my parents drummed this in me.
I hope I won't eat my own words in 10 years, I've got 2 kids with junior ISAs, lol.

Both ds had money at 18, about 8k each. Both put half back into an isa and one then bought a car, the other went travelling. Ds25 built on his isa when he could and used it for a deposit on a house last year. Not all 18 year olds blow the money.

“Luckily” I’m nowhere close to being able to max out my own isa allowance for the next few years so I’ve just saved for my kids under my name but in an account that is earmarked for them.

If I’m in a position to save more in the future though I would add a JISA on top and hope I’d taught them well enough to be sensible with it.

Junior SIPPs are a good idea but fulfil a totally different need, I wouldn’t think of them as an alternative to a JISA at all. I do have them for my kids but only put very small amounts in with the hope that decades of compounding might still make their lives a bit easier in the very long term.

I don't have ISAs but I have bank accounts they don't know exist, they are just sitting there. One spanks every pound he gets, DS2 is the opposite, not sure how DD will be. We are still deciding what to do with them but it's many thousands in each.

This is why I have a savings account for DS in my name

Well it depends what you mean by a “lump sum” and “blow it”

I have a junior isa for mine. I put small amounts in when I have spare cash. It probably won’t be more than 5-10k, and they can get it at 18 and spend it on what they like. It won’t be enough for uni or a house deposit.

if I were/could afford to put large amounts away and they’d end up with say 20-30k or more that would be a house deposit or uni fees, then I’d keep that in my own name.

as it happens both are reasonably sensible with money. One is using the money to pay for little extras, holidays etc while at uni. Just making life more comfortable. The other is using it to support themselves while they look for a job.

I actually disagree with the masses. I think at 18 it's time to learn that if the money's gone, it's gone. Putting it off until 21 or 25 doesn't teach them anything.

I also don't think by waiting until they are older they're necessarily going to be more sensible. The people I know who are sensible with money were sensible with it at 18. The people who are shit with it always have been and still are now.

This may seem obvious, but why don't you just not tell the child that you have opened up a junior ISA for them?
How would they know unless you told them?
Then you could wait until they were older to reveal the money.

I completely agree! If it’s my money I’m saving for them I don’t want it frittered away (best case) or used for drugs (worst case but you never know)!

Mine only have a junior isa for inheritance they’ve received as that is their money not mine. Will still have conversations with them about what to do with it but morally I can’t stop them having access to it.

Yep, we kept the savings in our names, an account per child. No sudden windfall at 18 here, although it will be spent on them or gifted when they are young, specifics depending on circumstances.

We couldn't have predicted it when they were little, but it's likely we will be able to help them a fair bit with our "own" savings too, but we can judge that as we go along.

Because IME once the child turns 18 the bank will write to them, inform them of the status change to an adult account, and give details on how to set up further management.

unless you’re intercepting the child’s post when they’re adults, you won’t be able to hide it for long.

My friends daughter has wasted all of the money in hers as she had access to it at 18, she won't have a house deposit or anything now

These are the questions you need to ask yourselves when making provision. People like junior ISAs because it provides them with a further £9,000 ISA allowance where growth and withdrawals are tax free. But the downside is they cannot get at themselves (legally!) and the children have full access at 18.

Trusts are an option but even if the trustees wish to retain monies in the trust, an of age beneficiary can sue for the money. Plus trusts require certain duties from the trustees and must invest with the sole purpose of providing for the beneficiary (there was a crazy thread a while back where the mother and trustee wanted to pay off her mortgage with the trust she managed for her son!) Some people find this onerous.

Another option is to simply earmark a pot. And gift as and when you see fit on your terms. This way you retain full control and can keep the money if you change your mind. However, you miss out on tax allowances, growth/interest/income will be taxed against you, and lets be honest, in a lean year we may well decide to raid it to pay for the holiday or whatever with the intention to repay that never quite materialises. Plus, it will stay in your estate should IHT become an issue.

Lastly, pensions. Well its a nice idea. But the issue here is that young adults need help now. Cars, education and property are so expensive, and pensions cannot be accessed until age 57 from next year. By that point you'd hope that they'd have a career of their own and possibly inherited. Arguably the money is better used as a leg up early in their adult life.

In conclusion, there is no perfect answer, only best fit solutions for your objectives.

All options bar earmarking the child is likely to be able to access their money whether you want them to or not. The best option is educate them financially and give them the tools to make their own sensible decisions.