If you have savings for your children ...

[yoursworried]

Are they in an ISA in their name or in yours? DH and I have some stocks and shares Junior ISAs for our two DC who are currently 4 and 6. They are currently only at around 3k each but we hope for 10-15k in each by the time they are 18. (We are about to earn quite a bit more).
I am suddenly a bit worried about the fact they will have access to cash at 18; I want it to be for something sensible of course but I know what I was like at 18 and it would have disappeared on nothing much. Should I
A) Carry on investing in these and hope for the best in terms of their attitude at 18
B) stop where we are and save future money into accounts in our own name
C) carry on as we are and just take the money out and stick it elsewhere at 17 and a half leaving them 1k or so to have some fun with?

I can see that these ISAs are good as they've grown quite a bit since we started but I'm worried about them having money at 18.

We have an ISA in our name. Not really comfortable letting them have access to a large sum at that age - can do more harm than good.

We are going to open a Lifetime Stocks and Shares ISA under one of the parents name. We won’t be able to access till we are 60 years old. They will be about 30 then. The government gives you 25% top up up to £1000. So you put in £4000 and it magically becomes £5000.

Put into an ETF hopefully 5-10% growth a year with compound interest, it should a a nice sum when they get it.

Your children might be responsible by that age or they might not. I'd keep them in your name.

I have a fund and share account for each child in my name as trustee for them (and the money was given to them by a grandparent so isn't taxed as my money). It won't go to them automatically at 18 although in theory they could sue me for it. I will make them aware of it but plan to keep managing it myself until they need something big. We haven't saved for them ourselves but we do plan to fund them through university from our own savings and help them get onto the property ladder if we can.

My three all have ISAs in their own names. Beginning to wonder if that might have been a mistake! On track to have about the same amount as yours when they turn 18 which could either (a) come in handy for something or (b) get quickly pissed up a wall!

Do have other savings accounts for them other than the ISAs but those are also in their names. Hopefully I won't live to regret my decision!

Also I don't think you can do option C from your list.

We haven't put stuff in the name of our DC.

We are maybe 'higher risk' as they are adopted, but you just don't know whether your lovely-at-6, hard-working-at-13 might turn into loved-up-and-lazy-18.

My eldest was v. sensible until GCSEs. Then she went to college and it all went to pot a bit. Light finally being glimpsed on the horizon 4 years later.

I think the tax savings are not worth the potential to push a teen off the rails.

We save in our name. Not theirs. Don't want them to have access to cash at 18. They were each given a fairly big (to me) sum of money by grandparents at age 18. Enough to buy a modest car. None of them have needed a car so they saved it in long-term savings. So they are not the kind of kids who would have gone to ibiza with their money and blasted it away. I still wouldn't want to take that risk though.

I'd go with option B if I were you.

I agree that I have no idea if they will be responsible enough; I wasn't irresponsible at that age but I would have wasted it on stuff - I hadn't got into saving by then or understood the value of property etc.

Thanks for your thoughts- I think I might leave them as they are and any future savings into something else in our names.

What stops me from doing option C out of interest?

I guess it's that now it's in there it can't be transferred elsewhere?

C) carry on as we are and just take the money out and stick it elsewhere at 17 and a half leaving them 1k or so to have some fun with?

You can’t do this - once the money goes into a Junior ISA it’s theirs not yours. You can transfer it in their name to a different provider but not withdraw it. So if you don’t want them having access to large sums st 18 stop saving into their Junior ISA & save elsewhere under your name.

@NoSquirrels thank you - I see. I think I've decided to go with option B and they can have this 3k (or whatever it has become by then) to hopefully be sensible with but possibly not

Dcs have some money each in ISAs. I’ll keep it at the level to buy a small secondhand car. And maybe a contribution to insurance.
Everything else is in my name until I retire. They’ll get it when they are mid-twenties by which time hopefully they’ll be a bit more sensible.

There are lots of discussions on here and other money-related forums. It’s almost a FAQ.

In short, you have NO legal recourse if little Johnny or little Imogen turns out to be a total and wants to spend all the money on holidays and drugs. It’s their money, you will have no say whatsoever on it once they turn 18.
Some people say their child is different, but

1. many parents cannot judge their children objectively
2. if children are very young now, it’s impossible to predict how they’ll turn out at 18
3. the world is full of sibling born into the same family, same DNA, same family values, same education, yet one may be responsible and the other may be a total

So there is a risk. Is this risk worth it? Well, it depends on your situation and the alternatives.

The key question is: what is your tax situation and are you absolutely sure there would be much of a tax advantage in putting the money in a junior isa vs in your name? What’s your tax band? Do you have lots of other shares? Could you use your own ISA allowance or do you already max that out?

How much capital gains do you make on your own? The first £11k capital gains or so (look up the exact details) are tax free, after which they are taxed at 10% or 20% depending on your tax band. That’s per person, so the same applies to your partner. With the amounts you are talking about, there is a chance you wouldn’t pay much tax on capital gains. You might pay taxes on dividends, but there is a £2k allowance for that.

Also, you can’t “take the money out at 17” – it’s their money, you cannot move it from an account in their name to one in yours.

PS To clarify a bit:
if you open a saving account, you will receive interest every year. If the account is in your name and it’s not an ISA, tax may or may not be payable depending on your situation. You can currently earn quite a bit of interest before tax becomes due.

If you open a stock and shares account, depending on the securities you hold, to simplify, you will have two sources of potentially taxable income:

1. dividends. Not all securities pay dividends, but those which do typically do so at least once a year. If the account is in your name and it’s not an ISA, dividends received above a certain threshold are taxable.
2. capital gains. If you buy something at £100 and you sell it for £110, you have made £10 of capital gains. Similarly, if the account is in your name and it’s not an ISA, capital gains above a certain threshold are taxable.

You must bear in mind that a capital gain becomes potentially taxable when you realise it, i.e. when you sell the security. If the shares you bought last year are now worth 5% more but you don’t sell, there is nothing to pay. If you buy some securities now and sell them only when the children are 18 because they will need the money then, you will be taxed based on the tax rules then. Clearly no one can predict what tax laws will be like a decade from now, so in this sense there is a (slight IMHO) risk that tax rules may change. But, well, there is also a (even smaller IMHO) risk that junior ISAs may be abolished altogether in 10 years, who knows, no one has a crystal ball.

Put into an ETF hopefully 5-10% growth a year

10% a year? Good luck with that!

NB. Currently you can realise £10,000 (actually a bit more can't remember the exact amount) in capital gain tax free per year. So if you put in £20k and it is now worth 35k, in order not to pay CGT you just need to sell it over 2 tax years.

DC have trust funds which they cannot access until 25 (set up by grandparents). We don’t save in their names for precisely the risk they may piss it all up the wall.

I don't save for my children, I save for myself.
I may or may not use some of these savings for my children, for things like help towards a house deposit etc.
I will judge each particular situation given my circumstances at the time and the situation itself.

My mum puts £25pm into a Child Trust Fund for each of them, and they also have the initial government payout, so there will be about £7k when they mature depending on growth.
They also both have premium bonds from money they were given by relatives at a young age when they didn't need anything from that money. These total about £1k each.
These funds in their names will be s nice pot to finance a 1st car or similar, or piss up a wall if they so choose - although currently at 16 & 13 I can't see that being the option they go for, but who knows.

We save in our own names for DD. I was actually quite a sensible 18 year old but I suspect I would have wasted a large sum of money if I'd received it at that age.

Yeah my little one has an isa in her name has a few grand in it and she's 2. I expect it to be a lot more by the time she's 18.

I was actually talking to dh about this the other night as I said no way will she be allowed to blow it all at 18. So I might not even tell her she has one, I'll decide how responsible she is nearer the time.

We saved for our DC. DS1 received around 5k at aged 18 and yes has blown it all in about six months. He deeply regrets it now of course. DS2 got his at the start of the year and has not touched his. They are all different.

18. So I might not even tell her she has one

The bank writes to the child at 18 and I think you stop having access to it

My ds1 turned 16 last year and received letters at that point telling him about various accounts, I'm sure this included the CTF.
(He already knew about them, but that's beside the point).

My girls were were in my name and in trust for them with various banks. Bit as a parent you do control them so I can't see how the bank can stop you transferring it at 17.5 years old. For instance, I transfer my kids accounts to go where the highest available rates are.

I would leave it in a Isa or children's account then transfer it before they are 18.

I agree with ChasingSquirrels too about the purpose of saving. It isn't just that they might piss it against a wall at 18, it is that you never know what life might throw at you. You might need all of your savings for something for one child or your husband or an emergency and having your savings locked into an account for a child won't give you access.