Child inheritance

[Idroppedthescrewinthetuna]

Hi all. I am so lost.
My ex partner died last year. He left no will.
My DD (14) will be inheriting circa 70k.
I have no idea how where this money can go. She has a bank account but she cannot have access to this money.
Everywhere I go, the banks say they do not do trust accounts.
Can anybody help me.
I am unable to afford a solicitor.

NatWest (at used to my youngest is 21) do child accounts which require an adults signature until 18 but it's not automatically transferred even at 18 - I control my kids accounts still, youngest dd is getting the balance shortly, eldest I still control as has asd - but NatWest never questions it

They have said they don't do trust accounts anymore. I believe an inheritance for minor has to go in trust account?

Try National Savings, my kids inherited at 14 and 17 and the solicitors put their first payment into NS&I.

My DD was still only nearly 16 when the final payment was made, the solicitors transferred ‘trustee status’ to DH and I and we kept the NS&I account running until she was 18.

For the remaining money, I think we used Nat West for transfer from solicitors, who wanted proof that we were named on the account!

You could always put some into premium bonds!

Your DD will get access to PB from age 16.

Your first step should be 9k into a JISA. Your DD will get access at age 18.

There's a piss-poor rate of interest but there are numerous savings accounts for children you can choose from.

You do not need a dedicated Trust account, you just need to hold the money "in trust", ie receipt any expenditure (driving lessons?) and evidence any decisions made on investments etc.

Here's a recent thread on JISAs.

www.mumsnet.com/Talk/investments/4476610-Junior-ISA-Stocks-and-Shares-with-the-lowest-fees

You/ DD will be able to (should) transfer the money to a homebuyers ISA at age 18.

Any platform fees should come from her inheritance. As above, just record this as proof of spend. If you don't already know how to use Excel, this would be a good time to learn.

A solicitor or financial advisor will be able to help you put it in trust for her

@PenguinLove1

A solicitor or financial advisor will be able to help you put it in trust for her

Op has said she can't afford that?

Check out JISAs.

Then you can give the executors the details of the account

Apparently I can only open one JISA for her per tax year.
I believe I have found a home for the lump sum until I can move it i to JISAs for her.

No, unfortunately I am unable to afford financial advice at the moment. So going to a solicitor or advisor is out of the question.

@JamMakingWannaBe

Your DD will get access to PB from age 16.

Your first step should be 9k into a JISA. Your DD will get access at age 18.

There's a piss-poor rate of interest but there are numerous savings accounts for children you can choose from.

You do not need a dedicated Trust account, you just need to hold the money "in trust", ie receipt any expenditure (driving lessons?) and evidence any decisions made on investments etc.

Sorry, can I clarify what you just said. I can just put it in a bank account until I find JISA? And if she wants driving lessons, or put it towards something that will interest her adult like I can give it her?

I don’t know the rules but could you pay for the financial advice out of the inheritance? I inherited a smaller amount at a similar age and went with my mum to talk to the advisor about what kind of investment- high/low/medium risk etc. I don’t remember much about it but the value had definitely increased by the time I came to use the money to buy my first house ( I left it in longer until it was needed rather than take it out at 18)

@tealandteal

I don’t know the rules but could you pay for the financial advice out of the inheritance? I inherited a smaller amount at a similar age and went with my mum to talk to the advisor about what kind of investment- high/low/medium risk etc. I don’t remember much about it but the value had definitely increased by the time I came to use the money to buy my first house ( I left it in longer until it was needed rather than take it out at 18)

So, due to the circumstances of the inheritance I refuse to spend a penny in trying to work this out. Unfortunately DDs dad, my ex, took his own life. Between his family and mine there is a lot of bad vibes. There is very little trust. I don't want my motives in spending money questioned. Something about me is I am a very honest person and get very upset when my honesty is questioned. So I am trying to do this independently. I unfortunately can't afford the legal help. There was no will, this has made everything so much more difficult.

Just open a savings account for her?

@bluebaul

Just open a savings account for her?

I have just found an account I can use. She has a lloyds childs saver. I believe I can open another one up for her x

It is your DD's money ask her if she wants to pay for financial advice it is nothing to do with his side of the family.

The conversation would go something like this in our house.

Blimey I have never been in receipt of that kind of money, so I am thinking on my feet here.

You can stick it in a bank account with me as a back up so you aren't tempted to spend it on intangibles.

Or we can get an IFA, first meeting generally free and they will probably charge you 1 maybe 2%, I know what I would do but it is up to you.

Sorry all, I think I have been a bit confused. I actually thought I had to put it into a trustee account. When it seems that I can just open up another account for her until I sort out JISAs.

Of course everything will be documented and all statements will be kept.

This is such a responsibility. You need to invest in your own financial education to handle this well. I recommend the Meaningful Money podcast. Take your time with the learning. As a competent amateur it took me maybe 5 years to really understand this, so don't worry about getting it all right. Just don't panic. Don't rush.

What is your relationship with your child like? Are you likely to be able to guide them? Are they likely to listen? Or do you need to safeguard it from potential poor decision making? These are important questions for you.

You also need to think about your goals for this money for your child. 70k could be divided into, e.g.
50k-60k ring fenced for house deposit (on the low side for now, but with investment growth and careful management it could be the right size by the time she is ready to buy, e.g. late 20s). 5-10k into pension. And then 5-10k to spend around 18 ish. On driving lessons/first car and maybe something like a painting or a piece of jewelry as a memory of her Dad to really enjoy and be tangible.

How to achieve this, what investment vehicles etc.
First, you REALLY SHOULD invest. People above saying premium bonds, or cash ISAs with interest rates, all that will happen is your money will have its purchasing power vastly eroded by inflation.
On the basis of the split I suggested above, here's what I would do:
With the company AJBell (I am suggesting AJBell so everything is in one company, as this makes it much easier for you to manage, get used to their app etc etc). I would open:
A Junior ISA (stocks and shares) - I will refer to this as a JISA
A Junior Self Invested Personal Pension - I will refer to this as a SIPP
A General Investment Account - I will refer to this as a GIA.

These are your wrapper accounts (literally think of them like your sweetie wrappers).
Inside them sit your sweeties/investments. I'll discuss these in a minute. First I want to talk some more about these wrapper accounts. Wrapper accounts basically determine how the money is treated for tax, there are rules around when you can withdraw it, and the government adds some free money into some accounts (yes really).
Before she is 18, each tax year she can put £9000 into her JISA and £2880 into her SIPP. The government will add another free 20% to her SIPP, taking it to £3600.

So 2022/2023 (before 5th April 2023) she should put £9000 into her JISA, £2880 into her SIPP, and £58120 into her GIA.
On 6th April 2023, she should move a further £9000 from her GIA to her JISA and £2880 to her SIPP. And repeat this each year until she is 18. For arguments sake, imagine you can do this for 4 years in a row. This means when she hits 18, you will have about 14,400 in her pension, 36000 in her JISA, and still have 22480 in her GIA. (In reality it will be more than this due to investment gains).

At 18, she gets control of all her money. There is nothing you can do about it. She can do what she wants with everything except what is in her pension. Though she is in control of her pension, she can't access it until at least 57. So at least £14400 is locked up and she can't blow it. At this point her JISA converts to a normal S&S ISA, with an increased contribution limit of 20k.

If she's listening to you, at this point she should open a Lifetime ISA too (I will refer to this as a LISA). A LISA has a £4k annual limit, to which the government adds a free 25%. So if you put in £4000, they will add £1000. You can use to either buy your first house, or access it at 60 (so as an alternative retirement savings account). This 4k is part of the 20k annual ISA contribution limit. So you can put 16k in her other ISA.

That first year, she should move 4k from her GIA into a LISA. And then another 16k into her ISA. And take what ever she wants from the GIA to pay for car/driving lessons/ a painting / a beautiful ring. Hopefully having a little to spend will, psychologically, stop her from blowing the rest. Then the following year, she she should move 4k from GIA to LISA, and everything else into the ISA. Then close the GIA.

Then every year after, drip feed 4k into the LISA from the ISA, to continue getting the free government money, until she then uses it towards her house deposit.

Caveat: I'm not quite sure how it works for annual limits in that transition year that she turns 18, but AJBell will be able to tell you.

In terms of investment inside these wrappers. I would look at Vanguard funds, as these are low cost. Probably the Vanguard Lifestrategy 80%. The same thing in each wrapper account. It is already diversified. The whole point is you don't have to think about anything else.

And finally, stick to the plan. If the markets drop IGNORE THEM, do not panic, do not sell, they will come back up. If you sell you will lock in the loss. You ONLY make a real loss or a gain when you sell, otherwise it's just a loss/gain on paper. Ride it out. They will rise again.

I hope this helps. With this plan you could help her buy a home, make sure she won't be in retirement poverty, and enable her to get a car/have a holiday/get a painting/driving lessons etc in early adulthood. It must be awful for both of you right now. I hope this helps a little. Take your time to understand.

A decent IFA will not charge you for advice. Fees will be deducted from the investment amount.

The child should not even be told of the inheritance until she is an adult.

@Starface

This is such a responsibility. You need to invest in your own financial education to handle this well. I recommend the Meaningful Money podcast. Take your time with the learning. As a competent amateur it took me maybe 5 years to really understand this, so don't worry about getting it all right. Just don't panic. Don't rush.

What is your relationship with your child like? Are you likely to be able to guide them? Are they likely to listen? Or do you need to safeguard it from potential poor decision making? These are important questions for you.

You also need to think about your goals for this money for your child. 70k could be divided into, e.g.
50k-60k ring fenced for house deposit (on the low side for now, but with investment growth and careful management it could be the right size by the time she is ready to buy, e.g. late 20s). 5-10k into pension. And then 5-10k to spend around 18 ish. On driving lessons/first car and maybe something like a painting or a piece of jewelry as a memory of her Dad to really enjoy and be tangible.

How to achieve this, what investment vehicles etc.
First, you REALLY SHOULD invest. People above saying premium bonds, or cash ISAs with interest rates, all that will happen is your money will have its purchasing power vastly eroded by inflation.
On the basis of the split I suggested above, here's what I would do:
With the company AJBell (I am suggesting AJBell so everything is in one company, as this makes it much easier for you to manage, get used to their app etc etc). I would open:
A Junior ISA (stocks and shares) - I will refer to this as a JISA
A Junior Self Invested Personal Pension - I will refer to this as a SIPP
A General Investment Account - I will refer to this as a GIA.

These are your wrapper accounts (literally think of them like your sweetie wrappers).
Inside them sit your sweeties/investments. I'll discuss these in a minute. First I want to talk some more about these wrapper accounts. Wrapper accounts basically determine how the money is treated for tax, there are rules around when you can withdraw it, and the government adds some free money into some accounts (yes really).
Before she is 18, each tax year she can put £9000 into her JISA and £2880 into her SIPP. The government will add another free 20% to her SIPP, taking it to £3600.

So 2022/2023 (before 5th April 2023) she should put £9000 into her JISA, £2880 into her SIPP, and £58120 into her GIA.
On 6th April 2023, she should move a further £9000 from her GIA to her JISA and £2880 to her SIPP. And repeat this each year until she is 18. For arguments sake, imagine you can do this for 4 years in a row. This means when she hits 18, you will have about 14,400 in her pension, 36000 in her JISA, and still have 22480 in her GIA. (In reality it will be more than this due to investment gains).

At 18, she gets control of all her money. There is nothing you can do about it. She can do what she wants with everything except what is in her pension. Though she is in control of her pension, she can't access it until at least 57. So at least £14400 is locked up and she can't blow it. At this point her JISA converts to a normal S&S ISA, with an increased contribution limit of 20k.

If she's listening to you, at this point she should open a Lifetime ISA too (I will refer to this as a LISA). A LISA has a £4k annual limit, to which the government adds a free 25%. So if you put in £4000, they will add £1000. You can use to either buy your first house, or access it at 60 (so as an alternative retirement savings account). This 4k is part of the 20k annual ISA contribution limit. So you can put 16k in her other ISA.

That first year, she should move 4k from her GIA into a LISA. And then another 16k into her ISA. And take what ever she wants from the GIA to pay for car/driving lessons/ a painting / a beautiful ring. Hopefully having a little to spend will, psychologically, stop her from blowing the rest. Then the following year, she she should move 4k from GIA to LISA, and everything else into the ISA. Then close the GIA.

Then every year after, drip feed 4k into the LISA from the ISA, to continue getting the free government money, until she then uses it towards her house deposit.

Caveat: I'm not quite sure how it works for annual limits in that transition year that she turns 18, but AJBell will be able to tell you.

In terms of investment inside these wrappers. I would look at Vanguard funds, as these are low cost. Probably the Vanguard Lifestrategy 80%. The same thing in each wrapper account. It is already diversified. The whole point is you don't have to think about anything else.

And finally, stick to the plan. If the markets drop IGNORE THEM, do not panic, do not sell, they will come back up. If you sell you will lock in the loss. You ONLY make a real loss or a gain when you sell, otherwise it's just a loss/gain on paper. Ride it out. They will rise again.

I hope this helps. With this plan you could help her buy a home, make sure she won't be in retirement poverty, and enable her to get a car/have a holiday/get a painting/driving lessons etc in early adulthood. It must be awful for both of you right now. I hope this helps a little. Take your time to understand.

Excellent advice.

I second Vanguard, they are extremely reputable and cost-effective. They have an inexpensive advisory service too.

@Starface

This is such a responsibility. You need to invest in your own financial education to handle this well. I recommend the Meaningful Money podcast. Take your time with the learning. As a competent amateur it took me maybe 5 years to really understand this, so don't worry about getting it all right. Just don't panic. Don't rush.

What is your relationship with your child like? Are you likely to be able to guide them? Are they likely to listen? Or do you need to safeguard it from potential poor decision making? These are important questions for you.

You also need to think about your goals for this money for your child. 70k could be divided into, e.g.
50k-60k ring fenced for house deposit (on the low side for now, but with investment growth and careful management it could be the right size by the time she is ready to buy, e.g. late 20s). 5-10k into pension. And then 5-10k to spend around 18 ish. On driving lessons/first car and maybe something like a painting or a piece of jewelry as a memory of her Dad to really enjoy and be tangible.

How to achieve this, what investment vehicles etc.
First, you REALLY SHOULD invest. People above saying premium bonds, or cash ISAs with interest rates, all that will happen is your money will have its purchasing power vastly eroded by inflation.
On the basis of the split I suggested above, here's what I would do:
With the company AJBell (I am suggesting AJBell so everything is in one company, as this makes it much easier for you to manage, get used to their app etc etc). I would open:
A Junior ISA (stocks and shares) - I will refer to this as a JISA
A Junior Self Invested Personal Pension - I will refer to this as a SIPP
A General Investment Account - I will refer to this as a GIA.

These are your wrapper accounts (literally think of them like your sweetie wrappers).
Inside them sit your sweeties/investments. I'll discuss these in a minute. First I want to talk some more about these wrapper accounts. Wrapper accounts basically determine how the money is treated for tax, there are rules around when you can withdraw it, and the government adds some free money into some accounts (yes really).
Before she is 18, each tax year she can put £9000 into her JISA and £2880 into her SIPP. The government will add another free 20% to her SIPP, taking it to £3600.

So 2022/2023 (before 5th April 2023) she should put £9000 into her JISA, £2880 into her SIPP, and £58120 into her GIA.
On 6th April 2023, she should move a further £9000 from her GIA to her JISA and £2880 to her SIPP. And repeat this each year until she is 18. For arguments sake, imagine you can do this for 4 years in a row. This means when she hits 18, you will have about 14,400 in her pension, 36000 in her JISA, and still have 22480 in her GIA. (In reality it will be more than this due to investment gains).

At 18, she gets control of all her money. There is nothing you can do about it. She can do what she wants with everything except what is in her pension. Though she is in control of her pension, she can't access it until at least 57. So at least £14400 is locked up and she can't blow it. At this point her JISA converts to a normal S&S ISA, with an increased contribution limit of 20k.

If she's listening to you, at this point she should open a Lifetime ISA too (I will refer to this as a LISA). A LISA has a £4k annual limit, to which the government adds a free 25%. So if you put in £4000, they will add £1000. You can use to either buy your first house, or access it at 60 (so as an alternative retirement savings account). This 4k is part of the 20k annual ISA contribution limit. So you can put 16k in her other ISA.

That first year, she should move 4k from her GIA into a LISA. And then another 16k into her ISA. And take what ever she wants from the GIA to pay for car/driving lessons/ a painting / a beautiful ring. Hopefully having a little to spend will, psychologically, stop her from blowing the rest. Then the following year, she she should move 4k from GIA to LISA, and everything else into the ISA. Then close the GIA.

Then every year after, drip feed 4k into the LISA from the ISA, to continue getting the free government money, until she then uses it towards her house deposit.

Caveat: I'm not quite sure how it works for annual limits in that transition year that she turns 18, but AJBell will be able to tell you.

In terms of investment inside these wrappers. I would look at Vanguard funds, as these are low cost. Probably the Vanguard Lifestrategy 80%. The same thing in each wrapper account. It is already diversified. The whole point is you don't have to think about anything else.

And finally, stick to the plan. If the markets drop IGNORE THEM, do not panic, do not sell, they will come back up. If you sell you will lock in the loss. You ONLY make a real loss or a gain when you sell, otherwise it's just a loss/gain on paper. Ride it out. They will rise again.

I hope this helps. With this plan you could help her buy a home, make sure she won't be in retirement poverty, and enable her to get a car/have a holiday/get a painting/driving lessons etc in early adulthood. It must be awful for both of you right now. I hope this helps a little. Take your time to understand.

Yep, this is exactly what you do. I like vanguard also. For a child, appetite for risk will be high as time in market is long - go for 100% equities fund. Vanguard fans seem to like the ftse global all cap. There's a really helpful meaningful money Facebook group you can join. A vanguard investor group too where you can ask questions of the amateur investors. I don't really interact with group but reading the posts and other questions is really helpful for picking up tips/ ideas and increasing my understanding of how it all works. Good luck

Starfaces advise is excellent and one I would follow.

As his daughter, surely she would be the person to inherit anyway. Why are his family causing a problem with this? I really wouldn't worry about them wanting to know what you've done with the money. It's nothing to do with them at all.

Wow! I love this advice and you have set it out as a perfect step by step plan! I will read up on it all when younger children are in bed over the next few weeks.

I work in payroll so do have a way with numbers. Upthread somebody mentioned being good with excel, my job is all excel and analysis of number, breaking everything down. So this won't be an issue.

The PP who mentioned my daughter shouldn't know about the inheritance, she isn't stupid. She is 14 she knows the inheritance is there, her dad had a home and she knows its hers. Unfortunately the maturity of my DD also means nothing can be hidden from her.

As @Starface has asked what my relationship is like with her. She is an amazing daughter. Unfortunately she had to grow up quickly due to her dads illness. When we split she saw her dads health and unfortunately when she did see him she would care for him. When he committed suicide their relationship was broken. The guilt she has about this is heartbreaking. The situation has not made her rebel, it has made her more sure of herself that she wants to grow up sensible. She has a life plan. She wants to go to Uni to study microbiology and she has started to look into the ways of getting her name out there. She then wants to do research and hopefully publish it. She does come to me for guidance and she has asked what she should do with her money in the future, whether investing it is sensible or whether building up her credit score to secure a mortgage. So although she is 14 she is thinking about it. I just hope when she is 18 she is still sensible.

I love the advice you have given and how you have broken it down for me. Sadly I have never had to educate myself financially. I work month to month with disposable money that goes straight into saving for our annual holiday, not looking into investments. However, I will be looking into this and will take on the recommendations you have given.

@HollowTalk if I say neither sides trusts each other, my DD has even said her dad didn't trust his own family, yet they don't trust me. The way I see it is my daughter will always be my priority and it is insulting that they don't see that. They even wanted to be a name in the accounts that it goes into. I actually believed this was a legal thing and they would have to be it is only looking into it a bit more that I realised this was not the case. But things have since calmed down, I just don't want to be interrogated at how my daughters money has been invested.

@Idroppedthescrewinthetuna
I am so happy to have been helpful, and so glad that it sounds like both you and your daughter will be able to make good use of my information. It sounds like your daughter (and you) has had a hard enough hand delivered to her.

Once you know this stuff you can't unknow it. I know you say you have never needed a financial education, but actually as you go on this learning journey you might come to see what I believe, which is that understanding this is EVEN MORE important if you have relatively less income. Because then understanding investing can have the most impact, in retirement, in terms of security etc. You can invest from as little as £25 per month. You might find yourself developing plans for your other children too on a much smaller scale, and revolutionizing your own finances.

For me, understanding money came from fear of being able to provide for my children. That learning has been hands down some of the most empowering learning I've ever done, for me personally and for my kids.