Inheritance Investment for 10yr old

[Onetwothreebadknee]

My 10 yr old DD has been left approx £20k from a relative (written in the will) what’s the best way to invest this until she is 21?
Also it needs to be kept in her name as I claim UC so obviously I can’t have savings. Thanks

I would put in in Premium Bonds in her name, and tick the box for any winnings to be re-invested.

9k in a junior isa stocks and shares
in the next tax year add another 9k and the remainder after that.

pick a standard wrapper from Hargreaves Lansdown

cash will become less valuable due to inflation.

You can invest this into a Junior ISA in her name, invested into a simple stocks and shares fund. This means any money you make is tax free. Stocks & shares means the money can lose value but over 11 years it is very likely to rise. If you do this, don't be tempted to move the money if its loses value in the short term - that's normal in investing, the key is to stay invested.

You are allowed to put £9,000 into a Junior ISA in each tax year, so it will take you just over two years to contribute the whole £20k. Do £9k now, £9k after 6 April 2025, and the rest after 6 April 2026.

Whatever you can't put into the ISA in her name now should go into a cash savings account in her name.

You can open Junior ISA from a company like this... https://www.fidelity.co.uk/junior-isa/

Choose a fund to invest in like this....
https://www.fidelity.co.uk/factsheet-data/factsheet/GB00B83LW328-legal--general-glbl-equity-index-i-acc/key-statistics

Tempting as this might be (due to the potential for big prizes) the odds are massively stacked against you given the amount you are talking about. Investing in stocks & shares likely to be best, or a simple high-paying Cash ISA if you don't like the idea of risking it with investments.

Get a proper trust set up to make sure the child can’t get unfettered access to this money (plus interest) when they are 18 - you can specify the age they be one entitled in the trust deed. The solicitor dealing with the deceased donor’s estate can advise on this

Put it into a Junior S&S ISA with a company like Vanguard - 9k this tax year and then another 9k after April 2025. The remaining can go into a Child Savings account for the time-being. I have told my children that the ISA money is there for them but it's for university or to go towards buying a house one day. Hoping that telling them early on means that it's already allocated to that in their minds and won't be frittered away.

Put it in a Junior ISA. Child will be able to access it at 18 but the vast majority of young people treat their money responsibly.

A trust for this amount of money makes no sense. The admin and overheads are huge.

Your DD cannot inherit the money until the age of 18 (or older if stipulated in the will). It is held on trust until she reaches the required age.

The will should have named who the trustees are (there must be two). These are the people who manage the money until your DD reaches the required age.

Is the age of 21 written in the will? Or is that just what you would like to happen?

If it's the case that this is simply what you would like to happen then you cannot stop her getting the money at 18. If it's written in the will then she will likely be entitled to the income from the age of 18 anyway.

I would disagree with the poster who mentioned Premium Bonds. The effective rates have come down a lot over the last few years and the best children's savings accounts pay more interest.

I would also leave some of the money in a savings account rather than putting it all in a Junior ISA.

You can only withdraw money from a Junior ISA at the age of 18. If you wished to use some of the money to benefit your DD before the age of 18 then you could not withdraw any money to do that.

"A trust for this amount of money makes no sense. The admin and overheads are huge."

Her DD cannot inherit the money until she is at least 18. A gift to a beneficiary under the age of 18 is always held in a trust.

No they can't. The only person who could specify whether or not there is a trust with specific terms is the deceased, it's not OP's money so she can't put it into a trust themselves.

Off the top of my head as well, it's difficult to vary what happens with a minor child's inheritance so deed of variations of that ilk are usually out.

I would echo other people. Put it into a JISA over a few years, with the excess in high yield savings account in the meantime (until it can trickle into the JISA). Invest it in a simple global tracker fund, for example, Vanguard All-Cap.

In the meantime, educate your child on good money habits and pray she spends sensibly when she gets access to it at 18.

Sorry, just another thought. Since the money is held on trust until whatever age then I am not sure that a trust can open an ISA. The trustees would have to transfer the money out of the trust and into the ISA.

If the age of 21 is written in the will then a Junior ISA may not be appropriate.

The reason for this is that if they will inherit at 18 then the beneficiary has a vested interest as soon as the person dies. It's just that they can't actually inherit until the age of 18.

In contrast, if any age over 18 (eg 21 or 25 etc) is specified in the will then your DD only becomes entitled to the gift if she survives to that age. This is often called a "contingency trust".

So, in this situation your DD is not allowed to touch the capital until she is 21.

With a Junior ISA I believe that she becomes entitled to the money at at the age of 18. This would go against the terms of the will.

If all beneficiaries agree then pretty much anything can be agreed - this is what happened when my kids inherited a lot of money when they were very young.

You are mistaken.

That is the case where the beneficiaries are adults. A deed of variation can easily be done. But you cannot do a deed of variation where the beneficiaries are under 18 unless you get a court order.

So are you really saying that the trustees of your children's money just decided to withhold the money from them? That's a pretty nasty thing to do.