How much to put in children's ISA accounts or keep control over.

[Waitingforthetimetopass]

There is some money that we know will be coming from an inheritance. We will use a chunk to pay off our mortgage. The rest will be invested and that will be discussed with professionals.

The bit I am unsure and wanted to ask others experience and thoughts on is that we will put some in ISA'S in our children's names. Ideally I want to try and save over 100k each by the time they are 18. However, I am not sure if it's a good idea that they get access to the whole lot with no strings on their 18th birthday. Is it better to have some just as family savings but mentally tagged as uni expenses/ first house deposit for each child.

It’s impossible to know what a young child will be like when they are eighteen. My dd is twenty two and therefore was one of the first to get a child trust fund from the government. Some parents put money in and some didn’t but every one of the eighteen year olds that I know who got a big sum, spent it quickly. The worst being a son of my neighbour who paid for a lads holiday for ten friends.

That's what I am worried about. I hope that mine will have more sense but...

I received a much smaller amount at 18 which I had been encouraged to contribute to and save for myself and did use it for my first house as intended.

I just wonder if with others receiving money on their 18ths if some of them spend it on holidays etc will it create that expectation?

My children are really young still.

The risks and benefits depend on your financial situation as well. Do you use your full ISA allowance? Is your estate likely to be subject to IHT? If you have spare ISA allowance of your own and you're not worried about IHT then there are clear benefits to keeping the investments in your name for now.

It's very hard to know now what your child will be like at 18. One of ours would have been absolutely fine with having access to a lot of money- she's a saver- the other would have spent it. This is despite us teaching them about money etc. The self-control you need not to waste the money is partly down to upbringing but also partly personality type- 18yo brains are still developing and some people need a bit longer.

If in doubt, I'd err on the side of keeping most of the money in your name and only giving them what you'd be happy for them to waste. You might also consider a junior SIPP which doesn't have the same issue and could be hugely valuable- put £2880 in a year until they are 18 and that could grow to over a million (real terms) by the time they retire, even if they never add another penny.

It's a very, very bad idea in my opinion. There is a good reason for the aristocracy typically holding money / estates in trust until 25/30 historically!
Imagine if they blow it? Holidays, drugs, treating their poorer friends, even on sex change treatments, how would you feel? Noone knows what their YP would potentially blow it on.

We had the older child trust funds opened for ours. We stopped contributing to each at age 10. That meant it still had a long time to compound but didn’t become a very large sum to drop on an 18 year old. In the mean time we have tried to max our own ISAs with the expectation that large chunks of those will be used to support them in buying houses.

Yeah i wouldn't trust an 18 year old with 100k even if they are sensible. If I had had 100k I would have spent it on travelling and holidays and the odd handbag and a car. All decent things to spend money on but not what I would do with 100k now.

DH and I have had this discussion over the years and spoke about it again only yesterday. We’ve decided our children won’t be able to access their money at 18 yo. They will need to wait until some point in their 20s and we will be guiding them to use it for a house deposit (all being well) although ultimately it will be their decision. It might seem controlling to some people to keep control of their money until we decide they’re ready to have it but I think it would be ludicrous to expect an 18yo to spend it wisely- some would, most wouldn’t. The kids know we are saving up their money and that family members have also gifted them money over the years, and we’ve told them it can be accessed when they’re much older for something important and special. My dd is very sensible with money and has a great attitude towards spending wisely so I think she’ll be fine. My ds, however, has said he wants to buy a Lamborghini so we might have our work cut out with him!

So are you keeping it in your own name then, not saving in the children's own accounts?

Yes. We keep a tally of what they’re given for gifts and what we add each year ourselves and will keep it for when they’re ready.

We haven't been using full ISA allowance recently but hopefully will do so more once mortgage free.

Our estate is likely to be paying IHT.

I get that a SIPP would be a good investment and I will certainly look at it but I am hoping to be able to help my DC get started in life. Preferably I want to be able to pay for uni and give them a good house deposit so that they don't need student loans.

I am thinking that will amount to 60k for first degree and 100k deposit. 2 children = 320k an enormous amount but I have 15 years before even DD1 would be starting uni. If I am able to put 50k each aside from this inheritance it will make a good start.

What I don't want, is to work hard save all of this and have a slightly daft 18 year old waste chunks.

Your list of what it could be spent on seems melodramatic and certainly sex change is not the worst thing in my opinion.

However the wasting of money which I have worked hard for is my concern.

That is interesting. Thank you for sharing. Yes I am leaning towards putting more in my own investments.

That's what I worry about. I had a much smaller amount and did use as intended
If I was given 100k though.... it would have been very tempting to blow chunks on a nice holiday etc.

Your children don’t need to know they exist! We saved for all of ours and they got their ISAs when they decided to buy a house - between 25-28.

They can only “blow it” if they know it exists! None of ours did and they were delighted to find out when they decided to buy their first house.

😆 The idea of an 18 year old with a lamborghini is terrifying 😳.

This thread is definitely making me think I will keep the majority of the money in our names. Some in their ISA'S but I don't think that it is controlling to tell 18 plus adult children that we are willing to give them money for education and house deposits but not parties and holidays. Or not that kind of sum.

This is what I am considering.

I was under the impression that most banks sent out letters when the ownership transferred at 18.

We put £100 a month into a JISA for ours and it was worth over 40k at 18 so if the kids are young, it doesn’t have to be huge contributions to make a decent sum with compound interest doing its thing. Our provider did send letters before they turned 18, but I suppose you could watch out for the postman but not sure how that’d stand up legally! Ours have been sensible with it so far.
I’d also look at starting a pension for them - £2880 a year and if they never contribute any more than that a year till retirement age it’d still be a 1M plus pension even with very conservative growth.

We saved mostly in our names. We started putting some into kids names when they were teens 'for a house deposit' so I could teach them about saving but I knew both were reasonably sensible by then and I limited it to less than 20K each. Still a lot of money but not all the savings for uni etc. Now they are in their twenties neither have spent the Junior ISA money and are good at saving. I really wish I had done the Junior SIPP thing if I had had enough money - my older son is less keen on me helping him now as he is very independent but can't afford to prioritise a pension himself. If you put the money in a Junior ISA, they are contacted by the bank when they are 16/18.

Only if it's not in their names.

They do and in fact ours could check balances etc from age 16

If they grow up knowing there's some money put away for a house deposit for them then they hopefully won't be expecting to blow it at 18. When they get to 18 you can talk to them about putting it in a fixed rate ISA for 3 years or whatever so they can't just draw it out, just do it all with them. DS never considered it his money to do with as he pleased because he knew it was all money that we had saved.

That's what we did with DS.

Thanks. That sounds sensible.

I suppose I just find it hard to imagine what my DC will be like at that age. Right now I am still trying to teach things like if you splash water around get wet. It is hard to extrapolate.

We put £500 a month into an account for the DGC. Her parents have control of the account with the understanding the money is to be used only for education and or housing. I know there is always a chance she may squander it but hopefully her parents will keep her in check