Latecomers to Grandparenthood

[Dove21]

I hope I've left it long enough to thank all contributors to this splendid thread.

A veritable goldmine of accumulated experience, knowledge, insight and philosophy - all of which will be helping our decision making.

Thanks all, much appreciated

Dove (who is happy to answer to 'slightly older', but maybe not 'successful'. Who knows ?)

[Grumpsimus]

This has been an interesting discussion, with a divide between those who want to give the money away and those who want to give it away and still keep control of it. Obviously you can't have it both ways!

However, no real indication of the sum involved has been made, which will of course affect the advice given.

One point that hasn't been mentioned is the useful IHT tax break of regular gifts out of income. If you can meet the conditions, this can allow you to transfer a substantial sum fairly quickly, withour incurring an IHT liability. Assuming the parents open a Junior ISA you can transfer up to £9000 pa into it.

If you are able to transfer more than this you could ask the parents to open a Junior SIPP, you can pay up to £2880 pa and HMRC adds another £720 pa making a total of £3600. This really is the ultimate in long term saving, which the grandchild can't access until they reach pension age.

[stevensfo]

This has been an interesting discussion, with a divide between those who want to give the money away and those who want to give it away and still keep control of it. Obviously you can't have it both ways!

However, no real indication of the sum involved has been made, which will of course affect the advice given.

One point that hasn't been mentioned is the useful IHT tax break of regular gifts out of income. If you can meet the conditions, this can allow you to transfer a substantial sum fairly quickly, withour incurring an IHT liability. Assuming the parents open a Junior ISA you can transfer up to £9000 pa into it.

If you are able to transfer more than this you could ask the parents to open a Junior SIPP, you can pay up to £2880 pa and HMRC adds another £720 pa making a total of £3600. This really is the ultimate in long term saving, which the grandchild can't access until they reach pension age.

with a divide between those who want to give the money away and those who want to give it away and still keep control of it.

Maybe a bit too black and white? From what I've read, nobody is advocating giving it way AND keeping control.

I think that most people feel that one should have a choice WHEN to give the money. The person setting up the trust should be able to set an age and not be forced to choose 18. I'm not a lawyer, but I don't see any problem with adding that as a condition of a trust.

Steve

[gryffron]

I think that most people feel that one should have a choice WHEN to give the money. The person setting up the trust should be able to set an age and not be forced to choose 18. I'm not a lawyer, but I don't see any problem with adding that as a condition of a trust.

Different types of trust required.
The simplest and cheapest is a “Bare Trust”. The beneficiary has a legal right to demand all the Trust’s assets when they reach 18.
The more complex and expensive “Discretionary Trust” can run in theory for 125 years, or more typically the beneficiary’s entire lifetime.

Gryff

[scrumpyjack]

The bare trust has the great advantages of simplicity, nil cost and tax efficiency (the child has their own tax personal and CGT allowance) etc etc.
I certainly never tried to retain 'control' of the funds but simply to help the beneficiaries avoid making silly juvenile mistakes that they would later regret. It has all worked out in that respect. I have seen in my wider family the problems that other sorts of trust could create and so have stuck to bare trusts.

[Grumpsimus]

I think a warning should be given about Discrectionary Trusts, these are not really a DIY option. You need a Solicitor to set them up, this is not cheap from a £1000 upwards and annual running costs. There is also the Tax treatment of Discretionary Trusts, this is complex and appears to change regularly. They are certainly not worhwhile for comparitively small sums of money.

I suspect that if you have enough money to consider these seriously, you probably already have Legal Financial advisers who can take you through the advantages and disadvantages of them.