Child Trust Fund Question

[willspal]

I have 3 children but only the youngest gained from the Child Trust Fund as she was born 2003.

They all have Building Society savings books with roughly the same amount of cash in each.

I have just noticed that the Child Trust Fund account has made a nice little profit in the year its been opened (its a Share account) and I was thinking of transfering all her funds from the Building Socitey to the Trust Fund BUT do you think this is fair on the other 2. I like to keep things equal for peace and my sanity and don't need the finger of 'You prefered her to us' in years to come. I would like them all to have roughly the same when they all hit 18 but what if her Fund makes lots more money than they end up with.

Shall I leave her Building Socitey Account alone and just leave the Trust Fund to see to itself.

WP

[caz21]

I think you should gain as much from it as you can for your daughter, it might not seem fair on the older children but i'm sure they would understand that the reason the youngest has the higher amount is due to her being born after 2003 and so be entitled to it. Me and my siblings had trust funds with the same amounts in and mine recently matured, my younger brother who still has four years til his matures will end up with a lot more than i did! i'm not bothered though, its just the way things seem to go!

[pedderwo]

I looked into this recently as my daughter is elegable, I am still deciding what to do to ensure that the figures balance when they are 18. I am considering many options.

1. To put a larger sum in my son's account to ensure that it earns more interest, as the amount of interest that is earned from the CTF is greater.

2. To invest in a more risky option of shares but again I will start my sons account off with a little more money to try to compensate.

If I keep track of both investments I can maybe make occasional payments to keep my sons account on track.

3. If they both had savings account another way would be pay the difference in interest myself on my sons account.

[kevshakry]

willspal,

i still have my child trust fund cheque i got it Feb 2006. could u tell me how u wisely invested yours as i think im confused wit investing it. - where is the best place

if u can place all her funds in the Trust fund as u get a better return do so but remember not even on a rainy day can u move it.

[FUZZYBEE]

I have two children and only one benefited from the ctf but i take 20 a month out of the family allowance and put that in a fund for the other one. However because there is only two years between them i have decided that i will wait for both funds to mature and i will put all monies together and split it equally. I wont let them know about it either as I would like them to use it for something useful.

[dancecaller]

Fuzzybee, can you do that? I'm sure you can put aside money and give it to the one that didn't have the trust fund, or split it to make them equal, but if the trust fund has more in it than you've saved I don't think you can do what you like with it. Surely it can only be taken out by the child (young adult by then). Which is a shame if you get better interest by putting extra into the trust fund. I suppose that if the chilgren agreed it when you put it in??? But what if they didn't agree when it matures it could be a problem.

[Sparkles3]

Agree with dancecaller, Fuzzybee, however well-intentioned, the money cannot be withdrawn by anyone other than the child. If you move the account, they will transfer the funds directly into the one you have chosen, or I think, they will provide you with a cheque in the child's name. You will not be able to have any cash though, so your children would need to agree to 'share' and sadly, with the exception of witholding all details of the CTF account so they can't actually find where the money is (and I'm sure where there's a will there's a way!), you have no legal control over what they do with it.

Back to willspal's question now, perhaps it would be worth seeing if your (or another) building society does a similar account that will be more beneficial and lucrative for your other children. I think it makes sense to try and get as much for them all as possible and so in your situation I would move the money across. No point in your youngest missing out just to try and make your older ones feel better - if they are concerned about it. As caz21 says, I'm sure your older children will understand, even if they do feel a little put out. Life is never fair is it!! I'm just relieved both of mine were born post CTF so I don't have to struggle with these decisions.

[FUZZYBEE]

Sorry guys I think you might have misinterpreted what i meant. My older child never got a trust fund so i put 20 cash away in a savings fund. When the little ones CTF matures I am still the controller as such for the account. Bearing in mind all companies differ and i chose this one in particular because it requires two signatures to be withdrawn. When we ALL go to withdraw the monies I will split it down the middle. Hope this clears it up.

[dancecaller]

Well, I suppose if they are friends when the time comes, and they know in advance that there are two accounts with different amounts in each they might agree to share. But you can't force it. This is what the government says.

http://www.childtrustfund.gov.uk/templates/Page____1177.aspx

"a long-term savings and investment account where your child (and no-one else) can withdraw the money when they turn 18
neither you nor your child will pay tax on income and gains in the account

a maximum of �1200 each year can be saved in the account by parents, family or friends
money cannot be taken out of the CTF once it has been put in � once your child is 18 they will be able to decide how to use the money
children can start to make decisions about how the money is managed when they are 16 "

If you are saving �20/ month I think it would be about 8 years before the interest goes over �100/ year so you can fill in a form to have it paid tax free. But anyone who could afford to save �1,200/year for their children will come up against the fact that interest over �100/year has to pay tax like the parents income (if the money came from parents) but in the trust fund its tax free.

But before you put any money in a trust fund with the intention of splitting it, they would have to agree, and even then I'm not sure that it's wise. You don't know what will happen . Their lifestyles and circumstances may be quite different, they may not be friends.

Certainly, check for the best rates for childrens accounts. Whether you want to risk the ups and downs of shares is a separate question. In abuilding society you keep all your money but risk losing out through inflation. Crystal ball needed.

[dancecaller]

Any one who has money saved in a childs name inan account that's not a Child Trust fund should make sure that they've signed to have the interest tax free.

[dancecaller]

Looking again at http://www.direct.gov.uk/MoneyTaxAndBenefits/ManagingMoney/PlanningYourPersonalFinances/PlanningYourPersonalFinancesArticles/fs/en?CONTENT_ID=10013916&chk=FGCHVY I notice that childrens accounts can have �200 interest/ year before tax if the money has come from both parents equally. And if it's come from anyone other than parents or step parents its the usual personal allowance (�5,035 for the 2006-2007 tax year).

Maybe if there are 2 parents and 2 step parents the limit is �400.