Skip to main content

Article published 2nd June 2008

Very few savings products or accounts can be held in Flora or Rufus's own name - in fact, only children's bank accounts, friendly society savings plans and NS&I Children's Bonus Bonds are eligible.

Who looks after what?

Control of friendly society plans and bonus bonds remains with the parent. Other savings plans - including unit and investment trusts - must be held in the name of the adult who set it up. If you want to indicate formally that an account is set up on behalf of Flora, however, you can 'designate' it by adding her initials after your name, though this carries no legal weight and you still retain full control over the money.

What if you want more certainty that the money will be used as intended?

You can set up a trust, which is basically a means of giving your assets away for another person's use, but laying out rules about how and when they are used.

Three groups are involved:

  • the settlor gives away the assets and decides how they are to be used (there may be more than one).
  • the beneficiary benefits from the money in the trust (again, there may be more than one).
  • the trustees (one of whom is usually also the settlor where children's trusts are concerned) - who administer the trust and look after the assets in it.

Bare Trusts

There are several types of trust, but the cheapest option and the one most commonly used for school fees is called a Bare Trust. It can be set up by anyone for a specific child or children; the trustees withdraw money as necessary to pay for school fees, and on their eighteenth birthday, the children receive control of any money remaining in the trust. As the chances are most of it will have been used up on fees by then, however, this is not usually an issue.

In addition, after seven years any money put into the trust by the settlor ceases to be liable for inheritance tax. However, once you've set up a bare trust, you cannot change your mind about who gets the money or how it's spent! Nor, incidentally, is it possible to hold investment or unit trusts within a bare trust, as they already have a trust structure.  More complex trust alternatives would have to be used instead, but for most people it's probably easier simply to designate the account in the child's name.

Accumulation and maintenance (A&M) trust

If you want a more flexible trust arrangement that can continue beyond Flora and Rufus's eighteenth birthdays and could therefore incorporate university fee savings plans, you could use an accumulation and maintenance (A&M) trust.

These are more complicated and expensive to arrange and administer, and (unlike a bare trust) require professional help. But they have certain advantages, not least the fact that they can be set up for children who are as yet only a twinkle in their dad's eye. A grandparent, for example, could set up an A&M trust to benefit all his/her grandchildren, both existing and down the line.

by

Related articles


  • Special Needs introduction

    Some special needs are easy to spot, others are only determined once a child has experienced considerable difficulties, frustrations or social and emotional problems.  Over the years, diagnosis of and provision for SEN have improved, but both can still be a minefield. Identifying different kinds of special educational needs Few children fit a condition perfectly – if they do, we tend to say they are a ‘classic’ case. Most will not be straightforward: perhaps a dyslexic with dyspraxia and a touch of ADD, or a child with ASD who also has Down’s syndrome. Just as special needs are hard to…

  • The Good Schools Guide online subscription

    Find the best school for your child. One month subscription - £0.49 per day Three month subscription - £0.41 per day Six month subscription - £0.33 per day One year subscription - £0.29 per day Register for instant access to: ☑ Search for more than 30000 schools in our parent friendly interactive directory. ☑ Create and save lists of schools via My Schools. ☑ Use our comparison grid to get an exam results overview of schools you are interested in. ☑ Find comprehensive advice on state and independent schools, tutors and special needs. ☑ Receive our monthly newsletter. For further…

  • Finding a state grammar school

    Counties such as Kent or Buckinghamshire are ‘selective authorities’ and most families will have at least one grammar school close to where they live. Elsewhere, for example in Reading or Kingston-on-Thames, there are just one or two grammar schools and competition for places at these is ferocious. How to find a state grammar school Grammar schools are located in 36 English local authorities. Almost half of these are considered 'selective authorities' (eg Kent and Buckinghamshire), where around one in five local children are selected for grammar school entry based on ability. The others are areas such as Barnet or Kingston,…

  • Schools for children with performing arts talents

    As proud parents, we all know our children are unique. They're smarter than anyone else's, funnier, certainly more attractive, better behaved and above all bursting with the kind of talent that would leave Daniel Radcliffe, Jamie Bell and Charlotte Church standing. And for some extraordinary - though totally understandable - reason, everyone but us seems blind to our offspring's God-given artistic gifts.

  • Education Consultants

    The Good Schools Guide Education Consultants advise parents on everything to do with children and their education  Our service is a personal one-to-one service.You tell us what you want and we tell you how we can help. And then we do! Our education consultants are our most experienced writers. They have visited countless schools. All are parents. You will have your own personal advisor who has the benefit of the combined experience and expertise of the entire team to draw on. All our consultants work as hard for the children of their clients as they do for their own. Call…


Subscribe for instant access to in-depth reviews, data and catchment:

30000 Independent, state and special schools in our parent friendly interactive directory.
 School exam results by subject and performance GCSE, Alevel or equivalent.
 Which schools pupils come from and go onto.
 Honest, opinionated and fearless independent reviews of more than 1200+ schools.
Comprehensive catchment maps for English state schools inc. year of entry.
School data comparison by A/B weighted, relative success and popularity.
 Compare schools by qualities and results.
 Independent tutor company reviews.

Try before you buy - The Charter School Southwark

The Good Schools Guide subscription

For a limited time get one month's Good Schools Guide subscription free with any purchase of The Good Schools Guide to North or South London.

Your subscription will activate on checkout

The Good Schools Guide London SouthThe Good Schools Guide London North

 GSG Blog >    In the news >

The Good Schools Guide newsletter

The Good Schools Guide Newsletter

Educational insight in your inbox. Sign up for our popular newsletters.

Struggling with an SEN problem? Get advice from our experts.

 

 
 

Struggling with an SEN problem? Get advice from our experts. November 22nd at The Space, Marylebone, NW1 5NX. Limited tickets available