Can I save money for my grandchildren, but with limited access?

2 December 2016


How can I invest a lump sum followed by monthly payments for my children? I do not want them to be able to access the money until they reach at least 25 years of age.

I also do not want their parents to be involved in the investment.



Junior Isas won’t work in this instance, as they have to be opened by a parent or guardian and the child gets control of them when they are 18. Instead, you could set up investments for each grandchild under a bare trust.

Essentially, you open a fund or portfolio – for example, an investment trust – and manage it directly.The named child is the only one who can benefit, and as you are managing the investment, the parents are not involved.

You as the trustee can manage the investments and even withdraw money – as long as it is for the benefit of the named child. There are no contribution limits, and saving from surplus income would not be subject to inheritance tax.

However, the child – the beneficiary of the bare trust – becomes legally entitled to the money at 18, so once again your age requirement is not met.

The simplest and easiest way to deal with this is to invest in your own name, preferably through an Isa if you haven’t used your own allowance in full. You could set up a specific fund or portfolio earmarked for the grandchildren.

That way, you don’t involve the parents, you don’t need to worry about investment limits (unless you are investing via an Isa) and, most importantly, you can choose when and how your grandchildren are given the money.


You could leave a letter of wishes with your will directing the executors to give these funds for your grandchildren should you die before you pass them on. Of course, there is no obligation to pass the funds to your grandchildren, but at least this option meets all your other requirements.

Note that, as the money is in your name, it could be subject to inheritance tax if your estate is worth more than the threshold when you die. Some people use discretionary trusts.


However, unless you are putting in a substantial sum – £100,000 or more – the cost of setting up a discretionary trust is just not worth it: you have the ongoing administration duties and expenses, trustee meetings, trust tax returns, charges when making distributions to beneficiaries and charges when adding funds. I find that most people prefer the simplicity of keeping the giving of money within their control.