My wife and I would like to set up a savings account for our young grandchild. How we should approach this?
SS, Rochester, Kent
The simplest option is to open a bank account in your grandchild’s name which you, or their parents, would run. The child would be able to access the money when they turn 18 or earlier (which might not be wise if the sum is substantial).
If you wish to retain longer-term control of the funds, Stuart Price, a solicitor at Thomson Snell & Passmore LLP suggests paying into a discretionary trust with your grandchild as “discretionary beneficiary” and you and your wife as trustees.
The bank account should be opened in the name of the trust and you and your wife will be able to make payments to your grandchildren whenever you wish. Don’t simply set up a bank account in your own name and earmark it for your grandchildren, he says. Although you would retain control, on your death any money in the account will liable for inheritance tax.
If you need help email Anna Tims at your.problems@observer.co.uk or write to Your Problems, The Observer, Kings Place, 90 York Way, London N1 9GU. Include an address and phone number.
