FAQ A step by step guide to giving €3,000 a year to a child via a bare trust

Once the plan is up and running, grandparents etc can also contribute to plan. Payments have to go through the trustees and AML is required as well as records of transactions (I'm beginning to think that 1.5% amc is cheap for all the advice that people get for their bare trusts! )
 
I'm definitely not getting into the weeds on this one except to note that throughout my career whenever I have seen people build longterm plans on the back of complex and/or expensive contracts, agreements or structures, more often than not these go awry because circumstances change, priorities change and/or the people running them neglect them.
 
Do people like to put away money that they can't touch so they don't spend it on something else maybe? So they are not thinking of the end stage of how their assets might be distributed or taxed, or their estate in terms of what the thresholds might be in 50 years, they are thinking of how can I take it out of my own reach right now so I don't blow it all on a holiday? (following another thread on here!)
 
Just to clarify, I was comparing it to directly investing in shares myself, rather than going with a managed fund. As far as I'm aware, there's no low cost stockbrokers that will allow you to open a share trading account in a minor's name.

And I think it's a little disingenuous to say the fees are "only" 90 euro for the first year, since you'll be charged 1.5% on that years contributions amount every year for the life of the fund.
 
TomEdison said:
why would you pay any cost for a trust or similar if you don't anticipate some CAT saving? Why set up the trust at all?
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Because people want to help out their children with buying property. Using a regular saver plan helps them do it by paying in on a monthly or annual basis. If money is tight, they can stop or reduce the amount.

For me as a financial planner, it is more about putting away money regularly for a large expense in the future as anything else. The €6,000 gift exemption is good to be able to use but I certainly wouldn't let a child's future CAT liability be a factor. They need the money now, not when they are 60.
 
Perhaps I’ve just seen more than my fair share of young people with wealth going off the rails, but I’d advise anybody thinking of doing this to think long and hard about how they would feel if their child developed a drug/drink/gambling habit in their teens that an injection of cash at their 18th birthday might hugely exacerbate, all to save a few quid tax. Or think of a child that is struggling to develop independence. There are much worse outcomes than little Jimmy wasting his trust fund on a flash car.

YMMV but we decided this risk was not even close to worth taking, so we will pay the tax and help our kids buy houses from our own investments when the time comes.
 
Steven Barrett said:
Because people want to help out their children with buying property. Using a regular saver plan helps them do it by paying in on a monthly or annual basis. If money is tight, they can stop or reduce the amount.
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But you can do that without setting up a trust. You just open a savings vehicle of your choice which you earmark as the vehicle through which you will save regularly to build up a fund that, When The Time Is Right, you can give to your kid towards the deposit on a house.

Until you give it to them, it's your money. When you give it to them, it's within the charge to CAT. But if you expect the total of the gifts and inheritances they will receive from you will be less than €400k, that doesn't matter.

Plus there are advantages to doing it this way; there's no risk that your child will improvidently squander the fund at age 18; you don't have to gift it to him until he is actually buying a house.
 
You can choose not to tell/educate your U18 child about the annual gift, but I don't think that's a good idea. Best to actually give them some reponsibility in their future and not try to control their lives indefinitely.

You could tell them about it at age 34, because that's the average age of a gambling addict entering treatment, or at 43, because that the median age for individuals entering alcohol treatment in Ireland. I know older people again that still can't manage money because no one ever taught them how. There's no guarantee that the 50/60 year old (or their spouse) won't go bananas with an inheritance. No one can control the outcome.

Again, availing of this specific annual exemption should really only be the concern of those that know now that the CAT threshold will be exceeded.
 
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Brendan Burgess said:
I will amend this to reflect the fact that the costs of owning shares directly are generally lower.
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Dividend income from shares in a Bare Trust will be taxed back on the parent if they are alive under anti avoidance provisions? or maybe that’s only relevant to a Family Partnership
 
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