Not that you’re likely to get into a legal battle with a child, but I assumed the 18 year old end point for bare trusts was something in law that you’d have no discretion over?It doesn't necessarily transfer automatically at 18. Mine is with New Ireland, and when setting up you have the option to strike out the following clause :
" The Trustee(s) are required to give each Beneficiary the option to receive the monies comprising the share of their
entitlement under the Policy when the Beneficiary reaches the age of 18 years onwards."
Yes, correct.I think the issue is that once a child reaches 18, s/he could potentially sue the trustees for poor performance.
Are you sure about that? An AMC of 1.25% these days is terrible value for money.Following up on this. It seems any investment product for children has both a circa 1.25% annual charge
Correct - investing directly in shares is much more tax and cost efficient than investing indirectly through the likes of a unit linked fund.If I'm looking at a 30 year span of investing, is my thinking right that this would mostly negate the 33% CAT savings compared to if I personally invested and gifted the money myself later? Assuming for the sake of comparison, that I was investing in individual shares and my annual return was exactly the same as the fund.
I'd be paying a 33% CGT on the gains rather than 41. And the returns overall would be larger, as I'm not paying out every 8 years.
And the annual charge would erode away the returns as well.
There are a lot of scenarios to consider, including whether the children will ever exceed their lifetime threshold for inheritance tax free.If I'm looking at a 30 year span of investing, is my thinking right that this would mostly negate the 33% CAT savings compared to if I personally invested and gifted the money myself later?
Investments for kids tend to be smaller amounts of money I’d have thought?The indivative AMC for a regular contribution product with advice is 1.25% to 1.5%. On an execution only basis it's 1%. You either need/want advice or you don't and that dictates the AMC.
Gerard
www.saveandinvest.ie
Investments for kids tend to be smaller amounts of money I’d have thought?
There's a lot to unpack in this post.Following up on this. It seems any investment product for children has both a circa 1.25% annual charge, and an exit tax of 41% every 8 years on the gains.
If I'm looking at a 30 year span of investing, is my thinking right that this would mostly negate the 33% CAT savings compared to if I personally invested and gifted the money myself later? Assuming for the sake of comparison, that I was investing in individual shares and my annual return was exactly the same as the fund.
I'd be paying a 33% CGT on the gains rather than 41. And the returns overall would be larger, as I'm not paying out every 8 years.
And the annual charge would erode away the returns as well.
I'm not very good with the maths for all this. I've no idea how I'd begin to calculate all this. But instinctively it looks like not a great deal.
We use cookies and similar technologies for the following purposes:
Do you accept cookies and these technologies?
We use cookies and similar technologies for the following purposes:
Do you accept cookies and these technologies?