Discussing Child Trust Funds

Child Trust Funds were only available for children born between 2002 and 2011, but there are a good few of them still around now. Many of them are quite small in value because of the limit of what could be paid in, and they are often set aside by people we speak to as not being worth seriously thinking about. But they are still a valuable planning tool.

Even smaller amounts of money should be reviewed and refined regularly to make the most of every pound. And it’s not uncommon for the charges on Child Trust Funds to be much higher than they need be, which really just means that your children are shortchanged when the money comes to them.

We contributed to a discussion article headed: ‘What to know about Child Trust Funds’ from FTAdviser.com recently.

Here’s what our financial planning adviser, Krupesh Kotecha, had to say about them:

“As children begin to reach age 16 and have the option to take over the management and investment decisions (but not access the funds until age 18) I suspect for most families things will probably remain unchanged with the Child Trust Funds remaining under parental supervision.”

But he added:

“I would encourage all 16 year olds and parents to actively encourage involvement and start the education process into the principles of savings and money management now, and if they have a financial adviser then bring the child along to discuss this at their next meeting so they can better understand the ins and outs.”

He also explained:

“The Junior Isa (which replaced CTFs in 2011) is another very good way to save for children. Like an ordinary Isa, they are available as a cash or stocks & shares Isa and although there are limits to how much you can save (currently £4,260 for 18/19 tax year) there is no tax on interest, dividends, or gains, so these provide a tax-efficient way of saving.”

If you would like to see what improvements could be made to improve, and shape your family finances, please get in touch with one of our financial planners. You can email team@balancewealth.uk, call or live chat with us, and we look forward to hearing from you.