I am dealing with an estate where a minor beneficiary is entitled to a share of the residuary estate (approximately £35,000) upon attaining 21. He is 19. The money needs to be invested and I would appreciate any suggestions members have for short term investments that would be suitable given that he will be entitled to the money in 2 years (or possibly less). Also, he is entitled to the income from the age of 18 so would that affect the type of investment the executors could make.
These recommendations seem very mealy mouthed and safe. Broadly they will give you 1% for 18 months – discuss for hours on the accuracy. From the markets (i.e. funds) expect 10% though of course some are better. This is based on basically one of the major Baillie Gifford Funds – American B , European etc.
There are investment professionals who would advise rather than a random selection of some people who connected to this forum. If I was allowed I would take money and ask for 25% of any profit over 3% per year and promise to pay 0.5% pa even if markets under perform that. Surely better than these recommendations and I would expect you to be getting 7-8% pa.
Lazza1973 - Yes, safe as you say. Admittedly I am no IFA but the time horizon is small so why risk an event like what has occurred this year? Yes there is a bounce now but it seems a lot of risk to for such a small amount of time. 5-10 years then something more risky perhaps. Trustees have a duty to protect as well as for growth.
The following is an extract from the current Premium Bonds terms and conditions.
Who may purchase and hold Bonds:
19 Individuals: Individuals of at least 16 years of age may, for only their own benefit, purchase and hold Bonds in their own name.
20 Attorneys: An individual of at least 16 years of age may also purchase Bonds in the name of another such individual where acting under a valid power of attorney.
21 Children: Bonds may be purchased on behalf of a child under 16 years of age in accordance with paragraphs 65 to 72.
22 Deputies: A person who is legally entitled to make investments on behalf of a person who both lacks capacity and is at least 16 years of age may purchase Bonds on behalf of, and in the name of, such person.
23 Bankrupts: Bonds may not be held or purchased by a person who is an undischarged bankrupt
It would appear that trustees may purchase bonds in only limited circumstances – i.e. when they are a parent, grandparent or great grandparent and buying for a child under the age of 16.
Provided that the child’s entitlement is absolute and, say, one of their parents is appointed trustee for them, it would be possible.
But is it either appropriate or desirable?
Paul Saunders FCIB TEP
Independent Trust Consultant
Providing support and advice to fellow professionals