Your money queries are answered by Peter Rutherford, senior director of Rutherford Wilkinson Ltd, chartered financial planners.
Q: I know that Junior ISAs are now available and I have some money I would like to invest for my grandchild. Is the Junior ISA the best way to go?
A: The first question is whether your grandchild is eligible for a Junior ISA. If they have been entitled to a Child Trust Fund then they cannot have a Junior ISA as well. On the assumption they do qualify then you can invest £3,600 and all gains and income arising would be tax free. However, you need to choose carefully as some providers are quoting high costs, which could more than outweigh the advantages. The other issue is that the child will become entitled to the funds at age 18 when it converts to a normal ISA and at that point you cannot stop them using the money as they wish. There are other solutions that can provide you with control but may not be quite as tax advantageous.
Q: I have some money to invest and I would like to do so ethically. Are there any funds you would recommend?
A: There is around £11bn invested in what are known as ethical or sustainable funds in the UK. However, there is much confusion as to what this actually means. Some funds seek to avoid, for the want of a better expression, “bad” investments while others actively promote a positive approach, screening the investment universe so they can find companies that are perceived to have a positive effect on the world. There are also those funds that simply take a best of breed approach. In other words they may wish to invest in, for example, an oil company and will analyse which oil company either does the least damage. You need to decide as to how you want your money invested and what you wish to seek to avoid. An independent financial adviser can then make recommendations as to funds appropriate based upon your desires.
Q: I was the sole beneficiary of my aunt’s estate and I am in the fortunate position that I do not need all the money for myself. I would like to give some to my two children. How much can I give away?
A: I believe that you are referring to inheritance tax when you ask about the limit that there is for a gift. Effectively there is no limit provided that you survive seven years from the date of the gift as it will fall outside of your estate at the end of that period. However, there may be a more efficient way of gifting money to your children now. This is by using what is known as a Deed of Variation, also known as a Deed of Family Arrangement. Effectively your aunt’s will is changed to reflect your wishes and some of the money that will have gone to you goes to your children. This would then be deemed to be a gift from her estate and not from you and you would have no inheritance tax issues to consider.
To request a free Investor’s Guide and with any questions you would like answered please contact me at Rutherford Wilkinson Ltd, Northumbria House, 21-23
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