Gifting €3,000 to child without them knowing for now

It is relevant in that the OP doesn't have to drip feed in 3k a year to make it tax free. They can just save it in their own name and pay over a lump sum which would reduce the present 400k threshold.
 
Airgunster said:
A bare trust with special conditions could probably work.
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If it's a bare trust then, assuming the beneficiary is of full age (which he is) and is mentally competent, he can at any time demand that the trust funds be handed over to him, and put an end to the trust. That would frustrate the objective of keeping the money out of the child's hands until he has got a bit of sense.

If the trust is established on the condition that (say) the beneficiary cannot access the trust funds before his 26th birthday, that's not a bare trust. More to the point, you'd need to check how it would be treated under the CAT legislation. From memory, if you put €3k a year into such a trust for n years and then on his 26th birthday the beneficiary is entitled to access the trust fund, €(3k x n years, plus accumulated interest), that's treated for CAT purposes as a gift of €(3k x n years, plus accumulated interest) made to the beneficiary on his 26th birthday, not a series of n annual gifts of €3k each.

OP wants to have his cake and eat it. He wants to make a series of annual gifts to his adult child of 3k each, but he doesn't want his adult child to get them; he wants the child to get a larger sum at a later day. Which, from the child's point of view, looks a lot like single gift of a larger sum at a later date.

You can do the series-of-annual-gifts thing with a minor child, but I don't think it works with an adult unless you actually give them the gifts. Putting money aside that they will get at a later date is not making a gift to them. Trusts are often used to defer CAT liablity because the beneficiary isn't regarded as getting a gift until they actually receive money from the trust, or become entitled to receive it. And, precisely because it works for that, I think it won't work for this.
 
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Airgunster said:
A bare trust with special conditions could probably work.
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A bare trust is for a minor, it falls away at 18.

I have lots of clients who use the small gift exemption for their adult children. As they are over 18, the account has to be in their name, so they will know about it (if they are a minor, they don't need to sign anything, so it can be set up without their knowledge under a trust structure).

In all instances...so far...the adult child has not raided the investment account to go on the lash with their mates. Their parents have explained what the money is for and it goes into an investment account that is not readily accessible. They are all in investment accounts with insurance companies.

If the money is in their bank account, do not expect a young adult to be disciplined enough not to spend it. Put it out of their way. The young adults that I set these accounts up for don't get involved in it past signing the paperwork, they really have little interest in it, they let their parents run the accounts for them and just sign forms when asked.


Steven
http://www.bluewaterfp.ie (www.bluewaterfp.ie)



* I get many enquiries from people who want an "execution only index fund bare trust". When I quote them the price, they never come back. These are not simple investment accounts. As well as investment accounts, there are complex legal documents and Revenue reporting to be completed. I have a client who made a top up to the their child's trust account and there is a list of things that we have to go through before the money is invested. So if you think a bare trust is a set and forget like a regular investment plan, forget it, they are not.
 
Curious does the small Gift exemption have to be money? i.e. could one in theory transfer €3000 worth of land or an assest to son or daughter per year?
 
Thanks for the replies. Apologises if hijacking this but assuming all inheritance thresholds have been already used up. How best /most tax efficient does a retired non farmer pass land valued at circa €600k to current farming son? Would he have to go into partnership or set up a company etc to minimise CGT.
 
Nowwhat said:
assuming all inheritance thresholds have been already used up. How best /most tax efficient does a retired non farmer pass land valued at circa €600k to current farming son?
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You'll definitely need specialist professional tax advice if this query relates to an actual situation, especially taking into account changes mooted in Budget 2025 which may or may not have taken effect at the time of writing.
Nowwhat said:
Would he have to go into partnership or set up a company etc to minimise CGT.
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It's highly unlikely that either would have much effect but that's really for a specialist advisor to address for you.
 
Has anyone opened a brokerage account for their offspring ( in their name ) and used that to make regular deposits to buy eg units of a fund ?
As I write this I’m not even sure an online broker would accept payments that didn’t come from the named owner of the account ..? I presume an account could only be opened if the child is over-18 but maybe others have tried an approach like this ??
 
You can't legitimately open an account in another adult's name unbeknownst to them. As I mentioned earlier, imagine, for example, what a boon to money launderers and other criminals it would be if you could?
 
Steven Barrett said:
A bare trust is for a minor, it falls away at 18.

I have lots of clients who use the small gift exemption for their adult children. As they are over 18, the account has to be in their name, so they will know about it (if they are a minor, they don't need to sign anything, so it can be set up without their knowledge under a trust structure).

In all instances...so far...the adult child has not raided the investment account to go on the lash with their mates. Their parents have explained what the money is for and it goes into an investment account that is not readily accessible. They are all in investment accounts with insurance companies.

If the money is in their bank account, do not expect a young adult to be disciplined enough not to spend it. Put it out of their way. The young adults that I set these accounts up for don't get involved in it past signing the paperwork, they really have little interest in it, they let their parents run the accounts for them and just sign forms when asked.


Steven
http://www.bluewaterfp.ie (www.bluewaterfp.ie)



* I get many enquiries from people who want an "execution only index fund bare trust". When I quote them the price, they never come back. These are not simple investment accounts. As well as investment accounts, there are complex legal documents and Revenue reporting to be completed. I have a client who made a top up to the their child's trust account and there is a list of things that we have to go through before the money is invested. So if you think a bare trust is a set and forget like a regular investment plan, forget it, they are not.
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Hi Steve

Are the investment accounts they have with insurance companies in the adult child's own name with the parents paying a yearly contribution?

Thanks
 
They can be yearly or regular monthly/quarterly /half-yearly contributions and you have the flexibility to change the contribution i.e. you're not committing to the contribution indefinitely.
 
Tuttlinghorn said:
Has anyone opened a brokerage account for their offspring ( in their name ) and used that to make regular deposits to buy eg units of a fund ?
As I write this I’m not even sure an online broker would accept payments that didn’t come from the named owner of the account ..? I presume an account could only be opened if the child is over-18 but maybe others have tried an approach like this ??
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Yes, have asked my adult children to open a DeGiro account in their own names. Each January, myself and my wife transfer €3,000 each to the children's bank accounts and they then transfer to the DEGiro accounts. I have full access to these accounts (with their permission) and manage the investments side but the accounts are owned by my children.

If it became necessary to stop them from withdrawing money or selling shares in this account it would be possible to change passwords etc but if this is a worry then I wouldn't recommend doing it this way. The kids are not really interested in the accounts, only one of them even knows the balance of their account.
 
I guess the kids knowing about the accounts can influence their behaviour. If they know thr guts of a deposit is sitting waiting for them, they might save less themselves. I would make it conditional on them contributing a like or multiple of the 3k once they are able to avoid this.
 
misemoi said:
I guess the kids knowing about the accounts can influence their behaviour. If they know thr guts of a deposit is sitting waiting for them, they might save less themselves. I would make it conditional on them contributing a like or multiple of the 3k once they are able to avoid this.
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Agreed misemoi, I've told them it's for their early retirement and that I recommend they do the same for their children too (assuming they have kids). Trying to get some long term thinking and planning on their radar along with good investment and finance planning. This also includes advising them to regularly view the AskAboutMoney website.

Ultimately, it's their money though and they are adults. If they want to do something with it that I don't agree with I can advise them against it but will not do anything beyond that to stop them.
 
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