Join our investing community

Buying shares for kids in family trust

Discussion in 'General Investing Discussion' started by Bberry, 16th May, 2018.

  1. Bberry

    Bberry New Member

    16th May, 2018
    Hi everyone, first time poster here.

    We are a young family and we are going to have two children (one is 2 years old and the other is just about to be born in the next few weeks) and we want to invest for their future of paying for private high school fees.

    We are planning to put aside $6k per child per birthday.

    For the investment strategy, we are interested in investing in EFT index funds on the ASX e.g. VAS.

    We plan to add to it each year and preferably reinvest any dividends. We do not plan to sell any shares/drawn down for at least the next ten years until they start high school.

    My question for those who may have experience in this:

    1) I have a Family Trust already. Should we purchase these shares through the family trust or in my individual name? Pros and cons?

    2) Which share trader should we buy through as a Family Trust? Previously we have had accounts with commsec and ANZ etrade, but both as individuals. Is there a particular trader that is better for a Family Trust account? Does the cost of each trade differ from an individual account?

    3) What do you think of this investment strategy for kids? Any other options to consider?
    twisted strategies likes this.
  2. Hosko

    Hosko Well-Known Member

    25th Sep, 2016
    I'm watching this one to see how many different answers you get. In a similar predicament a around 3 years ago (youngest is nearly 4) and there seem to be pro's and con's for each available option.
    As for who to trade with, my suspicion is that it is a moot point as you will be making 6 or 8 transactions per year? The costs associated with the trade will be minimal in the grand scheme of things?
    Rest assured the tax man doesn't miss out.......
    twisted strategies likes this.
  3. twisted strategies

    twisted strategies Well-Known Member

    3rd Nov, 2013
    on factor downplayed is inflation ( erosion of buying power )

    these are unusual times interest rate-wise

    if buying direct from Vanguard ASK if you can vary what you buy from year to year , sometimes ( say ) VLC or VHY will be a better option ( these are examples only )

    VAS and VHY have done nicely for me but i bought in 2011 and joined the DRP plan ( the timing was a BIG help )
  4. JasonC

    JasonC New Member

    1st May, 2017
    Hi BBerry,

    Our family has a family trust which we have a portion allocated for the kids. We are using wholesale managed funds for this portion at the moment as we put in a smaller amount each month and the brokerage on this would be prohibitive.

    We do have other shares in the trust and for that we just use a Commsec account - setting it up for the trust was fairly straight forward and don't believe there is any different in brokerage costs for the trust than an individual account.

    Are you going to be keeping each kids allocated funds separately or just pooling them together? If separate you might want to open multiple accounts (one for each child).


  5. Terryw

    Terryw Well-Known Member

    9th Jun, 2006
    I can’t answer ‘should I questions’ but who will get the income each year from the trust? Will the trustee actually pay this income out?

    What happens when the kids are 18?

    What if you die?

    An alternative is to simply use this $6k to pay off your home loan quicker. You will have hopefully paid it off by their 18 birthdays so you could then help them with a cash gift – or better an interest free loan. You can keep track on a spreadsheet what their notional balances are.