Most parents and grandparents will be familiar with the idea that you always think of your children and grandchildren as being young. Both of my children are legally adults and have both (finally!) finished school. However, I still worry about them if they’re not home on time, as much, if not more than I did when they were younger.

A client of mine recently sought my advice regarding her grandsons. She doesn’t have a great relationship with her son and daughter in law, and wanted to know what arrangements could be made for access for her and her husband through the courts. When I enquired about the children’s ages, she calmly informed me that they were 19 and 23! She is an intelligent and worldly woman, but still seemed genuinely surprised when I explained that no court could order the children to spend time with her or order her parents to give her access. In her mind, they are still young and can be told what to do by their parents or grandparents – having said that, I doubt that that was ever the case, but that’s another story.

Our meeting then took an even more unexpected turn, when she explained to me that she had been holding some money on trust for them since they were babies, and what should she now do with the funds. There was no formal trust set up for the money, all of which was being held in bank accounts in the children’s names. The woman was very surprised when I explained that upon each child turning 18, the money would automatically belong to them and should have been immediately handed over, and that her failure/refusal to pass the money to each child on her 18th birthday would probably amount to a breach of trust and/or create a tax issue. If you are holding money for minor children, anything that you do with those funds that is inconsistent with it being for that child could lead HMRC to conclude that it was just a ruse to avoid paying taxes on it. If that were to happen, you could find yourself with a tax bill going back to when the account was first opened, including interest and penalties.

Whilst it may be hard to accept that your family are growing up, if you don’t face the reality, it could cost you a lot more than just a dent in your ego. Not only will you have to face the reality that if they’re older, so are you, but also you may have a big tax bill to pay. If you do want to hold funds for family members beyond their 18th birthday, consider setting up a proper trust for them, or get financial advice from an IFA about taking out a policy or investment product.

Kleyman & Co Solicitors. The full service law firm. Wise beyond our years.