Accounts and assets held for children across several countries

Money set aside for a child is straightforward within one country and awkward across several. The awkwardness is entirely in the details, and they are worth settling before the account is opened rather than at eighteen.

Who owns it

The first question, and the one that determines everything else.

• An account in the child's name — the money is the child's, irrevocably in most systems, and the parent is an administrator rather than an owner.
• An account in the parent's name earmarked for the child — the money is the parent's, with all that implies for tax and inheritance.
• A trust or foundation, which is a substantial structure with its own reporting and cost, and which several civil law systems do not recognise cleanly.

The tax questions

• Whose income is it? Many systems attribute a minor child's investment income to the parent, defeating the point of the arrangement.
• Was funding it a gift? In several countries transfers to a child are gifts with reporting obligations and, above thresholds, tax.
• Where is the child tax resident? A child follows the family in most systems, and if the family moves, the child's account moves with them for reporting purposes.
• Reporting. A child's account is reported under exchange of information like any other, against the child's tax residence.

The practical traps

• Access at majority. In most systems the child gains full control at eighteen, whatever the parent intended.
• Moving the account. Banks are restrictive about minors' accounts held by non-residents, and closure on a move is common.
• Documentation. Opening an account for a child abroad requires the birth certificate legalised and translated, and consent from both parents in many systems.
• Divorce. Assets held for a child are frequently drawn into a matrimonial dispute, and the earmarking is not a protection.

The sensible arrangement

For most families: hold the money in the parent's name, in the parent's country of residence, with a written record of intention, and transfer it when the child needs it and the tax position is understood. Structures earn their cost where the amounts are substantial, several jurisdictions are involved, and there is an inheritance objective — and they should be built by someone advising in every relevant country rather than in one.