Trust Funds and ISA Accounts

Junior Individual Savings Accounts or Junior ISAs were created to replace trust funds. They are accounts in which interested parties can put away funds for later use by the child such as schooling or housing. There are currently two types of ISAs. One type is the cash ISA which works mostly like a regular savings account with some slight variations. The other type of ISA which is known as an Investment ISA would hold such things as stocks and shares.

Only one Junior ISA of each type can be opened for the same child. The accounts can be with the same provider or with a different provider. If the minor child already has an existing trust fund, then he or she will not be eligible for an ISA account. The government will also not make contributions into a Junior ISA as they did with previous trust funds. However, this type of account is still eligible for tax breaks. Once money is placed into the account, the interest earned on the account will remain tax free for one year.

Official launch of the Junior ISA account is set at November of 2011 on the first. These accounts will be available for residents of the United Kingdom.