How do I save for my US-based grandchildren who both hold duel UK/US citizenship?

07 October 2021

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Question by Sharon

I am a grandparent living in the UK and I want to save for my two grandchildren resident in New York. They are both dual UK/USA passport holders. My son is married to a US citizen.


Answered by Andrew Neligan

The most efficient way for grandparents to save for their grandchildren is through Junior ISAs. However, the child has to be living in the UK, not just have citizenship.

The other issue relating to US citizens is that the US government has more onerous tax rules which take into account worldwide assets and income. I am not an expert in US tax so can't provide a definitive answer or options but it does make things more restrictive.

Even if you were to establish less tax-efficient investment accounts in their name the same US tax issues may arise.

An alternative approach could be to invest the money yourself and earmark it for your grandchildren, but that may have tax issues for you (both income and capital gains tax in your lifetime, or IHT on death).

Or, you could give the money to your son with the direction that he finds a suitable US investment for children.

I hope this helps.

Andrew

Answered by

Andrew Neligan

Chartered & Certified Financial Planner.

Typically, I work with individuals and couples who have got to the point in their lives that they have important questions about money they want answering. They may be thinking about retirement in the next 5 to 10 years but they are worried they won’t have enough so they want to make sensible decisions now. Or, they really want to retire sooner, but either they don’t know if they can afford to, or they are afraid they will make decisions that they may later regret.