Saving for my child

My wealth strategy
1

Hello everyone,

I’m gradually starting to « educate myself financially » and so I’m planning ahead for my son (2 years old).

He has a current account and Livret A opened in his name at Bourso.

Having a PEA at TR, I opened a Plan Épargne Enfant for him, with €1,000 in an FTSE All World ETF (Vanguard). It’s quite simple and the advantage is that dividends are reinvested free of charge.

But after looking into it further, it turns out that opening a CTO ACWI in my name, then transferring it to my son when he comes of age, would have other advantages:

  • Exemption from taxes on capital gains realized before the transfer.
  • I maintain control until I feel he’s mature enough to make the transfer.

Is that correct?

In that case, can I « withdraw » the €1,000 from his PEE to put it into my CTO, which will be intended for him later?

How should I handle gifts given by family during birthdays/Christmas? Since the checks are in his name, they go into his personal current account. Is « transferring » them to my CTO allowed?

2

It’s a good thing to think about your child’s future and especially to look beyond the Livret A and life insurance. What are the conditions of their child savings plan? Technically you’re not supposed to withdraw your child’s money, but perhaps you could request that it be given in cash or a check in your name by explaining the reasons?

3

What information do you want regarding their PEE?

Indeed, I suspected that touching their accounts wasn’t allowed. Receiving the gifts in cash would be the solution. I can then add them to my account and fund the CTO by transfer from my account.

4

Because I understood very well the relationship between your PEA and the PEE? is the PEE in his name and what is its form? CTO or AV?

5

Same for me, I don’t understand.

The PEE is reserved for employees. It does not include a beneficiary clause.

In the event of death, the funds are therefore not transferred directly to a designated person, but are included in the estate.

6

Indeed, the two advantages you mention are valid and mean that you should prefer the brokerage account in your name that you transfer to him later.

There is another advantage that you don’t mention: If you separate from the child’s other parent (or if it’s already done), you maintain full control over this money, which is not the case for money in an account in your son’s name.

If I were you, I would leave what’s already in the PEE there, and I would invest the gifts he receives in the PEE as well. Indeed, withdrawing this money that belongs to him to put it in a brokerage account that belongs to you is very delicate, I wouldn’t do it. As for the money you decide to give him and invest for him, yes, you can invest it in a brokerage account opened in your name, which you will transfer to him when you decide.

1 Like
7

Oops, there’s been a misunderstanding. I used the abbreviation PEE for « Plan Épargne Enfant » (Child Savings Plan) and not for employee savings plan.

It’s a Trade Republic product, which is similar to a CTO (Compte-Titres Ordinaire) directly in the child’s name.

Advantages:

  • Contributions are fee-free with DCA.
  • On certain ETFs, management fees are refunded and reinvested free of charge in the relevant ETF
  • No paperwork for transfer/gift since it’s directly in the child’s name

Disadvantages:

  • No gift, therefore no capital gains exemption.
  • The child becomes the full owner of the account at 18, when they may not yet be mature enough to manage a potentially significant sum of money.