Investments Under In-Trust For (ITF) Account

On my previous post, I have written about opening a mutual fund in-trust for (ITF) accounts for kiddos as Christmas present. As I browse my FB account this morning, I came across a financial group who previously discussed about ITF accounts. 

Opening question: Paano po mangyayari if namatay si parent tapos ka-OR sa account ang anak, would the funds also be included in the estate? Madali lang ba to transfer the account to the child if nag legal age na? 

Summary of answers of group members: 

1. If the child is still a minor, open an ITF account. If 18 years old and above, use a joint (OR or AND) account. - Under an ITF account, the child must be below 18 years old. Minimum age requirement to open an individual account either in direct stock investment or pooled funds is 18 years old. 
2. When the parent (primary account holder)dies, it's subject to estate tax. - Investments are form part of an individual’s assets, and is therefore subject to estate tax. 
3. Nobody will manage the investment while the child is a minor, if the primary account holder dies (before the child reaches 18 years old). - Here also sharing responses directly from FAMI, Philequity,from a Sunlife FA and from a MF advisor:

The account will not be automatically transferred to the beneficiary even if he/she reaches his/her legal age. The primary investor will still be the one who will manage the account. The parent will be the Primary Investor for the account but in case something happens to the Primary Investor, it would not be automatically given to whom you In Trust For the account, hence your shares in the mutual fund will form part of your estate and will be distributed to your heir but the difference is that you now have a designated heir once you opened an ITF Account. - Philequity Management Inc.

If the beneficiary reaches 18 years old,the account has to be manually transferred (ie, redemption filed and shifted to a new account). In case that the primary account holder dies BEFORE the child reaches 18yo, the account is not automatically transferred because the owners of the account are still the primary signatories. In case that the primary account holder dies when the child is ALREADY 18yo, the account is not automatically transferred with the reason same that the primary signatories are the ones we recognize. - First Metro Asset Management Inc. 

Automatic transfer if the child is not a minor. If still a minor, someone else will have to hold his/her account for him/her. No estate tax will be deducted. Ang estate tax po, separate filing yan with the BIR and gumagamit talaga ng ibang pera. Which is why it's very important na may pang-final expenses ka thru insurance. - Ms. IR, Sunlife Financial Advisor 

For ITF acct when the child reaches legal age, required update para ung bata pwede na maging signatory sa MF. If the owner dies before the child reaches 18, there must be an assigned guardian kasi minor pa ang bata and di pa responsible. Pag namatay owner and legal age na ang bata, yes pwede after estate tax. Better is kumuha ng insurance si investment owner  just in case something happens, may pambayad tayo kay Ate Kim. - Mr. EL, MF Certified Investment Solicitor , Rampver Strategic Advisors

 Given the above responses, these caught my eyes (from the same post):

The scenario as a whole is quite complicated. Parents like me do open investment accounts for our kids for their future .Next to it is giving them a good financial foundation, teaching them good financial responsibility. However, the lessons here still applies in general when entering investment.

1. Research  and study thoroughly on the kind or form of investments  (direct stocks or pooled funds / sole, joint or ITF account) that bests suits your goals, your personality and financial capacity.
2. Find a company who has good credentials and has an accommodating customer service team - Remember, you'll be partners for life. 
3. Review the contract or agreement of the company where you'll invest - Any written word you find confusing, don't be afraid or ashamed to ask. Never assume. An office trainor always remind us that ASSUME means  that you make an ASS out of yoU and ME.
4. Seek for help or advice from knowledgeable/reputable persons regarding estate planning -Whether getting an insurance or setting aside a specific money to cover the expenses. Take note that risks not only revolve on fluctuating market but also on the possibility of death of the investor any time.
5. Never forget to inform your family (spouse and children) about your investments, get them involved and educate them about financial management - para hindi sila "nganga" kung anong gagawin kapag "may" mangyari or kapag "may" nakuha na  

Source: https://www.facebook.com/groups/theglobalfilipinoinvestors/