Ensuring fairness for two children's University / college funds

Question

Note: This question references UK-specific finances but, for the core question, the country is almost irrelevant

Two children (A & B), born a few years apart, each have a tax-free Junior ISA investment (stocks & shares) account for the purposes of paying for their higher education once they reached 18. The same total money has been added to each over the course of their lifetimes so far.

However, partly due to the age difference and partly due to the variable performance of the stock market, the value of the two accounts has diverged.

Child A's fund has a 46% greater value today than Child B's. This might not be a problem if we compare their value at the same age, but unfortunately even by that metric Child A's fund value was 28% higher a few years ago than Child B's is today.

Note that:

• Junior ISAs are managed by the parents but owned by the child yet only accessible when they reach 18. There is nothing to stop the ex-child taking all the money and frittering it away on their 18th birthday.
• However, assuming they they grow up to be sensible enough either to pay for further education or invest in themselves via some other means, there would likely be an expectation on the parents to fund each process to a similar level.
• This means that some additional funding from the parents at age 18 is likely to be required in any event.

What is the 'best' and / or 'fairest' means of ensuring a similar amount is available when they each reach 18?

1. Top up Child B's balance today to match Child A's balance a few years ago, then let the stock market decide their fate. But the fund values could still end up wildly different
2. Continue topping up the fund of least value to match the other, taking into account the time offset and inflation - and probably ultimately adding to both, until the first reaches 18. But one child would almost certainly receive more cash investment than the other
3. Set up a separate account in a parent's name which matches the same investments, and use that as the balancer. But there would likely be tax implications for the parent
4. Something else

Also, is it correct only to be comparing Child A's account a few years ago with Child B's account today, such that we are consistently comparing the children's accounts at precisely age X, not on date Y?

(Similar to this question, but differing as there are multiple accounts and the children have a legal right to them at age 18. We cannot therefore take money from one account and pass it to the other)

Answer 1

What is the 'best' and / or 'fairest' means of ensuring a similar amount is available when they each reach 18?

Something else

I'd vote for something else unless there are extenuating circumstances. That something else is: do nothing

A misconception that is pervasive in college saving for kids is that one needs all the money, to pay for college, the day a child starts the first semester. The reality is that one only needs the cost of the first semester and expenses can be paid from cash flow.

It is likely that child A will have more than child B upon turning 18. Considering this there are a few different scenarios:

1. If child B has no interest in college, then there is no reason to make up the difference. Given your purpose this is fair.

2. Child B wants to go to college but the money is sufficient for completing that education. Again, no reason to make this up. You have given them an amazing start on life.

3. Child B wants to go to college, but the money is insufficient. Only then would I then redirect money that I was using to pay for A's college to B's expenses. Other income/monies could also be redirected for this purpose to make up the difference.

The bottom line is any case that you feel the need to "make up" the difference you can do so through your cash flow. Presumably you will be making a higher salary and child A will no longer be part of the payroll so this should be accomplished easily provided you don't fall for lifestyle creep.