Investing for a child

A parent requires:

• an active client agreement
• a child account agreement
• an investment services agreement
• an appropriateness test (not required if the security to be purchased is trading in Europe and it is not a complex instrument (such as crypto assets, or index funds tracking the prices of crypto assets of precious metals))

In addition, it is necessary to conclude the following on behalf of the child:

• an investment services agreement

If the child’s account is to be used for transactions in US equities, a W-8 form will also need to be filled in on behalf of the child. In addition, a free Baltic securities account needs to be opened for a child to be able to purchase Baltic securities for him/her. An easy way to start investing is the Growth Account, where you can invest from as little as one euro if you want.

You can sign all the necessary additional agreements in the ‘Information and Settings’ → ‘Contracts’ section of LHV Internet Bank. To complete the appropriateness questionnaire, go to Information and Settings → Appropriateness Assessment Questionnaire.

The law does not allow for securities to be purchased with money deposited in a child’s account by a third party (including a grandparent) without the prior consent of the court. It is important to understand that the aim of the law is to protect the best interests of the child and to ensure that the child’s assets are not used inappropriately. If the grandparent made the transfer directly to the Growth Account, a parent should transfer the money to the child’s regular account and refrain from making any securities transactions with the money (including through the Growth Account).

If a child reaches the age of majority and they feel that their assets have been misused or have significantly depreciated in value, they have a legal right to claim compensation from the persons who represented them (parents). This can be based on the grounds that their assets have been misappropriated (for example, all their assets have been withdrawn from the child’s account or money gifted to them has been invested without the court’s permission).

A minor cannot carry out transactions on their own because they lack active legal capacity for the purposes of the law. A special authorisation to make investments may also exceptionally be granted by the court to a person aged 15 or over. Subject to the permission of a court, a minor may carry out securities transactions themselves by submitting a completed securities transaction order for each transaction at a bank office or by sending it digitally signed to info@lhv.ee.

No, there is not.

Yes, securities bought with money deposited by the legal representative in the child’s account can be sold, but the money must remain the property of the minor.

Yes, children are also subject to the income tax-free minimum.