Real-life MMD: Should I use my 5-year-old's £100k Prem Bond win to pay debts?

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  • It is her money not yours.
    ~~~~~~~~Thinking outside the box~~~~~~~~~~~

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  • hummingbird
    hummingbird Posts: 1,522 Forumite
    I would definitely agree that the 3 children should be treated equally in this. The resentments that could occur later on down the line could be very divisive - and the money should be a blessing to your family, not a cause of worry and concern. If you are in need of some of it to pay off serious debts, then use it as it will make the whole family more secure which will have a very positive effect on your children for the whole of their growing up years. Then a fund for each child.

    After all, you bought the premium bonds in the first place - it's only random that it was the 5-year-old's that won.
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  • Monkeyballs
    Monkeyballs Posts: 1,932 Forumite
    Hi,

    Here is my opinion;

    1. Consider if your debt is enough to have significant impact on the upbringing of the kids - I.e. it means there is no food, living is a struggle, etc. If it is then it is prudent to use some but not all of it.

    2. If you do use some of it then a small treat should be bought for the kids - a day out, a new toy or something along those lines...

    3. This is a one time deal so do not put yourselves in a position whereby you need to consider it again.

    4. Split the rest equally among the kids, and double what you currently pay - this should be a share of what you were paying on debt but not enough to create any hardship.

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  • katyboo123
    katyboo123 Posts: 232 Forumite
    I grew up in a household where my parents had debt - a significant amount which resulted when my Dad lost his job as a time served welder. I remember our record player getting repossessed and us having to eat our meals at our Nanna's house - my Mum said she loved Pilchards, who loves Pilchards!? - so she ate them almost every night with my Dad and we ate at Nanna's. I remember going to school at 8 or maybe younger and all of the other children had really 'good gear' like Nike trainers, etc. I had what we like to call bobby washables - no name trainers from the market... :rotfl:

    My parents would argue after we went to bed at night and me and my little sister would hop in bed with each other and cuddle up - it was cold, we didn't have central heating or double glazing. My Mum never wore new clothes and a lot of our stuff came from charity shops.

    I'm not complaining, we had more love than any kids in the world and were spoilt rotten in other ways. I'm an excellent cook and baker and I can make a £20 shop last a week or longer if I need to. I aced everything at school because my parents were so intelligent and would spend every evening helping us with homework and teaching us how to behave in the world. We used to have a mantra - when we were dropped off anywhere for babysitting (my parents later joined Amway :eek:) they would ask 'what are you on?' and my sister and I would chant 'best behaviour' in reply.

    Plus, being brought up this way 'we don't have much but we have love' made me the person I am today - successful, debt free (after a bit of a learning curve ;)!), frugal, loving and kind.

    However, if I could have done one thing for my parents, whom I love deeply it would have been to pay off their debts - stop them arguing, let my Mum wear nice clothes and have brand new rather than constant second hand. I would have given everything to win a premium bond draw and be able to pay it off for them. I wouldn't care less about having the money - I would have given them it all when I turned 18 anyway - what 18 year old can handle £100k!?. I wouldn't ever want to see them eating Pilchards on toast every night if I could have time over.

    So I say, pay off the debt, love your children beyond anything and bring them up right - they shouldn't ever resent you for it. And make sure if there is anything left, you split it between the kids and top it up with some of the money you might have spent on the interest for your debts. That way, when they hit 18 and go off to Uni, you can give them a little lump sum to help them on their way.
  • I think you should honour whatever you have told the kids about their Premium Bonds.
  • chog24
    chog24 Posts: 96 Forumite
    In my opinion, it rather depends on what the debt is and what your situation is. It's also something to which the solution will likely be very personal.

    For ME in MY current situation, if the debt were my mortgage, which I could easily manage the repayments on (and would have planned to anyway), I would split the hundred thousand three ways between the three kids and put them in trust for when they're 18. If the kids were a tiny bit older, I would probably have involved them in the decision making process too.

    However, if we're talking about a debt which gobbled up most of my disposable income, and which was in addition to the mortgage, I'd see that as being something that was better paid off so that my kids could have a better quality of life as they grew up (always assuming that the debt wasn't going to regrow because I was managing my income and outgoings effectively once the debt was gone).

    Of course, another option to consider is to use that money to get my kids a better education now - I don't know whether you'd considered that, but of course I do understand that some people are against private education on principal.
  • Murphybear
    Murphybear Posts: 7,257
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    The NS website does say clearly that any winnings for a child will be posted to the parent or guardian so I don't see how it can be theft for the parents to use the winnings.

    It is difficult to offer clear advice because 2 important facts have not been supplied ie how much is the debt and how many premium bonds do each of the children have.

    If the debt is having a negative impact on the quality of life then I would say pay off some or all of it.

    If the children do not have the maximum amount then why not top up their holding? The rest of the money can be put into a (relatively speaking) high interest account.

    I think the children should be treated equally, it was just happenstance that a particular child won, it could have been any one of them.

    As to the holiday, there are plenty of nice places in the UK where you have a great time without spending a fortune
  • Seronera
    Seronera Posts: 343
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    Whose name is on the winning bond? If its the childs name it is their money and you are the trustee of that money for them. You have none of the rights over this money and all the responsibilities to ensure you manage the childs affairs in their interests until they attain the age of majority.

    You may not like the consequences of this in terms of unfairness, but you set up the arrangement, I'm sure with the very best of intentions, and in effect made a gift of the bond to the child. Its his/her bond and you have no rights to use the money for other purposes than for their direct benefit.

    Settling your own debts with it is fraudulent misuse, but you would be far from alone if you were to expropriate the money for other purposes. It happens all the time where money and families are concerned.

    On the other hand, if its your name on the bond and it was your general intention that any prize money should benefit the family, then you are in the clear and you can do what you like.

    Ask a lawyer. I'm not a lawyer but have come across similar circumstances in work I once did.
  • seven-day-weekend
    seven-day-weekend Posts: 36,755
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    I would give the children at least £25k each (in trust until 25). The other £25k could go towards paying down your debts.
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  • mumps
    mumps Posts: 6,285
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    I can see it is a difficult situation but surely the money is legally the 5 year olds, wouldn't it be illegal to do anything with it to benefit yourself or other children? I didn't buy premium bonds for my children, I did consider it, because I worried about this exact situation. I bought the bonds in my name and if I ever win I can share it equally.
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