Loan From Your Kids?

focus888

2010nodebt wrote: »

When I was 21 my father got 30k from a house I owned by remortgaging without my knowledge , I ended up losing the house.

Sorry to be off topic but can i ask how he remortgaged your house without your knowledge? was his name on the deeds?

sillystudent_2

Ok I have a bit of knowledge here, given that my dad is a solicitor who spends a lot of his time dealing in trust law (and I got an A in law at A-level ) Basically the jist is - the money 100% isn't yours, your merely holding it on trust for the daughter, the fact that the money's in your name is merely a technicality.

Under the Trustees Act 2000, there are tons of rules and regulations that trustees must adhere to - i.e. what kind of investments they are restricted to etc. Essentially the Act says that the trustees must act in the beneficiary's best interests at all times - so using the money to pay off your mortgage would be a serious breach of your duty. Equally coming up with what's called a "sham" arrangement such as getting your 6-year old to pay rent would be deemed abuse of the trust.

Furthermore, the Act states that any benefits derived through the trustees' status as a trustee is owed to the beneficiary. I.e. if you took even a quid of the £10k and bought a lottery ticket and won the jackpot, the prize money would belong to your daughter, not to you.

Thus if you gain a benefit such as saving tons of interest in paying off your mortgage earlier (i.e. investing it to your profit) all of this money (i.e. the 'profit') is in fact owed to your daughter - so you won't be saving money at all, as you'll instead owe her £10,000 + whatever you saved by paying off the mortgage earlier. And you'll be in serious breach of your duties as trustees.

There may be some way of 'borrowing' some of the money from the trust, but it would be really dodgy ground and you'd have to involve a solicitor - and you'd have to repay the money at an interest rate higher than that of the mortgage you're paying off, and repay more than you saved on the mortgage interest (else it would be deemed an "illegal profit" and belong to your daughter instead of you.) You can't just use your position as a trustee to get an interest-free/low interest loan - if the law allowed that then putting money in trust would be a dodgy business, as trustees would be stoozing and doing god-knows-what else with the money on a regular basis.

So it really really isn't worth doing. Also you obviously can't ask the settlor (the guy who gave you the £10k) for permission as its not his money anymore, its your daughter's. So essentially there's nothing you can do with that £10k except hold it in savings/investments for your daughter until she's older (the whole point of the trust, I might add.) If you really need the cash, it would be much much simpler and wiser to just take out a £10k unsecured loan.

dotchas

steadynerve wrote: »

Thanks again for all the messages. If someone expalins to me what a troll is i will tell you if i am one! the reason for the gaps in posts is i don't log on very often but as the issue still remains i'm keen to read the answers.
I noted some people picked up on the fact that the money can be used for the express benefit of the child. But I was interested to see that person went onto to say they could not be used for clothes food for the child. I would have though that would have counted.
To rephrase the query again i suppose one is sayig currently there are four parties invloved parents, daughter, mortgage provider and savings provider. The question is really can daugher adnd parents do somethig legally togethr to cut out the mortgage providers cut. T0 get to a position were the family overall is better off.
I realise people are thinking we are cutting our daughter out but it isn't that as we can easily down size the house when the daughter leaves home and this will almost certainly generate more than sufficent funds to pay the daughter what is owed. So its not a question of we are stealing the daughters inherentence to pay for her food. But more a question of can we legally clain her food as expenses use this to pay off the mortgaage and still we will pay her back in full later. i'm assuming the daughter coudlnlt give us legal consent to take the money until she is 18 so its a cae of whtare the ohter legal ways to acquire it. Its suppposed to be a genuine money saving issue not a child inheritance robbing exercise!!

I am glad you weren't my parents.Trying to take your own daughters money,considering charging her rent and already planning for her leaving home.......she is only SIX! The idea of using the money to feed and cloth your daughter is shocking,what do you do? Divide the weekly shopping by 3?
Ideally there should have been another trustee appointed to prevent incorrect use of this money.It certainly acts as a warning to anyone leaving money to a minor.
Most parents would be grateful their child had a nestegg to start their adult life ,not wondering how to get their hands on it.
If this was an inheritance ,I can see why it was left to the child and not her parents.

sillystudent_2

Ideally there should have been another trustee appointed to prevent incorrect use of this money.It certainly acts as a warning to anyone leaving money to a minor.

True - an impartial trustee such as a solicitor is usually recommend for significant sums of money (with fees paid out of a portion of the annual interest earned on the monies.)

However this doesn't give the parents carte blanche to do whatever they like just because they're the only trustees - if the settlor (guy who gave you the money) finds out they're planning to use the money this way, he can take them to court on behalf of the child to freeze their accounts to block the action, and have them dismissed as trustees and get the court to appoint new ones. Maybe not such a bad idea in this instance!

jackieblack

steadynerve wrote: »

Thanks again for all the messages. If someone expalins to me what a troll is i will tell you if i am one! the reason for the gaps in posts is i don't log on very often but as the issue still remains i'm keen to read the answers.
I noted some people picked up on the fact that the money can be used for the express benefit of the child. But I was interested to see that person went onto to say they could not be used for clothes food for the child. I would have though that would have counted.
To rephrase the query again i suppose one is sayig currently there are four parties invloved parents, daughter, mortgage provider and savings provider. The question is really can daugher and parents do somethig legally togethr to cut out the mortgage providers cut. T0 get to a position were the family overall is better off.
I realise people are thinking we are cutting our daughter out but it isn't that as we can easily down size the house when the daughter leaves home and this will almost certainly generate more than sufficent funds to pay the daughter what is owed. So its not a question of we are stealing the daughters inherentence to pay for her food. But more a question of can we legally clain her food as expenses use this to pay off the mortgaage and still we will pay her back in full later. i'm assuming the daughter coudlnlt give us legal consent to take the money until she is 18 so its a cae of whtare the ohter legal ways to acquire it. Its suppposed to be a genuine money saving issue not a child inheritance robbing exercise!!

The answer is no.

That's all, just no.

wayne99

I must say reading this iam completely shocked, i hope to god you cant get your hands on HER money.

It not like she can chase you for payment if you dont bother paying it back is it ?

dont do it, its just wrong in every way, i wouldnt even have the nerve to even think about doing it let alone post here about it.

sorry but sort your head out for gods sake, its not a money saving exersise you just want the cash plane and simple.

Be happy you have a daughter and stop thinking of ways to screw her over.

Apples2

Without question, the very WORSE parents I have ever read about.

I shake my head in complete bewilderment. I pitty the poor Child.

Absolute lowlife.

Ivrytwr3

Thread is a year old.

(did they pay it back me wonders?!)

elfen

No, you can't use it to pay the mortgage or charge her rent and food bills. She's SIX, not until 18 can you do that. Why are you even attempting to, all you're doing is stealing from your daughter.

dotchas

Ivrytwr3 wrote: »

Thread is a year old.

(did they pay it back me wonders?!)

The OP has been posting again,last one today.