Is it wrong to use Children's savings...

Gadfium

Personally I still disagree with the idea of "borrowing" off the children. You are asking to borrow as the investment in BTL is not covering it's costs.

ILW

I would suspect that despite all the best intentions, the money will never be repaid. Things just tend to go that way with "informal" loans.

rpc

If the money is held in the children's names, then you aren't borrowing. The children cannot consent to a loan (and the terms of the will may prevent it in any case), so you are taking their money.

Whether you repay it or not is immaterial. The money is held in trust for them, it ultimately belongs to them and you can't lawfully take it from them.

It would be different if this was one of your accounts that you put their money into, but it isn't. Legally, isn't really much different to me getting your cash card and "borrowing" some money from you without your knowledge or agreement.

System

It's theft, morally and probably legally.

If you discovered when you got older that you once had some savings given to you by your grandmother, but your father had stolen it to pay his own debts, you would be outraged.

It is exactly like being entrusted with the funds of a small society or club, and deciding to "borrow" the money for your own purposes.
It is not your money.

srcandas

Interesting we are begining to get stronger views for and against.

To me this just illustrates how crazy giving non trivial sums of money to babies and children is. By all means budget for the future but money management is hard enough as it is without having to pre allocate years in advance.

If a granparent wants to guarantee their money is allocated for a granchilds education and feels they will not be around to manage the situation then they can leave instructions in their will and there are financial vehicles available. But they should remember that an 18 or 21 year old might not carry out their good intentions. Further if the child was seriously ill and needed an expensive operation in the US to save their 14 year old life would the grandparent be pleased the money was tied up?

If parents don't have the best interest of their children at heart I'm afraid to say that money is the least of the children's worries.

I feel in many cases child savings are an invention of the finance industry - the only party that actual gains by this :cool:

somethingcorporate

I'm in the don't do it camp.

What happens when they get older and start needing school uniforms? happy to "borrow" money for that (anyone remember that thread)? I agree it is a slippery slope.

Gobosly

Whilst I understand the view of many on this thread, that the money is the children's; the very fact that you are seeking people's views and taking this seriously suggests to me you're a pretty responsible person and will put money back. You even have a sensible plan for doing this (when the flat is sold).

I do know people who continually dip into their children's savings and never put the money back on the basis that it suddenly becomes "the families money". You certainly don't strike me as someone like that, and are taking this matter far more seriously.

The reality is that we all can fall on hard times, and it would be daft to be destitute in this situation. The fact that you will be giving the proceeds of the flat will more than make up for it in due course. It sounds like your mother will agree and that being the case I can see your proposed action being the sensible thing to do. From the financial viewpoint the pitiful interest that the cash is receiving compared to the high interest rate of the loan is a "no brainer".

Also one bit of further advice. In the last couple of years I closed my children's Nationwide account because the interest was so low. I opened one with Northern Rock instead (now Virgin). Not sure if their rates are still as bad as they were, but when you replenish the money make sure you put it in the highest interest account at the time - Also add a bonus as a thank you to the kids!

Good luck with sorting things out.

FatherAbraham

JohnRo wrote: »

How on Earth can it be wrong to use this money in the short term to make a better life for all concerned and then restore the accounts long term when the financial situation is much improved.

Because the children's money is currently in safe bank accounts, where the capital is protected. If the parent abuses the position of being in control of the money, and uses it to make a risky loan which benefits the parent, then something has gone very badly wrong from a moral and legal perspective.

It's entirely unknown whether the financial situation will ever be improved. Once the children's assets are in the parent's hands, creditors will be able to whisk them away for good.

I note that nowhere has the original poster said what rate of interest the children would receive for having their life savings forcibly expropriated in this way. The parent is granting an open-ended, potentially interest-free, risky loan to shore up deficient personal finances, rather than tackling the root of the problem.

To get into a situation where there are sizeable assets (the investment property) yet no cash-flow to finance a liquidation tells me that there's a low degree of financial competence here. The parent should take note, and for the children's sake, not grant a loan to such a risky prospect, evenif that hurts the parent's financial position.

The children would have a clear case to sue the parent for such a heinous abuse of trust. It's morally monstrous, what is being proposed and advocated on this board by people who seem to have no sympathy or feelings for the children.

Remember all the outrage about bank-account levies in Cyprus? Well, this is worse.

Have you all lost your minds? Your morals?

Warmest regards,
FA

srcandas

FatherAbraham wrote: »

It's morally monstrous, what is being proposed and advocated on this board by people who seem to have no sympathy or feelings for the children.

FA I fully see your moral position but to say people have no sympathy for the children is totally wrong.

If we look at this in purely financial terms your argument stands up but if you consider what other things (love, time, security, the economy and stability of the family) the children will need over the many years before they are independent it is not.

The family unit will need to be united and only the mother can take sensible decisions. If by not taking this action the mother offers a poorer quality of life for her children then how can that be justified.

We cannot of course comment on specifics in this case as we do not have all the facts (and some of the assumptions posted will certainly be incorrect). However in general I would say that the well being of the family unit is the most important thing.

Yes of course the mother should consult the granparents but at the end of the day she is responsible for her family.

I guess I'm back to where I came in - tying money up in restricted accounts in the current volatile world amounts to lunacy IMHO

moneysweet

I'm sorry to see that. If I were you, I'll try my best to find other ways ways. But if you can go nowhere, it's also not a bid thing to use your kids' money. You should just make your effort to earn and save more for them after that.