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

essexfan_2

mgush5 wrote: »

I would say pay off as much of your debts as possible where the impact would be significant (ie payday loans) but not low %APR debts as these, now you've paid the biggies, will be easier to pay off and pay the remainder into an account where all premium bond winnings would go. When the first child gets to 18 split and move 1/3 into an account for them and give them the bonds, and when the second gets to 18 half the remainder so at 18 each child gets a fair share. If the younger children win after the 1st gets to 18 that's another issue but I would not buy a holiday, I would have appreciated, as an adult, the money to buy a car or moped which can be used for a long time over a childhood holiday which could easily be forgotten.
The winnings are your childrens and the holiday seems like too much of a treat for you too, you got the bonds for their future. Its a long term reward so use it as such!

I don't really know where I stand on this issue, but I do actually think that children remember such things as holidays and days out far more than cars. When our three adult children are together its these things that they spend all their time laughing about.

fatal1955

First - sort out the true legal position. CAB may be able to help if you don't want to pay lawyers :rotfl:
Then - repost the dilemma, IF it still is one

notreallymyname

Pee wrote: »

As a childless lawyer...

Dear fellow childless lawyer (perhaps we should form a support group?),

I must say that I admire the literal direction of this topic. The question of the morality of whether a parent, who has incurred debt, should take the money from their child(ren) who have not incurred such debt and spent it on the adults debt repayment and holiday, certainly has a moral dimension.

As this is a moral question, confining myself strictly to moral issues, I would say that the money should be split between the 3 children. The funds should be placed in Trusts until the age of 18, save for the previously mentioned extreme scenario of eviction. If this applied, then the funds could properly be used to pay the debts, but the resulting assets be placed in Trusts for the children.

Sadly, however, as FA, you and now I, feel obliged to mention is the minor aspect of legality. The information given is not entirely clear. If we were to assume that you had indeed purchased individual Bonds and placed them in your individual child's name, then you need to seriously consider taking legal advice on your position (i.e. not from an internet forum). My initial thoughts are that, irrespective of moral ranting on the internet, the money is the property of child in which the Bond was taken out for. You, as the parent, have a onerous fiduciary relationship and if you are in breach of this the criminal penalties may be severe.

If, however, you think that your children will never find out, can I simply refer you to the inventiveness of children and the permanent nature of internet forum posts.

SparklyOne

A child does not own a premium bond in their own right until they turn 16. Phone NS & I or check out their website. You do not need to pay solictors fees to find this information out. I wonder if some of the other posters on here would take the same stance if the amount was £1 million! Enjoy your win!

notreallymyname

fatal1955 wrote: »

First - sort out the true legal position. CAB may be able to help if you don't want to pay lawyers :rotfl:
Then - repost the dilemma, IF it still is one

Sorry to re-post, but as much as the CAB's hearts are often in the right place, their advice tends to be generalist and far from specialist. You might happen to arrive on day when a good quality Trusts Solicitor is in attendance, but frankly the chances are low.

For advice which has potential £100k benefits/criminal consequences, speak to a specialist Solicitor/Barrister.

SparklyOne wrote: »

A child does not own a premium bond in their own right until they turn 16. Phone NS & I or check out their website. You do not need to pay solictors fees to find this information out. I wonder if some of the other posters on here would take the same stance if the amount was £1 million! Enjoy your win!

'in their own right...'

Is the operative term. You, as the parent are the Trustee and are obliged to act in the best interests of the individual child and not the children as a collective.

Seriously, this is exactly why you do need Solicitors advice...

SparklyOne

notreallymyname wrote: »

You, as the parent are the Trustee and are obliged to act in the best interests of the individual child and not the children as a collective.

Seriously, this is exactly why you do need Solicitors advice...

But a "Trust" is not created on the payout of the winnings in this instance, neither are the Premium Bonds themselves held in a "Trust" including a "Bare Trust". Up until the child turns 16 the parent is free to cash in the bonds if and whenever they want to, the asset doesn't "vest" at this point it either. The parent is not therefore bound by the legal requirements a "Trustee" would be.

shehen23

Immoral? What utter rubbish people talk! If the bonds were bought by someone else, Grandparents etc, then yes I agree the money should be split three ways and put into trust if that's what the giver wanted. But if the poster bought the bonds themselves, in order presumably, to give his/her children a better future, then in all honestly it's completely their call as to how best to use any winnings. He/she is their parent and only they know whether the money would be of greater benefit now (if parents are struggling with debt or under great financial pressure then that can be really hard on the family as a whole and the children are ultimately the ones who suffer). Regardless of anything, as a parent of three teenagers, I wouldn't be handing my 18 year old that kind of money. It would be a disaster. Either use it now to improve the standard of living for the whole family or keep it until they're 21 at the very least

JCL

I would split it between the kids and dripfeed into a pension over the next few years (think you can save c.£3,600 per child each year). That way the saving they will need to do for later life is off to a fantastic start AND they can't access it at 18. Just find a decent home for the sum in the interim.

That generation will get no state pension from Government of any colour. Have to assume they will need to save for themselves.

Teacher2

I do not think it is at all immoral to use the money to pay off family debts as parents stressing over money owed will affect the children negatively and solvent parents will have more to offer in many ways. So pay off the family debt and keep the residue in trust to be split equally and to be accessed when each child reaches 21. 18 is too early for responsible spending and giving only one child the money will result in resentment and family discord. My sister is corrosively jealous of me and it has caused a horrible split between us - and that was without either of us being left a penny. Five years older that her, I just started work, got married and bought a house earlier than she did but she was very jealous of what I had. Even now when she has caught up on job, house and marriage she cannot 'let it go'. Giving one child more money thatn the others would put roller skates under the resentment factor.

lolarosa90

Personally, if I was faced with this I would pay off my debts if they were directly affecting my family's lives and split the money three ways and put them into a ISA with a high interest rate so by the time they are sensible enough there will be a good amount of money racked up in there.

I honestly think that you should wait until your children are mature enough and understand the value of the money before you hand it over to them. Some children are mature at 18 some are not. As a parent, it's up to you to decide.