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

tlc678910

I think you should split the money four ways - your 3 children and you (you and your partner).

I don't think it would be fair for one child to be "richer" than the others and agree that the name on the account can be seen as notional. When you buy children premium bonds you dream of securing their future and you are now able to give more opportunity to each of them with university money or a house deposit.

With over 25k each in their premium bonds (added to what they had) they may be further wins which could also be shared.

You or you and your partner could choose what to do with your 25K. To pay down debts, get something you need and go on holiday.

I am assuming you are able to manage your debts and could continue to do so?

I would try not to over think it. This money should be a blessing to your family and give everyone a helping hand. If it divides your family it could very well become a curse. If your winning child is aware of the money make it very clear (to everybody) that the same would happen whoever wins because it is fair in your family to share.

You never know one of her siblings might win the big one yet! :T

999pez

In addition to the morality issue, if you put the premium bond in the child's name, I would have thought the legal position is that it is their money to be held in trust until they are 18. Wouldn't anything else be theft?

ollybass

Not having read all the replies, apologies for having missed some. I am not sure if bonds can be purchased for small children. If they can, then any winnings will be payable to the named child only.
If the bonds were purchased with the parents name(s), then cheque will be payable to parents only, so distribution of the cash is easy by paying off debts and cash into each child's account.
Someone said about giving the bonds to the children when they are older - - This can't be done; bonds can't be switched and can only be redeemed by the owner and the cash then passed on to the kids (or new bonds bought in child's name)
If the big win IS a cheque to a child, then there could be a legal problem if parents interfere with its placement and use. I think legally it should only be deposited into that child's account.
Surely the easiest way is for parents to buy, and own, the bonds and then spread any winnings evenly (and fairly).

scarlet_shoegal

Very complicated I think... If the bonds were bought for each of the children as individuals, then technically the 5 year old is entitled to keep all of the money. Were the 5 year old in fact 25 when the win happened, there would be no dispute about this at all – the money would be theirs to do with as they wished. Yes, the other siblings might be resentful, but that money would be rightfully owned by the person named on the bond and they would be under no obligation to share it with anyone.

Having said that, if the bonds were purchased for the children in theory only, (ie, they are actually in the name of one of the parents, perhaps purchased at the time each child was born) then the case is completely different. You’d be absolutely entitled to pay off your debts and do whatever you like with the remainder. Personally, I think putting some aside for each child when they are older is a great idea – it will help with Uni fees, a house deposit, etc, etc. Whatever it is that each child has most need of when they enter adulthood.

I guess if it were me and the bonds were bought for the children in their names, I would put all of it into an account for later on. Perhaps when the 5 year old is old enough there could then be a conversation about a lucky win that happened when they were little that could be shared with the other siblings? Of course, that’s hoping that the 5 year old grows up to be fair minded and gets on well with the rest of their family! They would be under no obligation to share, but it would be the right thing to do. If the bond were my own, I’d pay the debt and put some away for the children.

I feel very uncomfortable with the idea of a parent using their child’s money to pay off their expenses though. I don’t wish to sound harsh, but if you got into debt, then that is your problem to solve and not your child’s. Presumably the bonds were given as gifts – they can’t then be reclaimed because it’s convenient and the child is too young to do anything about it. Perhaps a better gift in future would be one that can’t later on unfairly advantage one child over another, but of course, that’s very easy to say in hindsight!

I think debt clearance is most definitely a road to a lot of future problems though - these things always come out eventually. How do you explain to an 18 year old who perhaps wants to go to Uni that you don’t have their money anymore because you spent it on your own debt? Unless you can put it back in time with the interest it would have earned, I don’t think it should even be considered – it’s not worth it for the rift it will cause with your child later on.

monkeyboobum

If it were me, trip to Disneyland for the family, the rest split between the children. Depending on the amount of debt pay it off and ensure it is repaid as soon as possible back into the childrens savings. If they all end up with the top limit in their premium bonds they should enjoy a lot more wins to come :-)

cuba2008

I only have the one child (now grown up and married) so this is never going to be an issue I face. However, to put things into perspective - it used to be the done thing to purchase premium bonds for grandchildren but no one really expected to win anything much. My grandmother won £1,000 but that was about it. I suspect when the OP purchased bonds for her children, it never really entered her head that one of them would win £100K. Let's face it - generally bonds aren't much of a money generator, since they don't accrue interest so, if cashed in, are probably worth less than when purchased when inflation is taken into account. That being the case, if it were me and I had 3 children, I really wouldn't feel it was "moral" for one child to have such a huge advantage over his/her siblings just because of the luck of the draw. If the OP has debts, I'd say pay them off. This can only lead to a better life for all 3 children, which is surely what we all want for our families. The rest should be split 3 ways. It's highly unlikely that another bond in the name of a second child will win this kind of money but, if it does, then split that 3 ways as well. If any child has a small win of, say £100, then treat the child(ren) there and then.

Gavin83

anotheruser wrote: »

Giving £100,000 to an 18 year old will be a waste.
They will just spend it on rubbish as 18 year olds generally are not interested in houses.

What's with the assumption that a house is the only thing that the money should be spent on and anything else is wasteful? Besides its the child's money and therefore is not anyone else's decision on what it should be spent on. Seeing as its the child's money 18 is a fair age to allow them access. I wouldn't be surprised if they weren't able to legally challenge it at this age anyway.

As its the child's money keeping any of it for yourself is nothing short of theft and I don't really need to justify how immoral stealing from your own kids is. I can understand the logic behind borrowing it and paying it back but given that you've gotten yourself into debt anyway what's to say it won't happen again and you won't be able to pay it back in the future?

Do you really want to steal from your own children?

I can however appreciate the logic behind splitting it between the children equally and this is what I would do.

Flipflop111

Firstly congratulations!!! My view is this a chance to change your children's futures! You can start your children off into adulthood without the debts you have by sharing this win three ways. I would put £30k each into a trust fund then use the remaining £10k over the next 10 -15 Years towards Christmas and birthday presents/school trips/ riding/ music lessons etc that may previously have caused you to get into debt. I think you may find if you pay off your debts and cannot re-save the money the guilt of wasting the windfall will be huge. You would have found a way to repay the debts without this and should remember the money is not yours. As others said don't waste it on a holiday - the kids will be just as pleased with a new £10 surprise toy!

fbromley

You should not even be thinking of using the monry to pay off your debts. You brought the bonds for the children & the win should be split 3 ways and invested for them for when they want to but a house or go to uni.
Your debts are incurred by you and are your responsibility. They are nothing to do with you children

gazmoore77

I think that if the bonds are in the childs name then legally the money belongs to the child and all these "moral" posts are actually just ways of justifying illegal actions. If possible I would hold the money in savings accounts until all the children are over 18 and then explain the situation without disclosing which one won. Then they can each decide what they would do - keep 100% for the winner or split equally or even split in some other proportion. This would allow the winner to see things from both sides and make a fair and "moral" decision. Then reveal who won and what they want to do with it. Would make a cracking TV gameshow!