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

Talent

Pay off the debts, all the kids will benefit from that, so long as you stay clear of debt in the future. Gambling for others is fraught with problems, you should set up a family syndicate.

MJBRoberts

I think many of those responding above are deluded.

Firstly, how is it 'fair' to each child to take the money from one child and split the £100K 3 ways. Each child has the same chance of winning each month. Had the win been £50 the child would have just kept that and it wouldn't have been an issue. The fact that it is more should not change anything.

I am 100% in the school of thought that you should pay off your debts (I won't question why you are buying Premium Bonds when you have debt to pay off) and take the family on a dream holiday. Your kids don't necessarily need to know the ins and outs but will remember a dream holiday to Disney (or wherever). I'd personally get them a Bean2Bed each as well.

Switch the situation and think how you'd feel if you'd won when you were 5 and your parents did the above. You'd know that they did the right thing for them and for the family.

thevilraggydoll

When you invested in bonds what did you plan to do with any winnings? Whilst the size of this winning may alter your view it is probably best to go back to your original intentions and go from there.

It does depend what the debts are and how they are affecting you and your family. If these debts are ones that you would be able to pay off by the time the child is 18 I would personally borrow the money. Save the family from paying the interest to a bank etc and repay the winnings by the time they are 18. You are benefiting and they will lose potential interest but it seems like a fairer balance than taking part, or all of, the win.

cheerful

You obviously had good intent when buying these bonds and probably thought it was pretty much harmless fun. However, even a small win could cause a rift between the children ("It's not fair" would be true) but a big win like this could wreck a family.

Technically, you chose to impose gambling on your children by buying them premium bonds. This does not make you a bad person but neither you nor any of your children earned this money therefore none of you deserve it any more than each other - or anybody else for that matter. Nonetheless you've now got it and you have to deal with it.

Are you a family or a group of competing individuals? If you have been raising your children to fully understand and appreciate fairness and equality you may be able to sort this out without too much long-term damage to the family. Unfortunately this is an uphill task as we live in a society where speculation is lauded and we have state-sponsored gambling with praise of purely lucky winners as if they had earned this income.

Each piece of advice given by others on this MMD has risks:

• Let the child keep it all and the others are likely to resent it.
• Split it between the children and the five year old may resent it (now or later).
• Pay the debts and the five year old, possibly the others too, may resent it (now or later).
• Don't use it to pay the debts or for a family holiday and you may later resent it (be honest).

Any of these resentments could wreck the family. All I can say is think carefully about your family and the future and try to do the least long-term harm that you can.

Good luck.

hogger84

I cannot see it written out in black and white, but reading between the lines on the NS&I website it seems to suggest that the bonds are in the parents name until the child turns 16 (possbiyl due to gambling laws). If you cash in the bonds it states " (we’ll make payment to the parent or guardian)"

As a parent or legally appointed guardian buying Premium Bonds for your child, you need to nominate either yourself or the child’s other parent or guardian to look after the Bonds until the child is 16. We’ll then post to the nominated parent or guardian:

• the Bond record
• any prizes won by the child’s Bonds
• payment for any cashed in Bonds

If you prefer, both parents or guardians can control a different set of Bonds for the same child. We’ll give a separate holder’s number to each parent or guardian for the Bonds they look after for their child. Both sets of Bonds will count towards the £30,000 investment limit for the child.


After the child reaches the age of 16 and contacts us, we will combine all their Bonds under one holder’s number.

tBagpuss_2

999pez wrote: »

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?

yes. And theft in breach of trust, which is an aggravating factor

dimbo61

As others have said £100K is alot of money and if Mum and Dad are going to lose the home over the kids heads while Little Miss Lucky has £100K sat in Premium Bonds or ISA,s or bonds she will think Mum and Dad are STUPID!!!
Now I have know Idea of the debts, lifestyle or Income of Mum and Dad but this is a hell of a lot of £££££.
I would invest 75% into cash ISA,s, bonds and other savings for the 3 kids and Yes 18 is young but if they want to spend the money on a new car or holidays, smart clothes, or paying for all the extras ( Like living at University) that is there choice.
The other 25% which is £25,000 shoul be used to pay down debts and taking the kids of holidays, buying Xmas presents, treats.
Consider changing to an offset mortgage and put the money into the offset account.
Each time you make a mortgage payment then put the same amount into cash ISA,s ( split 3 ways for 3 kids) and ADD the interest you would have paid to the lender on top.
In 10/13 years time each kid would have a nice lump sum to spend as they see fit

Kite2010

Depending on what the debts are, it would be silly to have the money sitting to one side earning small interest at the same time as having say a £20K debt at 10%.

Pay the debt off first, and then using the money you would have had to pay out for the debt into a saving pot for the kiddie.

meknowalot-51

Firstly pay off the debts which will help keep the family from potentially falling apart,a large % of divorces are caused by financial problems.This way your helping to secure their inheritance,family home,plus there not going to witness any arguments over money worries.Seeing mum and dad happy together is going to help their growth and education,long term you all win.Secondly,split the money three ways into trusts untill they are 22 and any future winnings do the same.This doesn't mean you can go mad and spend like there's no tommorrow,but the odd foreign holiday to help with their growth and education is fine.Of course now you have no debts these foreign holidays will be paid for by you.All of this will help secure your family and the childrens future.You've had a lucky break,learn from it,in future do not overspend and control the household budgeting a lot better.When they are old enough to recieve the money explain all this to them with one slight difference......do not disclose who's numbers came up,ever.Have a happy life.

stmartinsdiver

With interest rates as low as they are it would be doing no one any favours letting this unexpected windfall languish in a savings account - if you believe in treating all your children equally then pay off your debts and setup a regular savings plan for each of the children to repay the full sum by the time they are 18 as this should be considered a loan to you as it is not your money.
However - you are responsible for making sure it is put to best use.
This does not include having a holiday - you can save up for that otherwise you are still in debt to your children for the cost of your holiday.
Whichever way you look at things it is not your money.