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

oldtrout

scotsbob wrote: »

The moral thing to do is put it in trust until she is 18, anything else is immoral.
Remember that in a few years time you are going to have to justify your actions to her.

What?

It would be immoral if she didn't treat all 3 kids the same. The child is 5 and doesn't need to know it was her own win.

It's a substantial amount and the children are young. Split it 5 ways now (3 kids, 2 parents). Any subsequent win (from the kids or parents) should be treated the same until the children are all old enough to understand what it's all about.

gengiscant

Pay off the debt and save what is left for the kids.

It doesn't say how big the debts are but think how much it could potentially affect the children's quality of life over the years if the parents are substantially in debt. All the money wasted on interest payments etc.

The biggest proviso to this is that the parents shouldn't see it as an excuse to splurge to cash on other things and they should make sure they don't end up in debt again in the future due to their own actions.

tgroom57

£100,000 is a lot of money.
To answer briefly- all of the above.

The five year old may be blissfully unaware of her good fortune, but you can bet the 8 year old will be watching what you do, and report back when the kid is older. 8 year olds have a keen sense of justice.

I had a smaller windfall a while back, and managed to put £3,000 each for my children in separate accounts. This amount kept them in bikes & gadgets for many years and subsidised trips & holidays. I can recommend this approach - keeping the money for each child separate & available. It will reduce your 'overheads' for rearing them.
To put in context, I also had debts at the time which I should have paid off, but then we could not have afforded bikes.

How big are your debts ? If 100k would only leave you enough for one fancy holiday, then you are accustomed to a lifestyle that includes a high level of debt. Paying off your debts now would only mean you run up more in the near future, so no benefit.
If you must, take only a tithe - one-tenth - of the £100,000 to ease your debt with the highest rate of interest.
You weren't expecting a win and it isn't strictly yours - maybe you should buy Premium Bonds in your own name next time.

I would definitely keep the Premium Bonds especially the bunch that won, and reasonably buy more in same child's name. And I'd book a holiday to Disneyland Paris for when the smallest turns 3yrs, and 2 alternate years after that.

anotheruser

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.

IF you chose to keep it for them, give it to them when they are looking to buy a house. A £100,000 deposit would go a long way.

Personally, it depends how much the debt is.
If you can pay off the debt, split it three ways so each gets about £20,000 or more then I would do that as £20,000 is still a lot of money.

Tenyearstogo

Pay off your debt to reduce interest.
Split the rest three ways.
Repay what you borrowed to pay the debt.
When the children are looking to buy a house or similar type of sensible adult event, give them their share.

Not even a dilemma.

tgroom57

Cynical me says if you used the money to pay off your debts, I can't see you making it up to them. You wouldn't have to repay them ie there would be no consequences if you didn't pay, so you wouldn't.

FatherAbraham

MSE_Debs wrote: »

Money Moral Dilemma: Should I use my 5-year-old's £100k Prem Bond win to pay debts?

We bought each of our children Premium Bonds when they were born - they're now eight, five and two. The five-year-old just won £100,000. Should I put it in a trust for her until she's 18, split it three ways in separate trusts, or use it to pay our debts and treat them to a holiday?

The premium bond belongs to the 5yo, so the prize money does too.

Your responsibility, both morally and in law, is to look after the child's interests. That cannot include giving money away to siblings, or making a soft loan to yourself.

Your debts are your own problem -- you may not abuse a position of trust to benefit yourself.

The point of morals, ethics and laws is that they exist to enforce right behaviour in difficult circumstances. It may be convenient for you to pay off your debts, but it is not right. If expediency trumped correctness, then there would be no point in having rules and morals.

You have to live with the consequences of having given a highly volatile investment to each child (where the outcome has been an extreme profit for one of them).

Warmest regards,
FA

cazpost

This is a bit of a complicated one. Having spent my childhood in the shadow of a slightly older,but highly favoured, older brother I can see resentments storing up for the future here.Of course,there is absolutely no need for the children to know where this money has come from,unless you have told them. I would say nothing about it to them,as they are too young to understand really.
Assuming that you dont have a massive amount of debt I would say,clear the debts,put a good amount into 3 high interest bonds or similar so that each child gets a decent amont at 18 for university/house deposit,put some into a seperate account for school trips and extras of that sort,then carry on as you are,but without building up debts again.
Look at it this way,if you won some money you would use it to help out all the family wouldn't you ? You wouldn't spend it all on yourself and refuse to give any to your husband or children.

Kit10

I don't believe it would be immoral to use a portion of the money to pay off debt, its in the family's best interest surely?! Split the rest equally between the children and don't touch is until they are grown, add to it if and when you can but dont make it a mission to pay it all back like another debt!

I would also say that using a small part of the money for a family holiday is a nice idea. Family holidays are some of my best childhood memories, and having lost my mum to cancer those memories are very precious and more important to me than having a lump sum in the bank. I'm not saying blow the lot on an expensive trip, just use it wisely to live life now while setting some aside for later. Balance is the best approach in everything.

Good luck.

Granny_Sue

If it were me I would pay off the debt first. I doubt if you would really want to favour the one child and to be fair it was pot luck whose name the winning ticket was in. I would make a rule that all winnings are split equally amongst the family until such time as you all agree that they become their own property, maybe when they all become 21. Good luck and please let us know which way you go.