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

alfacat

I would never normally single anyone out or disparage other people's opinion, but honestly...

"Taking the winning child's money and doing anything with it other than prudently investing it for that child's future is a clear breach of trust, and would leave the parent open to being sued by the child."

(Text removed by MSE Forum Team)

The behaviour you are advocating would do nothing for family unity, and ultimately would cause terrible friction and resentment between the siblings and no doubt, between the children and the parents. Why kick the hornets nest when there is a more equitable, and in no way immoral solution, ie. to share.

FatherAbraham

Sorcha wrote: »

Only one of my children has one of those stupid children's accounts the government set up. IF it flourishes (not likely) they'll be splitting the money. That's it, foot down. They love each other enough that they're going to feel bad getting a windfall when the others have nothing anyway. The child who owns the account already knows this is going to happen, its a fact I'll be reminding her of

You can't make her do that. A parent isn't even able to make withdrawals from a Child Trust Fund, thankfully. You can transfer it to another account for the same child, and that's it, until the child becomes a legal adult at 18, and control passes to her, when she can decide what to do.

Legally, you don't have a say in who gets that money.

Warmest regards,
FA

Bella56

tgroom57 wrote: »

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.

I agree with this. If you can split it 3 ways, taking out not a penny more than £10000 for your own debts which might not clear them but thats not the kids' fault, then your kids will benefit in the future and you can still do the responsible adult thing of paying off the rest of the debt that you have accrued. No need to live flash now and be back in the same poor position in the near future, thats not going to teach the kids anything good.

FatherAbraham

It's somewhat irrelevant who am I, or what I do -- what matters is the strength of the arguments posted on here.

The legal position is clear. The law has been worked out with lots of debate and discussion, whether in the legislature (Parliament) or in the courts, so it's likely to have some validity.

alfacat wrote: »

The behaviour you are advocating would do nothing for family unity, and ultimately would cause terrible friction and resentment between the siblings and no doubt, between the children and the parents. Why kick the hornets nest when there is a more equitable, and in no way immoral solution, ie. to share.

This is simply untrue. The children each had Premium Bonds, and a chance to win. One won, which is entirely the point of Premium Bonds (the interest paid on the capital invested isn't shared out equally, but is used to pay "unfair" prizes).

The arguments for redistributing the winning child's fortune to others are all about making the parent feel better, not benefitting the child.

Unfortunately, the world isn't fair. It's perfectly legitimate for a parent to strive for equality of outcomes for his or her children using his or her own resources (so in this case, the parent might redirect any future regular savings for the winning child to the other two); it is not okay for a parent to steal the assets of one fortunate child to give to siblings.

The same argument would hold if a rich uncle died, and left £100,000 to his favourite neice, the 5-year-old, and nothing to the others. The parent may not override the child's rights and redistribute the windfall to siblings.

A child's assets are not the parent's, to do with as the parent wishes. That is the fundamental legal and moral situation here.

Warmest regards,
FA

florere

18 is far too young to have all that money for most children, most of the ones I know at 18 go off to university and get drunk. It should be changed to at least 25. I think you are between the devil and the deep blue sea. If you leave it as it is the two other children will think it unfair and if you split it between all of them the winner will probably be resentful. I would want to split it myself, I'm glad it's not my problem. I think you should go and see a solicitor and at least find out what the legal position is, there might be a family falling out over this. Who actually owns the money? Children are not allowed to gamble and PBs are a gamble. Can they own them?

Fujiko

The flaw in this dilemma you have given us is that you have not said how much you actually owe, for how long and how much of the £100,000 would be left if you paid it all off. I don't intend to criticise, but it would have been useful to know just how you had accumulated this debt, .You also did not say how many PBs you had bought for each child. Providing there would be a reasonable amount left, I think you should split the winnings equally between the children. I do not see why they should be deprived of a nest egg to help them when they are older just because you have been unable to manage your finances. What sort of an example would that be?
You do not say how much was invested for each child, was it all the same and did you invest it from your own funds or was it from gifts?

good_advice

I think we need to ask ourselfs if the parents won the money would they split it 5 ways? I did. It was a competition prize. I won £50 and wanted everyone to share my joy so gave everyone £10.

When my children were young they were left some money in a will.
x2 children and then we had a third.
I thought it best that the 2 oldest each give 1/3 to the younger child so they all shared.

My head says split the good fortune of £100,000 five ways to eliminate greed from the one.
The parents could use their share to pay off dept.
The childrens would be used for education, driving lessons, first car or deposit on a flat when older.

Neva79230

I really disagree with people who say it is immoral as all this is doing is making you feel guilty and perhaps preventing your doing the sensible thing.
You must definitely pay off your debts. I have no idea how large these are but the interest you save could be huge. You then need to set up an account so that your child will receive the winnings plus interest when 18.
Saying that though, I myself would probably spend it! Again I do not know the amount of your debt but consider buying a small flat or house in an area where you can get one for that amount and then rent it out. Use the rent to pay off your loans and, as interest rates at the moment are rubbish the increase in the value of the property over the next few years will probably be higher. Your child will then have some real estate and a foot on the property ladder plus an income from it.
Your real dilemma is whether or not to share the money between all three children!

Utilityman

I would suggest paying off debts, the risks associated with having debts if you were to loose income would affect them all. Then consider splitting the remainder 3 ways into children ISAs and pensions. You can put £2,880 per year in a pension, the tax man will make it up to £3,600 immediately. Gives them a nice head start on their retirement planning which will be there 50 years or more. They won't thank you now but a nice legacy. Either way a nice problem to have. If its too much for you I'll be willing to help by taking it off your hands!!!

tallgirld

I would keep 70k for myself and give them 10k each :-)