withdrawing money from childrens savings

amylyn

I have recently left my husband and me and my 3 children, (3,6 and 13) are living in a rented 2 bed flat. I am in the process of buying a house. I have saved for my children since they were born and have £30k between them in a 5 year fixed bond. I need to use some of this money to help pay the stamp duty, legal costs etc of buying our house so want to withdraw £6k, which I am allowed to do but have show it is in the interest of the children. Is the fact that I am using it to put a roof over their heads enough?

xylophone

Is this money in your name or in your name in bare trust for your children?

You say that you provided this money- it might be as well to be aware of the "£100 rule."

http://uk.virginmoney.com/virgin/savings/learn/childrens-accounts/ see "Things you might like to know"

If this money is held in bare trust for your children, then it seems to me (no expert) that as the money belongs to them absolutely, you cannot use it to buy your house, albeit that they will live in it.

However, you might wish to take your solicitor's opinion.

If this is a fixed term bond, will there not be a penalty to access it?

amylyn

Not sure if it's classed as bare trust. It's in a 5 year fixed bond with the Leeds, it's in their names but i am a signatory. Can take 25% out without penalty, checked a month ago it would ok, told yes. But today when checked again was told it would have to be used for the interests of the children, so perhaps will be a problem. Don't like using the money but my circumstances have changed dramatically since I opened accounts and am using the money to give them a better standard of living.

colsten

What do the T&Cs say?

xylophone

From what you have said and from what the Leeds has advised, it would appear that the bond is held in bare trust.

amylyn

Read t & c, just says signatory can take out 25%. Did check before started house buying process and nothing was said about proving it was for children so assumed could use it, would have budgeted differently if I'd known. Going to branch Tom so will see. Have thought about lying what it's for, but genuinely think being able to able to get out of a small flat and into our own home is a good enough reason. I have saved 30k for them over 10 years and will continue to do so, just unfortunate circumstances means I need some of the cash now. Will probably be on house buying forum Tom asking if you can pay stamp duty in installments lol!

colsten

If the T&Cs say that the signatory can take out 25%, without any conditions attached, you as a signatory can take out up to 25% without questions asked.

They might be nosy and ask what you want to use it for, and you can say it is for the kids new rooms - which would be 100% true, wouldn't it.

If they play difficult, just show them the T&Cs, and if necessary ask for a Manager to speak to. Staff cannot make up T&Cs as they please, they are bound by thee written terms, in just the same way as you / your children are.

amylyn

Thank you for your advice, has given me a bit of confidence and will take t&c, hadn't thought of that, can't argue with whats written in black and white. Thanks

xylophone

The T&Cs may well say that 25% can be withdrawn but that is not the point- if the money belongs to the children absolutely, then it is not for the
parent to use the money for a house purchase?

If it is in bare trust, the children are absolutely entitled to the capital and income.

http://www.hmrc.gov.uk/trusts/types/minors.htm

Eco_Miser

Might the children wish to use some of the trust funds to purchase a share of a house in which to live?

And if so, might not their trustee withdraw part of their bond, and add it to the money their mother is using to buy a house, so the house has four owners, three of them in trust until they reach their majority?

PeacefulWaters

colsten wrote: »

If the T&Cs say that the signatory can take out 25%, without any conditions attached, you as a signatory can take out up to 25% without questions asked.

They might be nosy and ask what you want to use it for, and you can say it is for the kids new rooms - which would be 100% true, wouldn't it.

If they play difficult, just show them the T&Cs, and if necessary ask for a Manager to speak to. Staff cannot make up T&Cs as they please, they are bound by thee written terms, in just the same way as you / your children are.

There are row things at play here.

1. The T&Cs of the account. If they allow the parent to withdraw on behalf of the child the parent can withdraw the funds.

2. If the status of the account is that of a bare trust (which it probably is) then the funds still belong to the child and cannot legally be used to buy the parent a property.

You could take a view that nobody would ever make a complaint and do it anyway. But that would be breaking the law.