Savings with friends

Scottish_Lassie

Me and 4 friends have been putting money aside in a savings accounts for years now. The account is in my name and we use this for various holidays/nights out etc. We're currently saving for a big trip away for our 40ths :eek:
Anyway, I'm happy to manage the account, I track the amounts from each person and let the girls know how much they have etc, as we're saving for a big trip we have over £7k in the account now.


A few of us in my office were discussing renewing mortgages and 2 people have said that they had to provide so much more info than you used to and had to include statements of all the accounts that they had and then the mortgage provider went through them almost line by line and asked what the money for for/what it was spent on etc etc etc..


So my query is, do you think there is any come back in a negative way for me having this account in my name when I technically don't own all of the money? I'm not renewing my mortgage anytime soon but I don't want this to come back and bite me on the behind for any reason? Should I be doing something to cover myself??


Any advice is appreciated
Thanks

PeacefulWaters

The money is in your name. It's your account.

If you died tomorrow whoever deals with your estate is left with something of a problem.

I'd suggest ending this arrangement.

I doubt it would give you any mortgage deal problems though.

DigForVictory

I think it's a splendid idea & I hope you all have a glorious birthday celebration.
However the risk of one of you having an accident that incapacitates you or worse is one you've not got a workaround for. Would a group bank account (treasurer etc etc) help, or cost more?
Have you any protection should anyone accuse you of getting the numbers wrong? An external auditor (someone you all know & trust) might help.
Sorry - it's a grand idea, but if anyone turns nasty or you have an accident, it could all get very unpleasant in short order. Mind, the coffeeshops that became banks worked out OK for decades!

Scottish_Lassie

Thanks for your replies.


There are actually 3 accountants in our group of which I am one so I'm very conscious of the issues you have both mentioned as are the girls. I completely appreciate that problems could arise but I look after accounts/money all day every day and I treat it extremely seriously/professionally.(In fact I could probably be stuck off from my profession if I was accused of any wrong doing) I also send the girls regular statements so its as transparent as possible.


I have thought about what would happen to the money regarding if anything happened to me, the account is in my name and yes it would be part of my estate. Could whoever is dealing with it - eg my husband gift the money to the girls which would be under £3k each so no issues with tax?


I'm going to look into to a group bank account - given the large amount in the account if may be more prudent


Thanks again for your replies

Browntoa

Post 5 is spam

Pincher

Don't banks and building societies have accounts for precisely this is kind of collective club account? I think you can register all the members, nominate backup Treasurer and signatories. All a bit of a red tape jungle, but could prevent a mess later.

Scottish_Lassie

Thanks Pincher, will have a look at that

PeacefulWaters

Could whoever is dealing with it - eg my husband gift the money to the girls which would be under £3k each so no issues with tax?

What he can't do is make discretionary payments out of the estate.

What you can do (and probably already are doing) is maintain records of who has deposited what and ensure any executor is aware of this. The estate would be liable for that as it would any other debt.

You risk one of your friends claiming a different amount off the estate than your records show. Or your husband denying all as a potential beneficiary of their cash. That's when it gets messy.

Wobblydeb

What a fab idea - it sounds like you've got some great friendships

This would count as your money if you were out of work and aiming to claim certain benefits. However this may be irrelevant if you've got a large value of savings of your own.

In your position I would also be very aware of the risk of identity fraud. Would your friends expect you to spend time chasing and sorting out a claim? Or heaven forbid replace money if the bank doesn't play ball?

Kim_13

The interest on their money will count towards your PSA, so worth checking what yours is and whether you're likely to exceed it when including the interest from this account and any interest on savings you have in other current/savings accounts.

If your PSA is exceeded, the tax on the remainder will need to be paid at your usual rate - so worth ending the arrangement if you are likely to use most of/exceed your PSA and they are barely using theirs, as they can't transfer any of their PSA's to you. Everyone can then earn the interest on their share of the money tax free. Interest is earned at a daily rate so if you are likely to exceed your PSA, ending the arrangement now would only be a damage limitation exercise for the current tax year.

Prior to the PSA, running the account couldn't potentially run up a (likely small) amount of tax for you to pay, as tax was taken off of the interest before it was paid to the account. Assuming all of you are in the same tax bracket, it was tax neutral as they'd have paid that amount with their money in their name.

The money in the account would be counted as yours were you to apply for means tested benefits or be chased for money for whatever reason. If you have a significant emergency fund of your own which would exclude you from benefits/cover any unexpected bills, then ending the arrangement would not be so urgent - though something to consider as if you did fall on hard times, use up your emergency fund, return their money and claim benefits, it may be seen as a deprivation of capital case. You could of course explain in such a case where the money came from, but whether the explanation would be accepted is another matter.

d70cw6

that money is all yours - spend it all on hookers and blow imo.