Kids savings account v overpaying mortgage

Ergates

muhandis wrote: »

You are entitled to your opinion and if you think that is illegal, we'll agree to disagree. I came on here to get an idea of what the implications were of doing what I was proposing

It's not a matter of opinion. If you open a bank account in the name of a child to hold *your* money, then this is fraud and/or tax evasion. Can and will be prosecuted.

jimjames

muhandis wrote: »

Haha, 'steal it back' when I'm still the trustee

Does that mean the trustees of my pension fund can help themselves to my money whenever they want in your opinion?

WantToRetireEarly

As expected, it isn't black and white, even when the father has literally stolen his child's savings and done a runner. Here is a question on this answered by the man himself - Martin Lewis

---

Q My ex has taken my children's savings. Can I do anything about it?

I got this tweet from a mother last week. It turns out to be £15,000 of their savings; the dad's absconded and has no contact.

If the money is in a child's name, it's their cash. However, for younger children the usual practice is to nominate a signatory (for example a parent or grandparent) who can manage and withdraw the cash without the child's approval, usually until the child is 16 – though some accounts let you give the child control earlier.

So for younger children it's quite easy for parents to use their cash; for older ones, you would need their permission.

As for whether it is legal to do so, I've consulted lawyers who, as is often the case, had mixed views. Some say it is criminal fraud, others say there's nothing in practice to stop it – though you could attempt a civil suit for breach of fiduciary responsibility.

---

https://www.telegraph.co.uk/finance/personalfinance/investing/11286926/Martin-Lewis-the-eight-questions-Im-always-asked-about-childrens-savings.html

ruperts wrote: »

is there any case law giving guidance as to what acting in the child's best interests actually means?

xylophone

What makes this slightly different is that the OP has declared that in order to obtain a pecuniary advantage, his intention is to open a Trustee account and use the money as his own.....

muhandis

What? You're joking. Come on, what does Martin know about these things?

Are you saying that there's some nuance to this issue? Even when the dad has scampered off with the money?! I'm shocked. :eek:

WantToRetireEarly wrote: »

As expected, it isn't black and white, even when the father has literally stolen his child's savings and done a runner. Here is a question on this answered by the man himself - Martin Lewis

---

Q My ex has taken my children's savings. Can I do anything about it?

I got this tweet from a mother last week. It turns out to be £15,000 of their savings; the dad's absconded and has no contact.

If the money is in a child's name, it's their cash. However, for younger children the usual practice is to nominate a signatory (for example a parent or grandparent) who can manage and withdraw the cash without the child's approval, usually until the child is 16 – though some accounts let you give the child control earlier.

So for younger children it's quite easy for parents to use their cash; for older ones, you would need their permission.

As for whether it is legal to do so, I've consulted lawyers who, as is often the case, had mixed views. Some say it is criminal fraud, others say there's nothing in practice to stop it – though you could attempt a civil suit for breach of fiduciary responsibility.

---

https://www.telegraph.co.uk/finance/personalfinance/investing/11286926/Martin-Lewis-the-eight-questions-Im-always-asked-about-childrens-savings.html

WantToRetireEarly

By absconding with 15k of the childs money and breaking off contact, I think that that man's intention is crystal clear as well

What you mention below is what the OP said in his initial post asking for advice. He then got lots of advice. The OP has also declared later on in the thread that he has no intention of breaking the law so I would just leave it at that. You or I can hardly do anything to stop him in whatever he chooses to do.

xylophone wrote: »

What makes this slightly different is that the OP has declared that in order to obtain a pecuniary advantage, his intention is to open a Trustee account and use the money as his own.....

dissstressed

So much needless to and fro!

To summarise -

1. OP wants to open a children's savings account to save interest and wants to know the implications
2. There are tax implications
3. The money is the child's once gifted
4. There are legal implications to managing the money on behalf of the child
5. The child's money needs to be managed in their best interest (no agreement on what the child's best interests are)
6. Some people hate what the OP is doing, some people have given advice and left it at that
7. OP has (hopefully!) read all the advice and said he does not intend to do anything illegal
8. OP will do what he wants to do. For his sake, let's hope it's all aboveboard.
9. I think the OP and the rest of us should all move on and stop clogging up the S&I forum.

Can a moderator lock the thread please?

THE END.

IanManc

dissstressed wrote: »

I think the OP and the rest of us should all move on and stop clogging up the S&I forum.

Can a moderator lock the thread please?

THE END.

I think we're all free to contribute to the forum whether you like it or not actually.

muhandis

Haha, finally something we can agree on!

IanManc wrote: »

I think we're all free to contribute to the forum whether you like it or not actually.

Terry_Towelling

Just before anyone locks the thread can I throw my twopenneth in?

For sure, there is no one in the land who could reasonably argue that paying down a mortgage with a child's savings is in the child's best interests when those savings were actually created out of money intended to pay down the mortgage in the first place. The only gain in the whole process being a marginal amount of interest (tax dependent) and that gain benefitting no one but the mortgagee by way of a decrease in their debt.

However, might it be in the child's interest to have their money used this way if the trustee created a fully-paid-up share in the ownership of the house to the value of the child's contribution? Obviously, the legal costs of doing so would outweigh any benefit gained from a slightly better interest rate but would anyone agree that that could be a situation whereby OPs idea might be workable?