Close family member with history of bankruptcy would like to open an account for my child

Andycmac

Hi Guys, long time reader, 1st time poster! I tried to research this question first but couldn't find any proper direction.

A family member (X) has very kindly offered to open a bank account for my child under X's name. While this is a very nice gesture, I have already opened an account for my child under my name to pay in a nominal amount every month, (only £100's in the first few years).

I'm certain family member X is doing this with the best intentions, however 'X' may have suffered a personal bankruptcy in the past and they are currently self employed.

If 'X' were to go bankrupt again, or similar, would my child's credit rating be at risk? Would there be any other risks, ie tax free allowance in conflict with the account I opened?

Hope someone can help!

Many thanks!

spadoosh

Children do not have a credit rating, they are unable to get credit so its pointless rating their ability to get credit.

With regards ot the tax, there is no risk to you or your childs tax liability as the account will be held in 'x's name and thus their liability. Whilst the account is in their name, its worth bearing in mind that its their money irrespective of intentions. Be wary of your own tax liabilities though as the account for your daughter is in your name and thus is your tax liability.

Children rarely need to worry about tax liability due to the unlikelihood theyll earn the relevant amounts.

kazwookie

Are you happy that (x) open's an account in your child's name?

I wouldn't be.

I would offer them the sort code / account numbers and suggest that they pay direct (BACS) into the account you control for your child, and thank them for their generous offer.

[Deleted User]

Have them transfer money to the Child account.

Apart from the fact children don't have credit ratings, no one for that matter does.

Besides it if's a savings account it won't show up either way

colsten

kazwookie wrote: »

Are you happy that (x) open's an account in your child's name?

I wouldn't be.

More importantly, neither would any bank. AFAIK, only legal guardians are allowed to open accounts in a child's name.

Nothing stops the person from opening an account in their own name but for the benefit of the child.

colsten

Regarding tax, best go by what HMRC says: https://www.gov.uk/savings-for-children

xylophone

AFAIK, only legal guardians are allowed to open accounts in a child's name.

No, only a personal with parental responsibility can open a JISA.

On other accounts this does not necessarily apply - it depends on the provider.

See

https://www.halifax.co.uk/savings/kids/

A grandparent can open a savings account for their grandchild, in the child’s name, as long as they can provide documentation such as the child’s birth certificate.

https://uk.virginmoney.com/savings/products/virgin_young_saver_issue_5/

The named child on the account must be aged 16 or under.
A suitable adult who lives in the UK must be named on the account as a trustee.

Andycmac

Thanks very much for all the replies and apologies for the naivety on the credit rating etc!

Part of me wanted to check the facts - and it seems any 'suitable adult' can open a child's saving account if they have the birth certificate. Also, nothing that transpires with the 'suitable adult's' finances will affect the child down the line.

I'm naturally cautious with handing out personal information normally, so likewise felt hesitant when asked for my babies birth certificate, even though the request was from a close family member. I'm 100% certain there is nothing untoward behind this, but was looking for a reason why it would or would not be a good idea.

Kazwookie/Colsten, what are the reasons you would be against a family member opening an account?

kazwookie wrote: »

Are you happy that (x) open's an account in your child's name?

I wouldn't be.

colsten

Andycmac wrote: »

Kazwookie/Colsten, what are the reasons you would be against a family member opening an account?

I don't think a "suitable adult" will be allowed to open any account for a child that they are not a legal guardian for. But even if I am wrong, I would absolutely never allow any 3rd party, as close as they might be to the family, open an account in my child's name as I would question their motives, and I'd be concerned that they would use the account to exert pressure on the child (anything from very subtle to open pressure), demand favours, make the child feel guilty, etc etc.. That pressure could also extend to yourself.

If the relative truly wants to put money towards the child's upbringing, they can do this in other ways. For example, they could give you the money as you as a parent know best what your child needs. If the relative doesn't trust you with that, ask yourself why not!

The other option is that the relative opens an account in their name, with your child named as the beneficiary. They can still use this as a carrot to get favours but your child and you can just walk away if it did become overwhelming.

Lastly, your relative is free to leave whatever they see fit to your child in their will.

jonesMUFCforever

I think you are right to be cautious. He could pay monies into the account to hide from his creditors (and withdraw them at will).

Flobberchops

If he's prone to bankruptcy, I'm not convinced a trust account administered by him wouldn't count as his own assets if he went through bankruptcy? Or can a more knowledgeable forumite set me straight?


It would be much simpler to give him the account details of the existing child saving account and he can make cash gifts as and when.