Property funds in child accounts

Grumpy_chap

wilfred30 said:

Grumpy_chap said:

One solution may be that your baby daughter buys the house in her name (using her money that is in her accounts) and you pay her rent until such time as she comes of age and makes her own decision as to whether she wishes to continue sharing her house with you.

I assume that's tongue in cheek as I'm sure you're aware that a child cannot buy property 

Sorry I was not clear enough.  The property will obviously need to be held in trust until the child comes of age.  I apologise for omitting that detail.

Such an approach seems to be wholly inline with the OP's aspiration to ensure the daughter has security: 

SuperCommuter said:

buy a family home, primarily for her benefit, as renting is inherently insecure. I have been on the receiving end of a S21 in the past and i don't want a repeat of this now I have a family to look after. 

To buy the house in trust for the daughter using the money in the daughter's bank accounts will ensure her security and protect the OP against the receiving end of an S21 at least until the daughter comes of age and the property transfers directly into her name and no longer needs to be held in trust.  This assumes the OP maintains rent payments, otherwise the daughter's trustee may still serve an S21 I suppose.
I am not sure how this will work and whether the OP can continue as trustee given the potential conflicts of interest that may arise.  No doubt the OP will take professional legal advice in setting all this up as it will need to be properly formalised and the legal advisor can comment on whether there needs to be an "arms-length" trustee rather than the OP.

I congratulate the OP on the advance planning for IHT.

AdrianC

SuperCommuter said:

theartfullodger said:

btw some might consider what you're wanting to be a terrible example to the poor child of how they should then manipulate their children's assets.

Some might, but I don't.

I am not manipulating her assets.

Yes, you are.

You are trying to use her money to buy a house in your name.
If it isn't her money, why is it in an account in her name?

We know the answer to that already. Because she gets more interest than you do.

So is it her money, or have you lied to the bank to defraud them out of the extra interest...? Because there's no third option...

I really don't see how using interest earned through these accounts is any different from accepting Child Benefit for my daughter.

CB is payable to the parents/guardians. Not to the child.

It is money being used to buy a family home

In her name? Or in yours?

If you say it'll be in joint names, have you investigated how that will affect getting a mortgage...?

...primarily for her benefit, as renting is inherently insecure. I have been on the receiving end of a S21 in the past and i don't want a repeat of this now I have a family to look after. Perhaps if the government didn't allow landlords the freedom to evict families anytime they feel like it, overheat the housing market, and push savings rates down to 0% then i wouldn't feel compelled to take such 'drastic' measures. 

What's all of that got to do with whose bank account you paid the money into?

SuperCommuter said:

ratechaser said: 
Where I think we differ is I have so far managed to do so without committing fraud or embezzlement.

It's neither fraud or embezzlement. Let's not get overly emotive here. 

How else would you describe lying in order to get more money than you would get if you were honest?
Is it the most serious fraud in the world? Of course not.
But is it likely to have lasting repercussions if discovered? Yes.

ratechaser

SuperCommuter said:

ratechaser said: 
Where I think we differ is I have so far managed to do so without committing fraud or embezzlement.

It's neither fraud or embezzlement. Let's not get overly emotive here. 

ratechaser said:

The money that has been paid into my children's accounts is theirs now, and theirs to use when they turn 18. They are not a slush fund for me to steal when I want it, under some flimsy rationalisation that they will get the benefit from my doing so.

I'm guessing you already own your own home and your children have security as a result. Assuming that's true then you probably also benefitted from better rates than we have today while saving up for a deposit. Your children will never know the threat of eviction. If i was comfortably housed, then i might also take a moral high ground and judge these methods though i'm not in that position yet. 

Hmm, yes you're right, I do own my own home. But... wait just a darn minute! I don't qualify for child benefit, and the little darlings are costing me a fortune, especially as they're stuck at home right now, eating all that food, consuming all that electricity. Perhaps I should just take a 'reasonable contribution' for bed and board out of their savings accounts each week...?

Or maybe not. Because I don't steal my children's money. And funnily enough, I managed to get to this point of relative stability without ever feeling the need to do so.

frogglet

I thought the interest on children's accounts were cut as well.
 It seems a very strange decision to make, to save your money in someone else's account. 
How much is it?
Have you had trouble drawing it out already?

I'm not sure why you have come on here, you clearly think you have done the right thing.
Id say, go and draw it out and provide it as your house deposit and let us know how you get on and what your solicitor says when they ask for provenance.

wilfred30

OP - why didn't you just buy a house with that money at the time instead of giving it to your baby daughter?

As far as I can see, if the bank refuses to let you withdraw all of your daughter's money to buy a house, your only option will be to withdraw the £50k you've got in premium bonds and use it as a deposit on a house and get a mortgage.  

After that, you'll just have to wait until your daughter reaches 18 and, hope against hope, that she agrees to give you the money that legally belongs to her.

babyblade41

oops , someone has dropped a monumental clanger !!!

xylophone

I earn around £80 on average per month from her accounts (NS&I prize dependant), 

You are aware of the "£100 rule?"

https://webarchive.nationalarchives.gov.uk/+/http://www.hmrc.gov.uk/families/babsi.htm

From the time when accounts needed to be registered for interest to be paid gross but the principle of "parental trusts for children" still applies.

And NB, even though the parent is responsible for paying the tax in the circumstances described, the interest and capital still belong to the child.

SuperCommuter

frogglet said:

I'm not sure why you have come on here, you clearly think you have done the right thing.

I came on here to see if there was a firm legal opinion on if this would be an issue when approaching a solicitor. I've never bought a house before but as far as i can tell to prove the money was obtained through savings i would need to provide around 6 months of bank statements that show the savings building up through contributions from my salary. I don't plan to buy very soon (the stamp duty holiday price ramping has pushed back my plans) therefore i have time to get my financial affairs into a 'clearer' state.  I think i've got my answer and i'm I am grateful to everyone who has responded. 

wilfred30

SuperCommuter said:

frogglet said:

I'm not sure why you have come on here, you clearly think you have done the right thing.

I came on here to see if there was a firm legal opinion on if this would be an issue when approaching a solicitor. I've never bought a house before but as far as i can tell to prove the money was obtained through savings i would need to provide around 6 months of bank statements that show the savings building up through contributions from my salary. I don't plan to buy very soon (the stamp duty holiday price ramping has pushed back my plans) therefore i have time to get my financial affairs into a 'clearer' state.  I think i've got my answer and i'm I am grateful to everyone who has responded. 

Yes, roughly 18 years if the bank refuse your request!

SuperCommuter

wilfred30 said:

Yes, roughly 18 years if the bank refuse your request!

Using instant access child accounts to stash personal money and obtain benefits is not allowed because the money is expected to be withdrawn by the parents and used instead of benefits. However, what you are saying is that actually withdrawing money from a child account is also not allowed because 'it's the child's money'. You can't have it both ways: either the money can be accessed by the parent or it cannot. The only exception to this is Junior ISAs and, as i said, i don't have any of these under my daughter's name.