Using Adult Savings Account for Child's Savings

hewhohuntselves

wmb194 said:

MrsLe-Page said:

Hi all.

Currently, the fixed savings rates for adult savings are a little bit better than any current kids savings. I have an amount of money in a 123 mini account (2%), which I am drip-feeding into the First Direct (adult) savings account (7%) at £300 a month. The FD account is obvs not a children's savings account and that got me thinking whether I am allowed to do this? My daughter is only 4, so we'll be opening many more savings account in her lifetime (we save £100 a month (into another account) for her so she might be able to put a deposit down on a house one day!). I'm quite savvy with moving money around to the accounts with the highest interests, but they won't necessarily be labelled as 'children's accounts'. Is this OK to do? 

Currently, £100 from our monthly income goes into the Halifax monthly saver (which will be 5.5% for me come June), then in June 2024 I will move that cash somewhere else. £300 a month from the 123 mini savings account also goes into the FD adult account, so after the 7% fix finishes, I will need to look around again too.

Thanks.

The money that's already in accounts where she is the beneficial owner is her money: you transferring it to your own account is stealing.

It sounds like you should just save in your own name and then decide in the future whether or not to gift it to her.

Stealing?  Come on.  It would be a parent holding money on trust for a child, nothing more.  Stealing at law (I'm a lawyer) requires dishonest intent and an intention to deprive.  Neither present here (and it's embarrassing to even have to consider whether this is stealing).

IanManc

hewhohuntselves said:

wmb194 said:

MrsLe-Page said:

Hi all.

Currently, the fixed savings rates for adult savings are a little bit better than any current kids savings. I have an amount of money in a 123 mini account (2%), which I am drip-feeding into the First Direct (adult) savings account (7%) at £300 a month. The FD account is obvs not a children's savings account and that got me thinking whether I am allowed to do this? My daughter is only 4, so we'll be opening many more savings account in her lifetime (we save £100 a month (into another account) for her so she might be able to put a deposit down on a house one day!). I'm quite savvy with moving money around to the accounts with the highest interests, but they won't necessarily be labelled as 'children's accounts'. Is this OK to do? 

Currently, £100 from our monthly income goes into the Halifax monthly saver (which will be 5.5% for me come June), then in June 2024 I will move that cash somewhere else. £300 a month from the 123 mini savings account also goes into the FD adult account, so after the 7% fix finishes, I will need to look around again too.

Thanks.

The money that's already in accounts where she is the beneficial owner is her money: you transferring it to your own account is stealing.

It sounds like you should just save in your own name and then decide in the future whether or not to gift it to her.

Stealing?  Come on.  It would be a parent holding money on trust for a child, nothing more.  Stealing at law (I'm a lawyer) requires dishonest intent and an intention to deprive.  Neither present here (and it's embarrassing to even have to consider whether this is stealing).

There are 5 elements to an offence of theft, not just the two you state.

There needs to be (1) an appropriation (2) of property (3)  belonging to another (4) dishonestly (5) with the intention of permanently depriving the owner of it.

For someone who tries to add authority to their posting by stating "I'm a lawyer" you might say "it's embarrassing" that you didn't even define the necessary elements of theft correctly.

The parent is at the moment taking money which the child owns out of an account in the child's name. She is putting it in an account in her own, i.e. the parent's, name which she describes as an "adult" account. That is inappropriate. It is the child's money and should remain in the child's name.

It is glib to say that it is "nothing more" than "a parent holding money on trust for a child", because the mechanism for holding money in trust for a child is to open an account in which there is a named trustee with the child as a beneficiary, which the child takes control of at 18, or 16 in Scotland. This ensure that the money is not mixed with the parent's money; that the money does not for part of the parent's estate if the parent dies; and that any interest earned will fall under the child's own tax allowance and not be taxable as part of the parent's income. A cash only bare trust bank account for a child does not need to be registered with HMRC as it is covered by an exemption.

You would think that someone who posts "I'm a lawyer" would have known that, and would not have posted something as unhelpful and misleading as "it would be a parent holding money on trust for a child, nothing more".

wmb194

hewhohuntselves said:

wmb194 said:

MrsLe-Page said:

Hi all.

Currently, the fixed savings rates for adult savings are a little bit better than any current kids savings. I have an amount of money in a 123 mini account (2%), which I am drip-feeding into the First Direct (adult) savings account (7%) at £300 a month. The FD account is obvs not a children's savings account and that got me thinking whether I am allowed to do this? My daughter is only 4, so we'll be opening many more savings account in her lifetime (we save £100 a month (into another account) for her so she might be able to put a deposit down on a house one day!). I'm quite savvy with moving money around to the accounts with the highest interests, but they won't necessarily be labelled as 'children's accounts'. Is this OK to do? 

Currently, £100 from our monthly income goes into the Halifax monthly saver (which will be 5.5% for me come June), then in June 2024 I will move that cash somewhere else. £300 a month from the 123 mini savings account also goes into the FD adult account, so after the 7% fix finishes, I will need to look around again too.

Thanks.

The money that's already in accounts where she is the beneficial owner is her money: you transferring it to your own account is stealing.

It sounds like you should just save in your own name and then decide in the future whether or not to gift it to her.

Stealing?  Come on.  It would be a parent holding money on trust for a child, nothing more.  Stealing at law (I'm a lawyer) requires dishonest intent and an intention to deprive.  Neither present here (and it's embarrassing to even have to consider whether this is stealing).

As a trustee why wouldn't you hold it in a trust account? An account that you already have - and it's easy to open more bare trust savings accounts - rather than mixing it with your own funds and causing problems? As a lawyer, you ought to understand the obligations a trustee takes on. You really shouldn't mix finances.

IanManc

Or putting it succinctly: @wmb194 has a point: for an adult to take money from a child and to put it in their own account does look to an outsider like they're nicking it.

Far better to choose one of the excellent children's accounts out there:

https://moneyfactscompare.co.uk/savings-accounts/childrens-savings-accounts/

Anyway, it's sunny and I'm off out into the garden. Have a lovely afternoon everyone! 

cwep2

Worth pointing out to the original poster that if your child earns more than £100 in interest in a (tax) year and that money came from a parent then you need to tell HMRC - it's then taxed as if the adult earned that interest. So in some ways, particularly if you are looking to build a nest-egg/deposit for your child, given current interest rates this is quite likely to be an issue.

It is complicated even when the money comes indirectly from someone else, say a grandparent wants to give money to their grandchild and transfers cash to the parent's current account, parent then deposits into child savings account then this money has "come from" the parent - or HMRC may see it that way. The safest way to avoid this is JISAs or get others to transfer directly to child's account or for them to pay in cash to their savings account (eg birthday money) the latter is practical for a few hundred £s but not for thousands.

JISAs or Adult ISAs obviously avoid this, but the former comes with the issue that it all goes to the child at 18. The *only* way to retain control of the money, ethically or legally beyond 18 is to just keep it exclusively in your name, which means you may potentially pay tax on it at your marginal rate rather then the (probably) zero tax rate that would be available to a child. Better rates available for adults may offset this, and an awful lot of savings providers don't bother offering accounts to children so the best rates are normally adults only and there is a lot more choice. 

It's a lovely thing you are doing for good reasons, your child is very lucky.

Exodi

This question comes up fairly regularly on this forum (as well as the arguments about theft).

I'll say that as the OP specifically says:

MrsLe-Page said:

I want it to be my money so that I can give it to her for purchase of a house only! Call me a control freak, but I don't want her getting all this money at 18 haha.

Then it's clear the most sensible path is to save any future money in their own name and gift it when they decide it is appropriate. Funds already in the child's name are probably stuck that way (for many of the arguments listed above), plus I believe you may find it difficult to have a bank transfer it into your own name now regardless.

For what it's worth, I don't think you're a control freak OP. Many people on this forum share similar views. I have watched many of my siblings absolutely rip through cash accessible to them at 18 in a few short months, spent on nights out, takeaways and luxury purchases (much to the disappointment of family members praying it would have gone towards a car or something).

While I do not have children yet (we'll be trying end of this year at long last!), I would definitely keep the money in my own name until the time is right. Likely saved in my S&S ISA with a specific global fund earmarked for them.

hewhohuntselves

IanManc said:

hewhohuntselves said:

wmb194 said:

MrsLe-Page said:

Hi all.

Currently, the fixed savings rates for adult savings are a little bit better than any current kids savings. I have an amount of money in a 123 mini account (2%), which I am drip-feeding into the First Direct (adult) savings account (7%) at £300 a month. The FD account is obvs not a children's savings account and that got me thinking whether I am allowed to do this? My daughter is only 4, so we'll be opening many more savings account in her lifetime (we save £100 a month (into another account) for her so she might be able to put a deposit down on a house one day!). I'm quite savvy with moving money around to the accounts with the highest interests, but they won't necessarily be labelled as 'children's accounts'. Is this OK to do? 

Currently, £100 from our monthly income goes into the Halifax monthly saver (which will be 5.5% for me come June), then in June 2024 I will move that cash somewhere else. £300 a month from the 123 mini savings account also goes into the FD adult account, so after the 7% fix finishes, I will need to look around again too.

Thanks.

The money that's already in accounts where she is the beneficial owner is her money: you transferring it to your own account is stealing.

It sounds like you should just save in your own name and then decide in the future whether or not to gift it to her.

Stealing?  Come on.  It would be a parent holding money on trust for a child, nothing more.  Stealing at law (I'm a lawyer) requires dishonest intent and an intention to deprive.  Neither present here (and it's embarrassing to even have to consider whether this is stealing).

There are 5 elements to an offence of theft, not just the two you state.

There needs to be (1) an appropriation (2) of property (3)  belonging to another (4) dishonestly (5) with the intention of permanently depriving the owner of it.

For someone who tries to add authority to their posting by stating "I'm a lawyer" you might say "it's embarrassing" that you didn't even define the necessary elements of theft correctly.

The parent is at the moment taking money which the child owns out of an account in the child's name. She is putting it in an account in her own, i.e. the parent's, name which she describes as an "adult" account. That is inappropriate. It is the child's money and should remain in the child's name.

It is glib to say that it is "nothing more" than "a parent holding money on trust for a child", because the mechanism for holding money in trust for a child is to open an account in which there is a named trustee with the child as a beneficiary, which the child takes control of at 18, or 16 in Scotland. This ensure that the money is not mixed with the parent's money; that the money does not for part of the parent's estate if the parent dies; and that any interest earned will fall under the child's own tax allowance and not be taxable as part of the parent's income. A cash only bare trust bank account for a child does not need to be registered with HMRC as it is covered by an exemption.

You would think that someone who posts "I'm a lawyer" would have known that, and would not have posted something as unhelpful and misleading as "it would be a parent holding money on trust for a child, nothing more".

Two points:

Perhaps I just wanted to set out the two elements which are most obviously lacking here?  Even if just one is lacking it's not theft.  No need to address irrelevant elements.

Trusts can be created informally.  A parent holding the funds in their own account may not be optimal, but it is not going to attract - in the real world - sanction.

You have yet to convince me there's a real issue here.

hewhohuntselves

wmb194 said:

hewhohuntselves said:

wmb194 said:

MrsLe-Page said:

Hi all.

Currently, the fixed savings rates for adult savings are a little bit better than any current kids savings. I have an amount of money in a 123 mini account (2%), which I am drip-feeding into the First Direct (adult) savings account (7%) at £300 a month. The FD account is obvs not a children's savings account and that got me thinking whether I am allowed to do this? My daughter is only 4, so we'll be opening many more savings account in her lifetime (we save £100 a month (into another account) for her so she might be able to put a deposit down on a house one day!). I'm quite savvy with moving money around to the accounts with the highest interests, but they won't necessarily be labelled as 'children's accounts'. Is this OK to do? 

Currently, £100 from our monthly income goes into the Halifax monthly saver (which will be 5.5% for me come June), then in June 2024 I will move that cash somewhere else. £300 a month from the 123 mini savings account also goes into the FD adult account, so after the 7% fix finishes, I will need to look around again too.

Thanks.

The money that's already in accounts where she is the beneficial owner is her money: you transferring it to your own account is stealing.

It sounds like you should just save in your own name and then decide in the future whether or not to gift it to her.

Stealing?  Come on.  It would be a parent holding money on trust for a child, nothing more.  Stealing at law (I'm a lawyer) requires dishonest intent and an intention to deprive.  Neither present here (and it's embarrassing to even have to consider whether this is stealing).

As a trustee why wouldn't you hold it in a trust account? An account that you already have - and it's easy to open more bare trust savings accounts - rather than mixing it with your own funds and causing problems? As a lawyer, you ought to understand the obligations a trustee takes on. You really shouldn't mix finances.

Trusts arise informally all the time.  A parent can generally hold property on behalf of their child without issue.  

I would be wary about overcomplicating what is a fairly mild proposal by reference to stealing and fiduciary duties. 

Parents have to be able to (apart from some types of account) be able to administer their children's finances.  If that includes holding it on trust then, again in the real world, I find it hard to believe the police would be knocking on anyone's door.

artyboy

hewhohuntselves said:

wmb194 said:

hewhohuntselves said:

wmb194 said:

MrsLe-Page said:

Hi all.

Currently, the fixed savings rates for adult savings are a little bit better than any current kids savings. I have an amount of money in a 123 mini account (2%), which I am drip-feeding into the First Direct (adult) savings account (7%) at £300 a month. The FD account is obvs not a children's savings account and that got me thinking whether I am allowed to do this? My daughter is only 4, so we'll be opening many more savings account in her lifetime (we save £100 a month (into another account) for her so she might be able to put a deposit down on a house one day!). I'm quite savvy with moving money around to the accounts with the highest interests, but they won't necessarily be labelled as 'children's accounts'. Is this OK to do? 

Currently, £100 from our monthly income goes into the Halifax monthly saver (which will be 5.5% for me come June), then in June 2024 I will move that cash somewhere else. £300 a month from the 123 mini savings account also goes into the FD adult account, so after the 7% fix finishes, I will need to look around again too.

Thanks.

The money that's already in accounts where she is the beneficial owner is her money: you transferring it to your own account is stealing.

It sounds like you should just save in your own name and then decide in the future whether or not to gift it to her.

Stealing?  Come on.  It would be a parent holding money on trust for a child, nothing more.  Stealing at law (I'm a lawyer) requires dishonest intent and an intention to deprive.  Neither present here (and it's embarrassing to even have to consider whether this is stealing).

As a trustee why wouldn't you hold it in a trust account? An account that you already have - and it's easy to open more bare trust savings accounts - rather than mixing it with your own funds and causing problems? As a lawyer, you ought to understand the obligations a trustee takes on. You really shouldn't mix finances.

Trusts arise informally all the time.  A parent can generally hold property on behalf of their child without issue.  

I would be wary about overcomplicating what is a fairly mild proposal by reference to stealing and fiduciary duties. 

Parents have to be able to (apart from some types of account) be able to administer their children's finances.  If that includes holding it on trust then, again in the real world, I find it hard to believe the police would be knocking on anyone's door.

Alright well then there's the other and probably simpler aspect of fraud. Fine to put it in the child's name when children's accounts attract the most interest, but as soon as the adult accounts are paying more, let's yank that money back into the parents name. 

I do agree that there's little likelihood of the rozzers turning up for this, but it's blatantly dodgy behaviour nonetheless.

Keep_pedalling

Sg28 said:

MrsLe-Page said:

I want it to be my money so that I can give it to her for purchase of a house only! Call me a control freak, but I don't want her getting all this money at 18 haha. I'm glad that what I am doing is OK. My mum (her nan) sometimes gets her premium bonds, not my choice, but she is free to do what she wants.

I'm not brave enough for investing, maybe I will look into it..

Tanks for the help!

Ive just started a pension for my 6 year old son. It might be worth you considering. They still get the 20% tax uplift and potential growth over 50 years means they are likely to have a decent pension pot by retirement for quite a small amount invested now. Im doing £25 a month. 

I wish my parents had had the knowledge and means to do it for me 35 years ago.

He might not think that if you are not also building up savings for use earlier in his life. I would me slightly miffed if I had a nice nest egg that I could not touch for 40 years when I really needed it for a house deposit.