How do I continue saving for my 16 year old daughter into an account she can't access

annagi

I've been saving over the years for my daughter. The account is in her name, but I have 'authority' over it as she's currently under 16 and she doesn't know that it exists. She's 16 in a couple of months so the account will 'mature' and transfer over to her name. There's over £40k in the account and I don't want her to have access to it yet/know about it yet. I could take the money out and put it into my savings account, but is there a way I can still have a savings account in her name that she can't access yet?

elsien

What type of account is it?  I think whatever type of account it is, she’ll be able to access it when she’s 18 regardless.

Can you just take money out of an account in her name and put it in your name instead - is that lawful?


 

pseudodox

Put the money into a fixed saver - where only permissible withdrawal is closure?  You could do a 5 year fix so it is not easy to access until she is 21, when she may have got past the "spend, spend, spend" age & be thinking about getting on the property ladder.  Maybe such an account that would allow annual withdrawal of interest so she gets a little splurge once a year would work.

Newly_retired

When she turns 16 the bank is likely to write to inform her that she is no old enough to handle the account, or to invite her to open a different one if hers is for under 16s. To prevent that, you could empty it and close it, and transfer the money to an account in your name.  

Ideally she is well enough educated financially to know not to spend it rashly, but that doesn’t really account for an older teenager’s brain.

Exodi

elsien said:

What type of account is it?  I think whatever type of account it is, she’ll be able to access it when she’s 18 regardless.

Can you just take money out of an account in her name and put it in your name instead - is that lawful?

I'd suggest that anything's possible. As the parent is acting as a trustee for the child, they are entitled to wander into most banks and empty the account without a seconds notice (with the expectation being that the funds will continue to be managed to the benefit of the child by the trustee).

Proceeding to put the funds in the adults name is certainly controversial, but the funds are intended to be used for the benefit of the child, so I don't see it as a major drama (though I think if they told the bank that was their intention, the bank might tell them they can't allow a withdrawal under those circumstances).

Newly_retired said:

Ideally she is well enough educated financially to know not to spend it rashly, but that doesn’t really account for an older teenager’s brain.

I was going to say, from my younger siblings, I've seen the outlandish spending spree's young adults go on - nights out every weekend, takeaways for every meal, etc. At least in my families case, that £40k would have been absolutely ripped through over a year or two.

Personally I always recommend saving money in your own name and gifting it when the time is right. £40k is so much money I'd really expect something significant like a house deposit from it - but young adults aren't renowned for their financial prudence and only think in the now.

BungalowBel

Put it into Premium Bonds.  She can cash those in, but it's not 'instant' and if you have a talk with her beforehand, she may think twice about it before doing so.  Tell her with that amount of money she should win small prizes pretty frequently and she could have the prize money paid into her own bank account, for a bit more spending money.

thegreenone

Exodi said:

Personally I always recommend saving money in your own name and gifting it when the time is right. £40k is so much money I'd really expect something significant like a house deposit from it - but young adults aren't renowned for their financial prudence and only think in the now.

I do like the PB idea as I won £1250 last year on a 40k holding but the PBs become the child's at 16.  But I think @Exodi's idea is probably the best.  Take it out, if you can, and choose an account maybe fixed for a year, as driving lessons/car might be wanted/needed at 17.

Mojisola

annagi said:

I've been saving over the years for my daughter. The account is in her name, but I have 'authority' over it as she's currently under 16 and she doesn't know that it exists. She's 16 in a couple of months so the account will 'mature' and transfer over to her name. There's over £40k in the account and I don't want her to have access to it yet/know about it yet.

How is she likely to react when she gets control of her account and sees that you have taken a lump sum out of it?

MusicLover1357

Once your daughter turns 16, most child accounts automatically convert to adult accounts, giving her full access. May be you could open a Bare Trust Account – The money is legally hers, but you manage it until she’s 18 (or older, depending on terms).