Money Moral Dilemma: Should we keep our teenage son in the dark about his Child Trust Fund?

outtatune

You say you're worried about your son being financially immature, but he's not the one who's gambled a 6 figure sum without apparently any idea what it was for or how it should be put to use. The time to be asking these questions was when you were considering setting up the trust.

Just remember that if the money does disappear over the course of a couple of years, it's you that's wasted it, not him. 

CapeTown

My sister who married a rich man , put aside a trust fund for her lovely children.  They now have no drive to work because they know they have money to fall back on 

keithyno.1

From the Child Trust Fund section of www.gov.uk:

What happens when your child is 18

On your child’s 18th birthday, the Child Trust Fund matures. This means that:

• your child automatically takes over the account
• no more money can be added

Your child can either:

• take out the money
• transfer the money to an adult ISA

The Child Trust Fund will then close.

Until your child withdraws or transfers the money, it stays in an account that no one else has access to.

^

As you can see, that's quite unequivocal - once your son reaches the age of 18 the funds in the account become his, to do whatever he wants with them.

To try to keep him in the dark about money which WILL belong to him once he's 18 would be unfair and quite unethical in my opinion, because it denies him the opportunity to use the funds however he sees fit (for instance, he might wish to re-invest it elsewhere for higher returns).

I'm sure you knew of these rules when you set up the Child Trust Fund so you should abide by them. 

It sounds like you're worried he might fritter the money away but ultimately that will be HIS choice as an adult. What you CAN do is offer to help him as best you can with advice on investment opportunities etc.

I suppose the moral of all that is, your son will become an adult later this year so you'll have to treat him like one. Good luck!

Livingonanisland_

Speaking from experience.  I'd wait till he's older before telling him about it.  If the bank inform him once he's 18, I'd have a serious discussion suggesting if he doesn't use it for studying, then it'd be wise to invest the bulk of it in property as an investment

dirtmother

outtatune said:

You say you're worried about your son being financially immature, but he's not the one who's gambled a 6 figure sum without apparently any idea what it was for or how it should be put to use. The time to be asking these questions was when you were considering setting up the trust.

Just remember that if the money does disappear over the course of a couple of years, it's you that's wasted it, not him. 

Ah, someone who doesn't know about Child Trust Funds. Parents didn't 'consider' setting them up, the government set them up. (Admittedly the government only put in some of the money and parents decided whether to add to it... the general idea being that saving is a good thing without needing to know what for)

There's something of a scandal about access to these monies for those becoming adults who do not have capacity to manage them for themselves due to the severity and nature of their disabilities.

bikaga

Rd1994 said:

If your followed anything Martin / the experts say it’s that you shouldn’t pay for your children to go to uni. It’s the best loan they will ever get and will unlikely not pay it back. Let them use the money for a house deposit or business idea later in life if they need it but I would save it until they’re working / find their feet / what they want to do in life. Also whose uni cost 100k?! 

A 4 year course at £10k a year (many unis) is £40k. Average student room in the UK is £166 a week according to Google, so assuming that'll increase just a bit year on year, £36k over 4 years. More if he studies in London. He's not yet bought any books, food, clothes, toiletries, laptop, phone contract (even if it's just SIM only), bike or car or bus / tube pass, paid for field trips etc.

bikaga

Talk to him about it. Even if he's not into uni and wants to learn a non-uni profession, he might understand that he's better off having it for a down payment on a property or setting up his own business. You could offer something like helping him invest it year on year and letting him have the interest for fun stuff - at 18, £5k fun money a year is nothing to sneer at.

Not telling him about it is probably legally questionable, never mind morally. And how's he going to learn to be responsible with money if he doesn't even know what he's got?

roubiliac

It’s his from 18. I very much doubt you will be able to keep him in the dark.

silvercar

Rd1994 said:

If your followed anything Martin / the experts say it’s that you shouldn’t pay for your children to go to uni. It’s the best loan they will ever get and will unlikely not pay it back. Let them use the money for a house deposit or business idea later in life if they need it but I would save it until they’re working / find their feet / what they want to do in life. Also whose uni cost 100k?! 

that used to be true, with the new student loan rules it is less clear as far more students will end up paying back their loan. A loan that will last for 40 years rather than 30.

Suzych

I had post office bonds for  my son . He knew about them but was told he couldn’t have the money until he was 21. Yes I know I was legally incorrect but I was not handing g him a few grand before university . 

At 18 he was being an awkward teen and refused to sign the forms to reinvest as I had told him never to sign anything without knowing what it was for!! 

Stalemate ensued until his grandad had a gentle chat and advised him to sign the forms. He totally respected his grandfathers opinion . 

Needless to say I kept the money invested until he graduated with the proviso I would not be able to give him a similar amount again. 

He is now very financially responsible and I have  kept to my word that the Bank of Mum is closed at age 24. 

Would do I do it again . Absolutely .