Money Moral Dilemma: I've put my mum's money into Premium Bonds - who gets the prize if it wins?

Kim_13

Aside from the other issues already highlighted, clearly the choice is the mother's as to whether she wishes the gift to her friend to be the sum she has specified or that sum including any gain it may make prior to her death. If her choice is the latter, then the logical thing to do would be to reinvest the prizes; presumably if it won big such that the amount couldn't be reinvested, she might want to do something different anyway.

While keeping this money is preventing you from holding your own Premium Bonds, that does not mean it would be right to help yourself to any prizes without your mother having agreed that you could do so in return for keeping the money. Presumably she has not said this or the question would not have been asked, so I would be minded to suggest that perhaps this isn't such a good idea given the legal issues mentioned, plus the fact that it will be preventing you from buying your own bonds were you to want to do so (unless mum's money + amount you wanted to buy was £50k or less.)

crumpet_man

Gambling on a horse race is not the same as premium bonds, it does not make sense as a comparison in order to make a point.

kimwp

https://forums.moneysavingexpert.com/discussion/comment/81897930#Comment_81897930

Ooh, I don't think I've seen that happen, it must be the unicorn of MMDs.

keithyno.1

Irrespective of all the legal implications already raised in previous responses, to directly answer your question, "If there's a win, big or small, should it go back to my mum, kept to give to her friend, or should I keep it?"

Morally speaking, whilst your mum is still alive this amount of money is hers. So, if you do receive a win from the Premium Bonds ASK HER what she'd like to do with the winnings. It certainly doesn't belong to you, even though the Premium Bonds are in your name.

I can't help thinking it would have been so much easier for all concerned if your mum had kept hold of this money and simply had it written into her will for the specified amount to be left to her friend on her death.

Albermarle

https://forums.moneysavingexpert.com/discussion/comment/81897809#Comment_81897809

It is not quite as simple as that .

The more bonds you own, the more likely you will get close to the average payout.

If you own a relatively low amount of bonds ,then you may get nothing for ages, but if you have even one prize in a year, the overall return could look good.

My main point is that often people think ‘ what if I win a big prize’ but the chances are very very small, so not really worth including it any future plans .

tawmjk

The only moral solution is to ask your mother what she intended to do with any winnings.

Investing in Premium bonds appears to be a bad choice, the prizes are not as good as a savings account so maybe the prizes are not important.

Frogletina

Unless it is the maximum amount invested in Premium Bonds, the winnings can be automatically reinvested and buy more bonds. This ensures that the amount for the friend in the bonds doesn't decrease due to inflation

After my husband died in his 80s, I found 2 premium bonds of £1 each of which had never won. He'd held them for decades and that pound would have needed to have increased to around £37 to keep up with inflation

Section62

https://forums.moneysavingexpert.com/discussion/comment/81898092#Comment_81898092

"Investing in Premium bonds appears to be a bad choice, the prizes are not as good as a savings account so maybe the prizes are not important."

The prizes are tax-free though, which means who pays the tax on income from this money is one less thing to worry about among all the things that could go wrong with this idea.

Premium Bonds aren't necessarily a bad choice, savings accounts are not always better. It depends a lot on the individual's personal circumstances, and how 'lucky' they are.

Tigra_

I no longer speak to my brother as he said he’d only give me a million pounds if he won the lottery whilst giving our sister two million. Funny thing is that he never plays the lottery. Oh well never mind.

retired19

Three questions

1, Why are you looking after this money? Is it because your mum is hiding it from others(family or tax)? or is she worried about her own mental capacity at some later stage?

2, Why has she not simply kept it herself and made a will? As MSE has pointed out this can be done for free using various offers .

3, Have you and your mum considered all the possible consequences of your arrangement (some of which can be be read in earlier comments)?