WWYD premium bonds

[SmileAndNod]

I have 3 DCs. They were all given premium bonds when they were born by grandparents which I hold in trust until they're 18.

One of them has won quite a bit of money (to us). Not a life changing amount, but it would probably be a good heft of a deposit on a house.

Do we split into 3, and do the same if the other 2 ever won anything? And where do we put it? A lovely problem to have but I'm ever so slightly in shock.

It's not the most straightforward bit of law (as it refers to previous legal structures) but see www.legislation.gov.uk/ukpga/1989/41/section/3 subsection 3. As a parent with parental responsibility you can 'receive or recover in [your] own name, for the benefit of the child, property of whatever description and wherever situated which the child is entitled to receive or recover.'

I am not sure who the cheque is made out to (having not been fortunate enough to receive one!) but the key point is that being in control of money that the child is entitled to receive does NOT mean that the OP can simply choose to use it as she personally thinks would be best. She has to act for the benefit of the child who is entitled to it.

Grandparents bought my children some, both the children and the grandparents know and want that any prizes over £100 will be split so they end up with similar amounts. Sadly that's never happened and they are only £25 different in amounts they now own!

@123ZYX

If, for example, it's the 8 year old who had the win and you split it, what happens if the 14 year old gets a big win when she's 19? At that point, she will have gained from the 8 year old's win and won't be under any obligation to share her own. At what point does the sharing stop? Will they still have to share wins when they're all adults?

No. Because they're adults.

If I put £5k into premium bonds for each of 3DC, and one wins big, as children, I make the decision I see best for the children as I'm the adult. Otherwise children would be in charge of their bonds from the start.

As an adult, if one DC wins big, then it's down to them, to make their own adult decision.

All PB held at child ages, I would view as all in one big pot of "children's". Whichever ticket wins, is split amongst all the children. As the eldest turns 16 (I think it's 16 for PB, not 18) their share is removed from the child pot and operates independently. So if they win, it's now theirs to keep. Or make the decision to share.

If one of the two younger ones won, and the children are all close in age, I'd still give a share to the (just turned) adult child. Presuming the older child hadn't won big themselves already, and kept it. But that would only be for a very short overlap period until the second child hit 16. Once the older two were both holding independent adult bonds, I'd treat them all as separate pots. So then if the youngest won, it would be theirs. Likewise for the elder two.

Child bonds I see as for all the children, and so I would distribute fairly amongst all, as that's how I parent them in every other aspect. Adult bonds I see as for the adult child to decide.

Congrats that's amazing. I would split the money between my 2

My memory of trust law is that the parent can use the money for the maintenance and education of the child (which covers housing - so technically you could convert the loft - particularly if this is to be the lucky child’s room).

However we had a similar situation (only a £1000) and split it! Children are adults now and no complaints!

Premium bonds are not a trust.

Difficult. You have to invest it now! - you can't wait to ask them.

I think that I would split it, my decision as trustee would be to act in the interests of all children equally.

I would then see how they all feel about that when they're older and leave open the possibility of leaving the winning child more in my will if their feeling was that they were hard done by.

I absolutely couldn't leave it as it is. After investments, you could easily end up with winning child in a permanently better position than their siblings. I don't think that's in the interests of anyone.

@CavernousScream

Premium bonds are not a trust. Stop giving the OP made up advice. There is no legal direction at all on what she should do with that money. It’s a moral dilemma precisely because there is no law to tell her what to do.

I think you misunderstand the point that people are making. It is not that premium bonds are themselves a trust. It is that when a parent/guardian controls money and property on behalf of a child they do so as a fiduciary and so must act for the child's benefit. The fact that the terms and conditions of premium bonds apparently allow the parents to receive and control the winnings does not change the parent's duty to the child. It simply regulates the relationship between NS and I and the parent.

Of course whether a child could ever successfully enforce this duty is another matter.

@MollysDolly

You do know the bonds are completely under you control. There's nothing stopping you from cashing the lot out, including the winnings, for yourself.

Whilst that would be a shitty thing to do, I just wanted to point out that you are fully able to do that because you're getting a lot of false information here. So absolutely you can distribute what you wish.

In fact, what you could do, is cash out the lot. Then with the total split in three, purchase new bonds, all equal in monetary value, and the kids will never know who won because those bonds don't exist anymore.

This is a good idea. Split it, don't mention it and they won't be able to see which child won when they take control at 18.

Yes, it could be seen as somewhat unfair on the 'winning child', but so is potentially poisoning their sibling relationships going forward into adulthood. At what price £50k or whatever if your siblings are permanently resentful of you? And this is the sort of thing which would rankle with young adults, who don't have the maturity to just accept that's life and life is unfair sometimes. As an adult, if one of my siblings won, I'd be pleased for them and clearly wouldn't expect a share, but it's a bit much to expect an 18 year old to take that view.

I think OP's comment at 06:57:4 of "I will take advice" is spot on.
Spend a few thousand of the winnings to get proper legal and financial advice.

Completely. If my brother won the lottery (we're both in our 30s) I'd be made up for him. It's his ticket, that he chose to buy as an adult, and he's reaping the benefits. He probably would give me something, but that's his adult choice.

If my parents had bought 4 lucky dip tickets and labelled them as "one for everyone" and the one he was holding as the draw took place turned out to be the winning one, no way would that be deemed as "just his" to be handed over at adulthood (yes yes children can't play the lottery, you get the principle)

That's all these bonds are. A load of "tickets" randomly labelled under names.

buy more PBs and put your head in the sand until they are 18 and can decide themselves if they want to share
who knows what the future holds

I would split it. It would be nice to help all three children in adult life than just one having a lot of money gifted to them.
They aren’t responsible enough to make the decision at the moment so you need to

I mean loads of people have mentioned trusts, but ok. To the extent that parents have a fiduciary duty, they have it to all their children. There is nothing in law that says that money has to be kept for the ‘winning’ child.

@CavernousScream

I mean loads of people have mentioned trusts, but ok. To the extent that parents have a fiduciary duty, they have it to all their children. There is nothing in law that says that money has to be kept for the ‘winning’ child.

I am assuming that you are not a lawyer?

@CavernousScream

I mean loads of people have mentioned trusts, but ok. To the extent that parents have a fiduciary duty, they have it to all their children. There is nothing in law that says that money has to be kept for the ‘winning’ child.

The parents have a fiduciary duty to work in the best interest of each individual child. They have 3 separate fiduciary duties - one over each child, not one joint fiduciary duty to look after all the children collectively.

So they have the duty to use the money won by the winning child in a way that is in that individual child's best interest. Giving 2/3 of it away in not in line with their fiduciary duty to that individual child, and leaves the parent open to being taken to court and made to pay back the money. And frankly, if I was the child who found out that I'd won a significant sum, and my parents had chosen to give 2/3 of it away, I'd be livid and it would destroy my future relationship with my parents.

If the parents (or the grandparents)had wanted all of the money given by the grandparents to be used collectively to jointly benefit all children equally, then they should have used a different investment mechanism than individual premium bonds, which by their nature solely benefit an individual if they win. A single joint trust or a single joint account in the names of all 3 children jointly would have been more appropriate for that purpose. But they didn't do that - they invested it in premium bonds, and so the parents have a duty to use the winnings won by one child only for the benefit of that child only. When they are an adult, the winning child may choose to split the money, but that has to be their adult, informed decision.

@mrsm43s I agree. I would recommend the Op pays for legal advice if she plans to do differently.

My DCs have premium bonds, one is over 16 and so has control over them.

However, I decided that when they were younger and if they won big, I would split it between them as that's what the grandparents would have wanted.

Yes exactly as mrsm43s says.

In any case the OP has been very clear throughout that she accepts that she is acting as trustee for her children and that she just wants to make the right decision for them. Right from the very start she says 'They were all given premium bonds when they were born by grandparents which I hold in trust until they're 18.'

Same situation happened with me and my DSis when we were young. DPs gave her all of what her bonds won (into a savings account) and didn't split it. Perfectly fair in my opinion.

I'd split it evenly. And I'd roll my eyes at anyone that didn't

You can roll your eyes all you like @stiffcondomhat but that's not going to change the legal position for the Op

One of mine won £1000 when they both were primary school age. I told them that one had won and they had to decide if they wanted the person who won to keep it all or split it between them, of course I didn’t tell them who had won. They both agreed it would be best to split it. To this day they don’t know who won, but it sounds like yours is a much bigger win. I must admit I often pondered what I would do if one won really big and I don’t really have a great answer. I also did check with my dad as he was the one who actually bought them and he said split it.

@KeyboardWorriers

You can roll your eyes all you like *@stiffcondomhat* but that's not going to change the legal position for the Op

I thought as pointed out upthread, there is no 'legal position'?

Not sure if anyone has mentioned this (and I did try to look) but recently I read an opinion that premium bond winnings should really be called interest as it is used as a savings account. In this case sharing the big win is perfectly fair so that they get equal interest.

And then I'd be cashing in the premium bonds and opening ISAs for each. There's lots of info online about what a bad idea PBs are in comparison with savings accounts.