Not to share out Premium Bond winnings?

[Dolphining]

A few months ago, my 2 DCs and I each inherited a five-figure sum of money from my grandmother. I've put the money into Premium Bonds (in the UK). To be clear: there are three accounts, each with an equal amount of money in. One is mine, one is DC1s and one is DC2s. For those who might not know, Premium Bonds pay out monthly prizes instead of interest. Prizes start at £25 and there are two monthly jackpots of £1m.

So far, we all tend to win something every month, which is great! Given the nature of Premium Bonds, we are winning different amounts each month. The money is paid out into savings accounts, not reinvested in more bonds.

DH and I were chatting about this at the weekend. (DH is DF to the DCs.) DH thinks I should be splitting the winnings equally between us each month rather than letting one child win/earn more than the other. He thinks both DCs should be treated equally and that all winnings should come to me, and I give a third to each DC. On the face of it, this seems fair and the obvious thing to do. The winnings seem to even out over time, but for example this month DC2 has won four prizes but DC1 has won none.

However, I thought about it a bit more and I'm not so sure this is the right thing to do. My Premium Bonds are in my name, DC1s in their name and DC2s in their name. I don't think I have the right to have DCs winnings paid into my account and to redistribute them according to how I see fit. I think it could technically be theft unless the DCs consented to this arrangement. DCs are 14 and 11, so arguably have the capacity to do so, but you could also say that it's coercion. This is more of a legal point.

My second reservation is more moral. It doesn't feel so important to me with smaller winnings, but what if one of us wins the £1m jackpot? It sounds awful, but if I won £1m I wouldn't necessarily want to split it three ways with my kids right now, and I think if I were to die within 7 years there would be IHT implications (as the money would have been a gift from me). At this stage in my life I would want DH to inherit, and he would take care of the DC. But then what if one child won £1m? I wouldn't expect a share, but how awful would it be to have one millionaire DC and one with "just" a uni fund? This sounds like such a first world problem and likely to remain hypothetical, but I now feel that I need to come to some agreement with the DCs on how (if at all) we split the winnings. And how long should this arrangement last? Forever, or until turning 18, or until we agree to end it? What if DC2 (11) agrees to split £1m now, but as an adult thinks that in hindsight they didn't have the mental capacity to make this decision and we have a big family fallout?

On balance, I think each of us should just keep their own winnings. AIBU?

Agree with this. It’s appalling parenting to knowingly potentially engineer a situation where one child could be hundreds of thousands better off than their sibling through sheer luck, imagine what that would do to their relationship.

@SummerInSun that advice has changed. As I wrote upthread, at the time they were a good choice and have performed well compared to interest rates and stock market over the period, and again as I said earlier the money will be drip fed into their S&S JISAs.

An increasing number of people seem to be offering me investment advice, which isn't what I'm after thanks.

The question is a legal and moral one about whether I should give one child's money to the other.

I’d keep my own winnings but split the children’s between them 50/50.

Get them to sign a written contract with each other that any prizes of greater than £100 will be shared equally.

The investment advice is coming as a way to give better long term growth for your DC without the legal/moral dilemma you have given yourself.

Each of my children has a personal amount of premium bonds given to them on their 18th birthdays which quite obviously in 'age' of the bonds

They also have an inheritance amount which was given to them at the same time so purely the luck of the draw

We agreed that all small winnings would be split equally. Anything bigger is equally split out of the inheritance bonds but if their birthday money nets them 100k or a million or whatever them they keep it....if that makes sense

@Whinge of course I decided for them. I believe I can do that as a parent!!

I'm not sure children can seek financial advice. I've justified my investment decision upthread, not that I should need to.

But if the money was invested differently it removes the problem.

I would move the DC's bonds into you own account (if your account has the headroom required) and then allocate a proportion of the winnings to each DC's savings account, until they are adults earning their own money.

Do they have any other savings? Especially in a time of inflation, I wouldn't keep all their savings in PBs

So far they've gained an extra 2k each

We did say we wouldn't tell them about the winnings and they didn't want to know but as they get older they might want to spend the 'extra'

Depending upon the ages of your kids, I don't agree with what you're doing right now. They could grow up to be either so used to money being effectively 'handed' to them each month without doing anything to earn it (which in and of itself isn't a crime of course but not an ideal thing for a child to be accustomed to. They can lose the sense of needing to earn/achieve your rewards in life. It also (and this may not be a popular opinion) kind of glorifies gambling.

I'm not saying I disagree with premium bonds - absolutely not! Sounds like you made an excellent choice. I just wouldn't have told them about any of it. I would have kept mine separate and put all of each of their winnings into ONE savings account and the. divided the final amount into two, once the first child turns 18. Then when the second child turns 18, they get theirs.

@Whinge I don't know what colour to paint my lounge. If I sell my house, it removes the problem. I'm not asking whether I should sell my house or not. I'm asking what colour to paint the lounge 🙂

And @TeenDivided

This has put me off doing PBs for DC. I think for the small wins its fair enough whatever you decide. But what do you do if there's a big win? Especially a win when theyre old enough to knwo it it's their money? Nice problem to have, maybe, but money in families can cause terrible trouble.

I'm not actually sure it's OK for a parent to decide a child must hand their money to a sibling in the interests of fairness?

Yes, but selling your house is a disproportionate response to not knowing what to paint the lounge.

Reinvesting savings for children from premium bonds (which on average give low returns, and if they don't means one child ends up with way more than another or one child's winnings is given away without proper consent) is not at all disproportionate.

I don't think they can.

And I don't think a child can 'consent' to this either.

You could put it all on the horses instead, if you like deliberately creating ethical dilemmas. A different horse in the same race perhaps, if you want to guarantee the winnings will never been evenly spread between siblings.

Your DH is right. You are overcomplicating things.

You have no say on which child gets which bonds, and therefor which child gets the winnings. If the inheritance had been put into an account, they'd be treated equally.

It's grossly unfair of you to leave down to chance what could end up being a substantial disparity in fortunes (that your DGM clearly didn't want, incidentally, seeing as she left them equal amounts). It would take very little to not allow this to happen.

You should do whatever you want with your PBs. The winnings from the DCs' bonds should be rolled over into more bonds in their own names. Raise your DCs with the knowledge that PB winnings are a matter of luck, and that they should receive equal amounts on x date, and they should do whatever transfers they need to in order to see that happen.

Anything else would be deliberately creating inequality, and be ridiculously divisive.

Their premium bonds their winnings

I think it’s too late to share. This should have been a decision made before you bought the premium bonds in 3 separate names. If you wanted the winnings to be all yours to divvy ip as you see fit, you should have put all the bonds in your name, or invested the money in something that paid a set amount each month where everyone with the same amount invested gets the same return.

you have chosen the gamble option and for both dcs to have their own separate pot. So now I think you need to live with the choice you have made.

if one child gets a big win, at the point they turn 18, you could have a discreet conversation about perhaps sharing with their sibling so they have the same amount, but it would need to be their choice, as it’s their money, not yours.

are you able to sell the premium bonds in your dcs name and invest the money differently, or are you stuck until they are adults and able to do that themselves?

Spilt the kids evenly and keep yours.

My parents did a similar thing with us, and used an inheritance to buy themselves and all three of us premium bonds on the understanding all winnings were shared. We tended to share it out once it hit a decent amount.

We we’re all adults though.

We did this and decided anything up to £100 they kept, anything more was shared. Slightly complicated by one of them now having cashed hers in!

Reinvesting savings for children from premium bonds (which on average give low returns, and if they don't means one child ends up with way more than another or one child's winnings is given away without proper consent) is not at all disproportionate.

You need do conceptually separate "savings" and "investments" in your mind. In this context a "savings" account is something with zero volatility and no risk of loss that (or may not) also give some sort of return. OP cannot "reinvest" the premium bond money, because it's not an investment in the first place. She could "invest" it instead of "saving" it in premium bonds, but she's repeadly said she doesn't want to.

Having had a quick skim of Moneysaving expert current recommendations, there are no savings accounts that I would prefer to Premium Bonds.

(Best savings account I saw was Chase bank, which offers a similar return to Premium bonds. I ruled out any which I didn't trust to keep higher rates indefinitely, as opposed to offering them as a temporary gimmick to get money in. Though I'm not even sure I trust Chase in that respect. Also not interested in those that lock up money, or that have a limit of less than 50K on which they'll pay high interest.)