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?

Another option is to invest their inheritance in a SIPP instead and invest in a tracker fund or similar, Vanguard, Hargreaves Landown , AJ Bell all offer junior SIPPS. Or give them the choice of a split between the two. This is a brilliant time to teach them financial education. If its in a SIPP they wont be able to access it until Pensionable age which is quite nice that their great aunt is providing for them then however it may impact any access to benefits they may need in future and Im not sure how they are dealt with during relationship breakdowns etc.

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

Putting money in investments instead of savings is a disproportionate response to a problematic feature of a savings account. One could suggest savings accounts that only pay interest, but not sure if there are any that beat premium bonds, that could be in a child's name.

My two have PB too. We decided that any money they win up to £5k is split 50/50 between them, so if one wins £25, it goes into my bank account and then I send £12.50 to each of their accounts. Any prizes of £5k+ are family money.

Putting money into Premium Bonds as part of a balanced savings and investment portfolio is a perfectly valid and sensible decision. They are totally secure and it's always a good idea to have a proportion of your money in something secure! A key aspect is to have quite a lot in Premium Bonds – the Martin Lewis article a pp linked to is using the example of someone with £1000 in PB but if you have £50,000 in PB the parameters change somewhat. In fact if you read the whole article, and in particular the conclusion, you will see that Lewis doesn't dismiss PBs at all, far from it. He merely cautions against unrealistic expectations of a big win.

It's possible to work out what rate of return you are are getting on PBs and @Dolphining has done this, to compare with the best savings rates obtainable – there really isn't much in it at all. That might change with the ongoing financial crisis, but for now it remains true.

Is that your decision to make? It's the child's money. You can't just decide It's family money.

Does that carry on until they're 13/15/18?

I get not sharing your winnings with your kids but you can't have your children getting different amounts.

But you will if you give them PBs. Legally it's the winner's money.

Actually as children the parent can do what they like with the money.
I wouldn’t perhaps share my winnings but I would have the winning amounts directed back into the account and every couple of years with draw from one to put into the other and even the amounts up.

i also wouldn’t tell them they have an account until they were able to appreciate how hard working and saving money is otherwise.
I have seen young people wasting money on crap or putting their life in danger by the amount of alcohol and drugs they can afford to buy and then take.
I have also seen young people think they have loads of friends when they just have a load of users following them around with outstretched hands.
Money just burning a hole in their pockets.

I would withdraw their money from their account before they are 16 and put the amounts into your own account then track any winnings in terms of percentages.

i.e if you have £25000 and they have £12500 each in your account then a £50 win would be £25 to you and £12.50 to each of them.
If need be start a savings account in your name and put their winnings in their

I am scrupulously fair with Dd and Ds but I wouldn’t tell them they have any sort of amount of money coming to them until I thought they could handle it and had a plan for an amount of money that wasn’t going to be spent on a depreciating asset.

children's savings accounts have better interest rates than those available to 18+

With PBs you have to transfer a child’s account to an adult account at 16.

PBs have to be changed to an adult account at 16 so there is no waiting till they are 18. If they are older than 16 then are you sure there is even money in the accounts anymore.

Also why would you give an 18 year old that much money.
I think everything should be split equally, especially large amounts otherwise it is storing up problems for later life.

Dh had an ok relationship with his brother and his mother has done something that has created a huge divide between them doing something similar but on a lot larger scale.
I don’t see how things can ever recover.

Of course it's my decision - I'm the parent and they're the child.

If they'd earned the money themselves, it would be a different matter, but they haven't. It's money we're saving for their future, but it's our money that we're investing for them so of course we decide what happens to it.

I think everything should be split equally, especially large amounts otherwise it is storing up problems for later life

I agree

Also why would you give an 18 year old that much money I haven't said how much they have been given...I may have mispoke, I meant winnings of 100k...not that they have 100k

And yes money is still in the accounts 😀though one child is taking out a sum for a house deposit

I do 50% to the winner and the other 50% split between the other 2 of us. I did this even with extra unexpected bonuses from work so all 3 of benefited but the person whose money it was gets the majority

I would share. We have had this hypothetical debate at home and we wouldn’t have one child with £££ and the other with 0.

Op did you see the thread where sometimes child had won a huge amount!! .

Life changing and the other zilch. .

I would simply re invest all winnings equally into a stocks and shares ISA for both.
So one wins 100.

Put 50 each onto each ISA.

To be honest, stocks are on sale. I would personally research and buy some low cost index funds for both.
Keep a little in pb.

@LimeCheesecake it isn't right to invest someone else's money in my name.

In response to your last question, the bonds are a short term, easily realisable investment that will be drip fed into JISAs with the balance moved into cash savings once interest rates have stabilised.

@TheRubyRedshoes someone mentioned this thread earlier. I'll look it up. Thanks.

I have seen teens go off the rails when given a lot less

I have seen threads on here about the child trust fund the government gave to children born after a certain date and the problems on finding out they had as little as £800 the child was entitled to.

Mum always shared ours equally between me and my brother

Agree with DH RE kids. Up to you what you do with the winnings in your account but I could never do that to my kids. Let one possible have thousands and the other tens..... no chance. They'd get equal shares.

Surely the time to invest in index funds is right now whilst we have this dip?
Infact some people think it will go further and wait.

As an aside I religiously buy the same index funds for my DC and buy in every month at exactly the same moment so it's the same share price.

One is quite a bit older but I hope the amounts stay roughly the same

@Kennykenkencat ..

But what's the context of the DC going off the rails?

Surely a child who has had exposure to budgets, household budget, managing money 💰 from a young age will acquire their money at 18 and know exactly what to do with it.
Especially if they have been taught to enjoy some?

I find it's cash starved DC who go wild.

Thanks everyone for all your valuable input! It's really helped shape my thinking.

I'm going to level up the "winnings" at the point of cashing in the premium bonds or at the point when the eldest turns 18, whichever comes first. The bonds aren't a long term investment.

I'm keeping my winnings for myself!

In the unlikely event of a significant win, I think I will have to get the winning child's permission to share it. Thinking about it as I type, I would probably put a £1m win into trust until both DCs are old enough to discuss and agree on what to do with it.

I think you should all just keep what you win; we can’t all win all the time in life- it’s not a bad lesson for your children really