Page 24 | Told I can’t use this premium bonds money for our house deposit as it’s illegal?

Mia85 · 29/09/2024 14:35

UnimpressiveUsername · 29/09/2024 12:46

I’ve been thinking about what an odd/unique product premium bonds are… Apologies for the rambling nature but here we go.

As I’m starting to understand it, everybody, including children, are able to win prizes if they invest money in the scheme, for as long as their money is in the scheme. Children being children obviously can’t just crack on themselves, but they still have an allocation within the scheme. Someone can else use their allocation.

The controls must be on who is allowed to use their allocation. That person decides how much to tie up in this scheme and for how long. Perhaps they will get fed up of not winning anything and decide to try a more traditional savings account. But the person who has access to the winnings must be someone who has responsibility for the child, right? Dave from the corner shop shouldn’t be able to use your child’s allocation of premium bonds to win for himself. Considering the feature of child premium bonds exists, it’s very reasonable that a parent can use the allocation. Is it reasonable for a grandparent to use that allocation…? Well, that’s going to depend on a number of factors. Will it benefit the child? If they are going to keep the winnings and take back all the capital then no. But if they gave the child the winnings, but took back the capital out of the scheme after a period of time, then yes…? It how can you enforce that? What if you want to invest your own money and control the use of the winnings but granny’s maxed your child’s allowance for their benefit? I assume therefore that there are strict controls on who is allowed to apply on behalf of the child.

I guess what I’m getting at is it will be hard to argue the money is completely the child’s if they are under 16. They only have an allocation of premium bonds that can be purchased, and this must controlled by an adult. That adult must be allowed to take the money out if they feel they want a more stable return on their capital, as relying on winnings may no longer be the best option. This isn’t about “giving” money to a child. It is about using their allocation of premium bonds. You will only end up actually giving that money to the child if you leave it in there beyond their 16th birthday.

Edited

I think the confusion on this thread is the point reflected in you last paragraph: the distinction between ownership and control. This it will be hard to argue the money is completely the child’s if they are under 16 is incorrect if by it you are assuming that a child cannot own property. Children can own property, including money. What they cannot do, at least when young, is assume control of it. A parent with parental responsibility can manage that money on their behalf but must do so for the child's benefit. This includes the right to receive the child's money in the parent's name. If a parent does take the child's money back into their (the parent's) name that does not mean that ownership has transferred back to the parent. The child would retain the beneficial interest in the money, which the parent would be holding for the child.

I suspect that many people responding on this thread don't see the money as the child's. That's either because they (mistakenly) think children can't own money, or because they think it's really the parent's as the parent was just putting it in the child's name to 'use their allocation' (as you put it). In fact, transfers from parents to children are presumed to be gifts in a way that other gratuitous transfes are not. This is called the 'presumption of advancement' and it is difficult to overcome. It tends to be relevant in cases in which the question of what the parent owns is relevant (e.g. bankruptcy, divorce etc). It's much rarer for a child to challenge the transfer themselves, so in reality it is very difficult to enforce (the point in your penultimate paragraph). The basic point is that if you give money to your child the starting point is that it is now theirs.

Finally, the fact that these are premium bonds, and not another financial product, is largely irrelevant. The terms and conditions could impose addtional restrictions on access, but it sounds as if they just reflect the general law on parental responsibility (i.e. the parent can control the child's money, including by receiving it into their own name). What the t&c of pemium bonds cannot do is change the basic law of property and parental responsibility outlined above.

Cantbelieveit888 · 29/09/2024 14:42

Mia85 · 29/09/2024 14:35

I think the confusion on this thread is the point reflected in you last paragraph: the distinction between ownership and control. This it will be hard to argue the money is completely the child’s if they are under 16 is incorrect if by it you are assuming that a child cannot own property. Children can own property, including money. What they cannot do, at least when young, is assume control of it. A parent with parental responsibility can manage that money on their behalf but must do so for the child's benefit. This includes the right to receive the child's money in the parent's name. If a parent does take the child's money back into their (the parent's) name that does not mean that ownership has transferred back to the parent. The child would retain the beneficial interest in the money, which the parent would be holding for the child.

I suspect that many people responding on this thread don't see the money as the child's. That's either because they (mistakenly) think children can't own money, or because they think it's really the parent's as the parent was just putting it in the child's name to 'use their allocation' (as you put it). In fact, transfers from parents to children are presumed to be gifts in a way that other gratuitous transfes are not. This is called the 'presumption of advancement' and it is difficult to overcome. It tends to be relevant in cases in which the question of what the parent owns is relevant (e.g. bankruptcy, divorce etc). It's much rarer for a child to challenge the transfer themselves, so in reality it is very difficult to enforce (the point in your penultimate paragraph). The basic point is that if you give money to your child the starting point is that it is now theirs.

Finally, the fact that these are premium bonds, and not another financial product, is largely irrelevant. The terms and conditions could impose addtional restrictions on access, but it sounds as if they just reflect the general law on parental responsibility (i.e. the parent can control the child's money, including by receiving it into their own name). What the t&c of pemium bonds cannot do is change the basic law of property and parental responsibility outlined above.

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You sound intelligent but also not……

Children under 18 cannot own property in the UK, but property can be held in trust for them until they reach that age.

Cantbelieveit888 · 29/09/2024 15:02

ThisOldThang · 29/09/2024 13:39

The OP's solicitor hasn't said they won't accept the money. You've just made that up.

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Yes exactly correct why can’t people read….?!
The OP never said her solicitors didn’t allow it.
It was her uneducated friend who that said it was illegal….hence the post in the first place…

My God…..

Mia85 · 29/09/2024 15:10

Cantbelieveit888 · 29/09/2024 14:42

You sound intelligent but also not……

Children under 18 cannot own property in the UK, but property can be held in trust for them until they reach that age.

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You are being very rude and also appear not to understand what you are talking about. If you look at the defintion of parental responsibility https://www.legislation.gov.uk/ukpga/1989/41/section/3 you will see that it refers to the child 'and his property'. That is because a child very much can own property.

If you have simpy googled, you may be confused by the changes to the ability of a minor to hold a legal estate in land brought in by the Law of Propety Act 1925.

Children Act 1989

An Act to reform the law relating to children; to provide for local authority services for children in need and others; to amend the law with respect to children’s homes, community homes, voluntary homes and voluntary organisations; to make provision w...

https://www.legislation.gov.uk/ukpga/1989/41/section/3

Aduvetday · 29/09/2024 15:50

We have Google lawyers now. I feel that this is “house” MN is fucking nuts at times.

UnimpressiveUsername · 29/09/2024 17:14

Mia85 · 29/09/2024 14:35

I think the confusion on this thread is the point reflected in you last paragraph: the distinction between ownership and control. This it will be hard to argue the money is completely the child’s if they are under 16 is incorrect if by it you are assuming that a child cannot own property. Children can own property, including money. What they cannot do, at least when young, is assume control of it. A parent with parental responsibility can manage that money on their behalf but must do so for the child's benefit. This includes the right to receive the child's money in the parent's name. If a parent does take the child's money back into their (the parent's) name that does not mean that ownership has transferred back to the parent. The child would retain the beneficial interest in the money, which the parent would be holding for the child.

I suspect that many people responding on this thread don't see the money as the child's. That's either because they (mistakenly) think children can't own money, or because they think it's really the parent's as the parent was just putting it in the child's name to 'use their allocation' (as you put it). In fact, transfers from parents to children are presumed to be gifts in a way that other gratuitous transfes are not. This is called the 'presumption of advancement' and it is difficult to overcome. It tends to be relevant in cases in which the question of what the parent owns is relevant (e.g. bankruptcy, divorce etc). It's much rarer for a child to challenge the transfer themselves, so in reality it is very difficult to enforce (the point in your penultimate paragraph). The basic point is that if you give money to your child the starting point is that it is now theirs.

Finally, the fact that these are premium bonds, and not another financial product, is largely irrelevant. The terms and conditions could impose addtional restrictions on access, but it sounds as if they just reflect the general law on parental responsibility (i.e. the parent can control the child's money, including by receiving it into their own name). What the t&c of pemium bonds cannot do is change the basic law of property and parental responsibility outlined above.

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Thanks for this. I mean, I’ll admit I still find the whole premium bonds ownership thing confusing (the tax vs interest vs winnings thing I think has been sorted now). I guess this brings me back to the original question about how clear it is what you can use the money for once the money has gone into the child’s account. It’s crystal clear that the parent can withdraw the money from the account. People would be reasonable to choose to use premium bonds because of that very feature. There seem to be no restrictions on how that money is then used after it’s withdrawn or at least no way to enforce it.

And don’t get me wrong. I think it’s clear that the OP will get her house and I don’t foresee any solicitors or mortgage companies objecting to any of this. I am now just genuinely curious.

I’ve been on Mumsnet a long time and this had certainly been one of the weirder threads for misinformation and misunderstandings 🙈🤣

Mia85 · 29/09/2024 17:37

UnimpressiveUsername · 29/09/2024 17:14

Thanks for this. I mean, I’ll admit I still find the whole premium bonds ownership thing confusing (the tax vs interest vs winnings thing I think has been sorted now). I guess this brings me back to the original question about how clear it is what you can use the money for once the money has gone into the child’s account. It’s crystal clear that the parent can withdraw the money from the account. People would be reasonable to choose to use premium bonds because of that very feature. There seem to be no restrictions on how that money is then used after it’s withdrawn or at least no way to enforce it.

And don’t get me wrong. I think it’s clear that the OP will get her house and I don’t foresee any solicitors or mortgage companies objecting to any of this. I am now just genuinely curious.

I’ve been on Mumsnet a long time and this had certainly been one of the weirder threads for misinformation and misunderstandings 🙈🤣

Edited

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As a matter of formal law (leaving aside the Q of whether this is likely to be enforced) the position is this. Assuming the money is the child's then the parent can manage it 'for the benefit of the child'. That includes putting it in the parent's name. It is quite clear that the parent could withdraw the money and put it into their own account, but even in that case the beneficial ownership would remain with the child and the money should be used for the child's benefit (see s3(3) Childen Act https://www.legislation.gov.uk/ukpga/1989/41/section/3 ).

As with many aspects of parental responsibility, the law starts from the perspective that parents will want to do what is best for their child, so there aren't routine checks on whether what they are doing is for the child's benefit. If there were a legal case about how they had used the money then a judge would decide whether it was used correctly, and in doing that they would be relying on precedent. It'd be very hard to argue that using the child's money to buy the parent property (without giving the child an interest in the property) was for their benefit. Obviously such cases are rare and this 5 yr old is unlikely to ever know the money was in her name.

Children Act 1989

An Act to reform the law relating to children; to provide for local authority services for children in need and others; to amend the law with respect to children’s homes, community homes, voluntary homes and voluntary organisations; to make provision w...

https://www.legislation.gov.uk/ukpga/1989/41/section/3

Commonsense22 · 29/09/2024 17:47

Mia85 · 29/09/2024 17:37

As a matter of formal law (leaving aside the Q of whether this is likely to be enforced) the position is this. Assuming the money is the child's then the parent can manage it 'for the benefit of the child'. That includes putting it in the parent's name. It is quite clear that the parent could withdraw the money and put it into their own account, but even in that case the beneficial ownership would remain with the child and the money should be used for the child's benefit (see s3(3) Childen Act https://www.legislation.gov.uk/ukpga/1989/41/section/3 ).

As with many aspects of parental responsibility, the law starts from the perspective that parents will want to do what is best for their child, so there aren't routine checks on whether what they are doing is for the child's benefit. If there were a legal case about how they had used the money then a judge would decide whether it was used correctly, and in doing that they would be relying on precedent. It'd be very hard to argue that using the child's money to buy the parent property (without giving the child an interest in the property) was for their benefit. Obviously such cases are rare and this 5 yr old is unlikely to ever know the money was in her name.

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Thank you. I don't know why this nuance is so complicated to grasp, it's what a bunch of us have been getting at from the start. I presumed the OP knew this too and was just being deliberately obtuse.

AngelicKaty · 29/09/2024 20:36

kiav · 27/09/2024 11:19

We have two premium bonds accounts. One is in my name and one is in DD’s name. We have 50k in mine and 30k in DD’s.

we are now in a position to buy a home. We will need the 50k for a deposit and we also need the 30k for things like stamp duty, new sofa, to do a small bit of work that needs doing in the downstairs etc.

I have been told by a friend it’s illegal to use Dd’s 30k for this? This is money we have saved from our income but now our circumstances have changed we need it. Surely premium bonds should tell you this before you invest??

Why are you taking a friend's word for it? Are they a lawyer?

The NS&I website has links to cash in your premium bonds and/or your child's premium bonds: https://www.nsandi.com/help/manage-your-savings/make-withdrawal-from-savings

Have you completed the form from this link to cash in your DD's bonds? If not, why not? Just because a friend tells you you can't?

Withdrawing from your savings

The time it takes to receive a withdrawal depends on which NS&I account you have, how much you want to take out and your withdrawal instruction. Find out more on our site.

https://www.nsandi.com/help/manage-your-savings/make-withdrawal-from-savings

llamali · 29/09/2024 21:02

Cantbelieveit888 · 29/09/2024 10:02

Thank you ! Very eloquently written… and exactly so…. It’s all very much legal and the OP should be very happy she can crack on to make that house purchase!

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Karma

Aduvetday · 29/09/2024 22:24

llamali · 29/09/2024 21:02

Karma

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Oh behave.

Glittercloud17 · 30/09/2024 01:42

Godsake. Speak to a financial advisor? Not randoms off the internet!

Abitofalark · 30/09/2024 13:42

Mia85 · 29/09/2024 14:35

I think the confusion on this thread is the point reflected in you last paragraph: the distinction between ownership and control. This it will be hard to argue the money is completely the child’s if they are under 16 is incorrect if by it you are assuming that a child cannot own property. Children can own property, including money. What they cannot do, at least when young, is assume control of it. A parent with parental responsibility can manage that money on their behalf but must do so for the child's benefit. This includes the right to receive the child's money in the parent's name. If a parent does take the child's money back into their (the parent's) name that does not mean that ownership has transferred back to the parent. The child would retain the beneficial interest in the money, which the parent would be holding for the child.

I suspect that many people responding on this thread don't see the money as the child's. That's either because they (mistakenly) think children can't own money, or because they think it's really the parent's as the parent was just putting it in the child's name to 'use their allocation' (as you put it). In fact, transfers from parents to children are presumed to be gifts in a way that other gratuitous transfes are not. This is called the 'presumption of advancement' and it is difficult to overcome. It tends to be relevant in cases in which the question of what the parent owns is relevant (e.g. bankruptcy, divorce etc). It's much rarer for a child to challenge the transfer themselves, so in reality it is very difficult to enforce (the point in your penultimate paragraph). The basic point is that if you give money to your child the starting point is that it is now theirs.

Finally, the fact that these are premium bonds, and not another financial product, is largely irrelevant. The terms and conditions could impose addtional restrictions on access, but it sounds as if they just reflect the general law on parental responsibility (i.e. the parent can control the child's money, including by receiving it into their own name). What the t&c of pemium bonds cannot do is change the basic law of property and parental responsibility outlined above.

Show quote history

Just thinking aloud, if a child couldn't own the premium bonds, the parents couldn't hold the parents' own £50k allowance of bonds and open a premium bond account for the children - unless one could argue that there was some kind of specific latitude or exception or alternatively that it was undefined and no consideration had been given or explicit provision made for this, say because it was felt it didn't matter about money held by parents and children as the aim of the scheme was to encourage savings, whether by parents or children, or it was impractical to enforce anyway.

If the parents did do that and it wasn't allowed by the terms and conditions, the parents' holdings would be in breach of the £50k limit and any of their winnings would be invalid and would have to be taken back by NS & I and the prizes from that draw reallocated. And it might be in breach of other principles of law, which may have been mentioned in this thread.

Mamabobogo · 30/09/2024 18:19

llamali · 29/09/2024 21:02

Karma

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What for?

ThisOldThang · 30/09/2024 18:23

Abitofalark · 30/09/2024 13:42

Just thinking aloud, if a child couldn't own the premium bonds, the parents couldn't hold the parents' own £50k allowance of bonds and open a premium bond account for the children - unless one could argue that there was some kind of specific latitude or exception or alternatively that it was undefined and no consideration had been given or explicit provision made for this, say because it was felt it didn't matter about money held by parents and children as the aim of the scheme was to encourage savings, whether by parents or children, or it was impractical to enforce anyway.

If the parents did do that and it wasn't allowed by the terms and conditions, the parents' holdings would be in breach of the £50k limit and any of their winnings would be invalid and would have to be taken back by NS & I and the prizes from that draw reallocated. And it might be in breach of other principles of law, which may have been mentioned in this thread.

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To be honest, I'm surprised that children are allowed to hold Premium Bonds. They're a form of gambling which has a minimum age of 18 in the UK.

The National Lottery used to be 16, but the minimum age has now increased to 18.

Phewthatwasclose · 30/09/2024 18:34

YaWeeFurryBastard · 27/09/2024 11:32

Not sure what you don’t understand? The mortgage company will want to see the trace of where the funds came from and may well not accept funds coming from an account in a child’s name. What you’re advising the OP could potentially cause issues.

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Not true at all. We openly did this with both our kids Premium Bonds accounts recently (and the kids weee much older than 5!) and it was not a problem AT ALL from the legal side.

Abitofalark · 30/09/2024 20:40

ThisOldThang · 30/09/2024 18:23

To be honest, I'm surprised that children are allowed to hold Premium Bonds. They're a form of gambling which has a minimum age of 18 in the UK.

The National Lottery used to be 16, but the minimum age has now increased to 18.

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Yes, it's an odd one. There's been a lot of concern in recent years about gambling addiction among young people, with campaigns and regulations because of the ease and growth of online betting.

doodleschnoodle · 30/09/2024 20:48

They aren't strictly gambling in the same way because you aren't losing your stake, as in traditional gambling. You put £50k in, you're guaranteed to get £50k out. The 'gamble' is that the interest return is variable, and it's distributed by lottery, but your base money is never at risk (in fact you can't get much safer than government bonds!).

doodleschnoodle · 30/09/2024 20:51

I do believe you aren't allowed to hold them in certain parts of the world though! So if you have PB and move abroad somewhere with stricter legislation, you might not be able to claim a win or will find it a lot more difficult.

Makingchocolatecake · 30/09/2024 22:55

kiav · 27/09/2024 11:24

I just think it’s crazy as it’s obviously money we have tried to save for her but our circumstances as a family have now changed

Tell that to my bank and my dd's ISA that I can't touch until she's 18! Knew that when I opened it though

Mamabobogo · 01/10/2024 05:53

Makingchocolatecake · 30/09/2024 22:55

Tell that to my bank and my dd's ISA that I can't touch until she's 18! Knew that when I opened it though

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its a JISA not an ISA, it’s written under rules to PB .

which is presumably why OP didn’t choose it.

AmberPanda · 01/10/2024 16:59

Question: let’s say you had 3 kids each with premium bonds. One won £1 million. Would you claim that that is that child’s money only and they should have all that prize money and the other kids nothing? We have always been adamant we’re one of them to win a substantial amount we’d share between them.

ThisOldThang · 01/10/2024 17:37

@AmberPanda

Exactly.

There was a thread a while ago where a mother has three kids. Her father had forgotten to amend his will to include the third child and people were trying to claim she was 'stealing' by sharing the money equally between the three children.

Some people seem to have very strange ways of doing things.

DogInATent · 02/10/2024 10:13

AmberPanda · 01/10/2024 16:59

Question: let’s say you had 3 kids each with premium bonds. One won £1 million. Would you claim that that is that child’s money only and they should have all that prize money and the other kids nothing? We have always been adamant we’re one of them to win a substantial amount we’d share between them.

If you have that written down, that you're effectively managing the three accounts as a syndicate for the benefit of all three children I don't see the moral issue. And if you can demonstrate that through historic behaviour - pooling all the winnings from all three accounts and distributing them back evenly across the three accounts, then there's no suggestion of unfairness. From the legal point of view you're acting for the benefit of each child by averaging the winnings over a wider investment. You're not affecting the expected ROI on any of the children.

But if you're only proposing to do it for "substantial" winnings, have you decided what substantial means?

The simple rules for PB:

The cash in the PB account belongs to the child; and
The responsible adult can manage the account for the benefit of the child until the child reaches the age of 16.

(the difference between your question and the OPs situation is that you appear to be intending to meet the requirements of both rules, whereas the OP appears to be failing both)

ThisOldThang · 02/10/2024 12:21

It's clearly in the best interests of a child not to have a huge sibling rivalry and hatred based upon the unequal allocation of parental support and money.

How shit a parent would you be to leave one kid with £1 million and the other kids with nothing?