Can I easily take half funds out of son's savings account to give to his new sis?

[CathyNoodles]

I opened a savings account for my son and when I got an inheritance I put most of it in there (thinking we were not having more kids at the time). Now he's to have a baby sister and I wanted to divide the money between them but looking at the details of the account it says you have to justify any withdrawals as being in the account holder's (the child's) best interests. It is an easy access account (opened with Lloyds, now TSB) Anyone have experience of this? Thanks!

surely the account is controlled by you so you get to decide what happens to the money. Is it a Young Saver account?

I am sure they have changed the conditions of running the account as they dont sound the same as they did when I opened my dc's accounts (mine were LTSB and changed to TSB)

Well, it depends on the type of account.

If it's in your son's name and you are the trustee, then the money is his - you can't give it to someone else, sister or not.

If it's held for him in your name, then it's still your money and you should be able to do what you like with it.

was it a big inheritance? Why did you put it all in his account?

It is a children's account, in his name. I suppose I put it in to get him the best interest I could, better than it would have been in an adult account. And because it was 'easy access' I didn't think of it locked away.

There are tax implications if the money you have put in earns more than £100 interest in his account:

Tax on money given by parents, friends and family

You can give a child any amount of money, or invest it for them, but if you’re a parent or step-parent there are special rules:

If you have given your child money that earns over £100 a year in interest, dividends, rent or any other investment income, the interest will be taxed as if it were yours. This does not apply to Junior ISAs, Child Trust Funds and Children’s Bonds (previously known as Children’s Bonus Bonds)
This doesn’t apply to anyone else – grandparents and friends can give as much as they like. However, there may be tax implications that you will want to consider. Giving cash at the wrong time or in the wrong way could end up being chased by the tax man at a later date

I believe if its earning more than £100 a yr in interest it can/should be taxed as your money. So if you are taxed at standard rate you would be liable for tax on it.
I believe it is possible if you put it in kids name and then take it out, it may be thought you are avoiding tax. Hence why they are looking for a reason for withdrawl.

You can put it in a childs isa/national savings without being liable for tax on the interest.

Though a childs isa i dont think you can take out the money?

Depending on the amount coukd you try to match the amount in his over time.

Also it would be reasonable to say the inheritance was left to him, he existed at the time and DD doesnt so wasnt left anything.
This happened with my cousins they got left money but the rest of us cousins didnt exist (6 of us)

Thanks Naty1. I did go in and ask to take some of the money out to put in an ISA today and it was fine. Also I think you can close the account at any time, as you are in control, and move the money elsewhere.