My brother recently divorced. He has two children. Every month and Christmas, our mother – the grandmother of the children – bought £ 100 in premium bonds for the children to their name.
She also deposits cash on their bank accounts. After the divorce, the mother of my cousin and my cousin seemed to clear the bills. My brother became aware when statements continued to come.
The childminder denies that this has happened. Something does not feel right about that and of course our mother is right now concerned that if this can happen she no longer wants to give the premium bonds or gift money to the accounts of the children.
Is this legal and what action can possibly be taken? It is the children who miss and our mother is so upset that the money is gone.
Cash gifts: what can you do if an ex-money is taken from accounts set up for children? (Stock image)
Tanya Jefferies, from This is Money, replies: It is no wonder that your mother is deeply upset.
In the course of the years she has given generous donations to her grandchildren, with the intention that they are to their advantage and now their funds have disappeared.
Even if, under a friendly interpretation, the money would have been withdrawn and actually spent on or by the children, the disappearance of it without any explanation – in the midst of denials, in fact – will cause very upset.
In view of the denials, however, the possibility of fraud by an outsider must also be taken into account.
You do not say whether the Premium Bonds have also been touched on the bank accounts, but this must also cause concern.
There are two important questions here. First, what action can you take against the missing money?
And secondly, what is the best way for your mother to continue making cash gifts and buying premium bonds for her grandchildren with the confidence that only they will benefit in the future?
As you said, it would be a disgrace if children who did not do anything wrong lost it, if they were deterred to make these thoughtful gestures.
We asked a savings expert and a lawyer to comment on these issues. We also asked National Savings and Investments how Premium Bonds bought the names of children and the rules for access to these names.
What can you do about the missing money?
Anna Bowes, director at Savings Champion, replies: When setting up a savings account for a young child, the account will be opened by an adult – normally a parent or guardian, although different providers have different rules about the relationship that the child and the adult must have.
Anna Bowes: Children are allowed to manage accounts themselves from the age of seven
But all the money that is deposited is from the child and not from the administrator.
However, that trustee can withdraw the funds and although it should be in the best interest of the child, it is difficult to check this.
There will be an age when the child is allowed to manage his account himself – this can be from the age of seven years.
Is it possible that the children have taken pictures?
Of course there is also the possibility that a fraud has taken place that has nothing to do with your ex-sister in law.
If she insists that she has not authorized the removal of these funds and the children themselves also deny, contact the bank as soon as possible. They should be able to help find out where the money was sent.
If your brother and your mother are still worried, they can set up an account for the children, with your brother or your mother as the administrator (depending on whether the provider will allow your mother to do so).
In this way your brother or mother has control over possible cash withdrawals in the future.
What is the legal position?
Katie Spooner, partner at Winckworth Sherwood, replies: It really depends on who has control over the bank accounts of the children.
Katie Spooner: It's worth your brother checking his financial order for the divorce
What was the agreement with the bank about when and how money could be withdrawn?
Did it require the permission of two family members – like your brother who also seems to receive statements for the accounts – or can the mother unilaterally withdraw money?
It is worthwhile to speak with the bank in order to check in the first instance the conditions and arrangements for the account to check whether there is an infringement.
Check whether the money was withdrawn without the proper permission or authorization as specified in the bank's terms and conditions for the accounts.
However, if the mother was able to unilaterally withdraw the money from the child account, there is likely to be no recourse unless there is something in your brother's divorce agreement that recorded how to use the children's accounts and funds.
Was there a specific agreement between your brother and his ex about the bank accounts of the children? It is worth checking your brother's financial order.
If there has been a violation of an agreement or court order, your brother should speak to a lawyer and the possible sources available to him to solve the problem.
In the circumstances, it would be wise for your brother and your mother to set up a separate account to deposit money for the children they have control over.
In this way they are only responsible for the bank accounts and the child money.
They can deposit and withdraw money for the children, where necessary, without any reference to or interference from the children's mother.
What about the premium bonds?
A spokesperson for NS & I said: When a grandparent buys Premium Bonds for a child, the grandparent receives confirmation of the investment, but the Bonds can only be managed by a responsible parent or guardian, which must be stated on the application form.
We send all paperwork, any won prizes and payment for silver-plated premium payments to the parent or guardian.
STEVE WEBB REPLIES YOUR PENSION ISSUES
Only the parent or guardian mentioned can take action on the Bonds, such as the redemption of Premium Bonds.
After the investment, NS & I communicates with the nominated parent or guardian until the child reaches the age of 16, when they subsequently become responsible for the management of the account.
The grandparent who bought the bonds for the child can not change the responsible parent after the account has been set up because it has no control over the management of the Bonds.
The current responsible parent should authorize the change to a new responsible parent.
It is not entirely impossible for a grandparent to change their minds, but they only have 14 days after the purchase has been confirmed to do so – that is the cancellation period.
After this period, the sale is complete and the authority has been transferred to the nominated person.
Only one parent or guardian can be named per application, but the grandparent can give a new responsible parent or guardian a name when buying Bonds for a child they previously bought.
This applies to both online and post transactions
Every purchase made by the grandparent is treated as a new transaction.
The parent or guardian mentioned on each application has separate holder numbers and can only manage the Bonds in their name.
Please note that a child can not invest more than £ 50,000 in total in all responsible persons.
All these bonds will be in the child's name when they reach the age of 16, no matter how many responsible persons there were.