A family struggled with the payout pathway for maturing child savings bonds when those due to receive the funds became the issue and the stumbling block. When two sums of £37,537 each from Virgin Money were due to be paid – agreeing on the right recipient stalled, Crusader was asked to help get the matter moving again.
The investment was opened in 2010 for Jeffrey Cook’s now adult children with monies from their grandmother. “They were held in my children’s names and I was named as the ‘adult’ who administered the accounts on their behalf,” he told Crusader.
If you’ve been affected by this issue or feel you’ve been a victim of injustice, please contact consumer champion Maisha Frost on maisha.frost@express.co.uk
“On maturity I requested that the cheques be sent to me assuming they would be paid to the beneficiaries. However both cheques came payable to me – the trustee. My request for a reissue has not been met. I don’t want to mix beneficiary and trustee funds which might be prohibited.”
Jeffrey was equally concerned that payment to him risked creating an inheritance tax liability should he die within seven years of the transfer. “Is there some kind of income tax liability for the past 15 years?,” he also queried.
Virgin Money did address his points and outlining the key steps to be followed, explained: “When a Child Savings Bond matures, we pay funds to the person controlling the account – usually the parent or guardian – which is explained in the Maturity Option form.
“The trustee can choose to transfer control of the account to the named child after they turn 16 if they want, which would mean funds would be issued to the child on maturity. We are working with Mr [Cook} to transfer control of the accounts from him, so that funds can be issued to the children.”
This has now been resolved plus a £150 goodwill gesture also paid to Jeffrey. “it’s a huge weight off my mind,” Jeffrey told Crusader [names have been changed]
Prepare for a smooth payout
To ensure a smooth payout prepare ahead of a Child Savings Bond’s maturity and check who the actual recipient of the monies will be. Funds are paid to the person who is operating the account at that time so usually the parent or guardian – the trustee or manager – unless they have chosen to transfer the account to the child after they turn 16.
The transfer is a key element. They should receive the options forms ahead of maturity, so keep an eye out. Steps are explained in Virgin Money’s terms and conditions agreed to by the responsible adult opening and operating the account.
If the child reaches 16 years during the fixed term, they may take over control from the adult and operate the account. Again think ahead about this option. Cheques will be issued to the person registered to manage the account on the maturity date