How to prevent grandchildren frittering a gift of money

Annie Shaw / 02 November 2016

Annie Shaw advises someone who wants to give grandchildren a monetary gift, and make it hard for them to fritter the money away.


My mother would like to gift £5,000 each to her grandchildren. 

What every teenager should know about money

She wanted to put the money into Premium Bonds, so it would be harder for them to fritter the money, but as they are over 18 she doesn’t know how to do this. 

How can she transfer money in a way that might preserve a lump sum? 

Gareth Shaw: Giving grandchildren a financial head start


Anti-money-laundering rules make it difficult to invest money in the name of a third party, unless it’s your child, and even then identification documents need to be produced, so you can’t do this secretly.

To set aside money for a child over 18, or lodge it in an account that cannot be accessed once they are 18, you normally have to set up a discretionary trust, which might seem complex and expensive where small gifts are involved. This makes it hard to prevent an over-18 frittering away a cash gift. It should, though, be possible to minimise the risks.

Annie Shaw: How to save in a pension for grandchildren

Your mother could ask her grandhildren to bring their laptops round and get them to buy Premium Bonds online while she watches (or you could supervise if it’s difficult to arrange a visit).

If she is worried they might cash the bonds in as soon as they have left the house, she could perhaps persuade them to open long-term fixed interest savings accounts, where the money could not be accessed for a number of years. Or she could just leave them a legacy in her will.

Should you leave your money to your children or spend it now?

The opinions expressed are those of the author and are not held by Saga unless specifically stated.

The material is for general information only and does not constitute investment, tax, legal, medical or other form of advice. You should not rely on this information to make (or refrain from making) any decisions. Always obtain independent, professional advice for your own particular situation.