Children cost money! According to the Nibud, parents spend approximately € 100,000 on costs up to a child's 22nd birthday. For many parents, the knowledge that children cost money and that costs increase as children get older, invites them to open a children's account and save for a child. But what happens to the money saved when it's not used? Who does the saved money belong to? And can a parent, for example, use the tuition money saved for a child for a remodel or to pay off a loan? In this blog, I'll address those issues.
What is a child and youth account?
Parents can save for their children in a variety of ways. One common way is to open an account. Examples of accounts that can be closed for the children are the ABN Amro's Young Adult Account, ING Bank's Growth Account, Rabobank's Rainbow Account and the Junior Savings Account at Regiobank. In these products, the parent saves or invests in the child's name. The nature of the account means that the child is the owner of the account. Therefore, the money does not have to be shared between parents in the event of a divorce.
If the account is in the name of a parent and was saved for the child, the nature of the account means that the parent is the owner of the account. It is not a foregone conclusion that the balance also (fully) belongs to the parent. In case law it has been ruled several times that the name of the account is not decisive, because in the first place the name concerns the legal relationship between the parent and the bank. Even if an account is not in the name of a child, the purpose of the account may have been to save money for the child. The intention of the parent plays an important role in jurisprudence. It is not decisive who fed the account, who made the deposits into the account.
What is (good) administration and management?
A child under the age of 18 may have assets. This can be both cash (e.g., pocket money and birthday money) and savings (e.g., bank balances and investment securities).
Because a minor is incapacitated by law, the minor needs his legal representative for certain things. A child can buy a roll of candy by himself, but he cannot use his money to buy a car without the permission of his parent(s). The child's freedom of movement is largely determined by his parent(s). The latter also applies to the disposal of the bank (savings) balance.
The law states that the administration of the assets of a minor child belongs to the task of the parent(s) with custody. Parents can freely dispose of the child's money, but must execute the administration as a good administrator(s). Good administration occurs when a parent is focused on a child's property interests, such as paying bank fees and receiving bank interest. They can dispose of the money without the need for an authorization and therefore deposit and withdraw money.
Within the jurisprudence there is no question of good administration if money is withdrawn by a parent for his own use. Parents are also expected to pay the costs of caring for and raising a child from their own assets and income. The starting point is that a child account may not be used for this purpose.
A child becomes an adult from the age of 18. From that moment on, a parent's guardianship expires and the child is fully empowered to make decisions about their own assets. Returning to the question in the title of my blog, I must conclude that parents are not allowed to use a child's tuition money for a renovation.
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