Money set aside for children is often treated as something almost sacred by parents. It represents hopes for the future – driving lessons, university, a first flat deposit, or simply a buffer for adulthood. But when a couple separates, even the most straightforward financial arrangements can become tangled, and children’s savings are no exception.

Many parents discover, sometimes too late, that they have never really thought about who legally owns a particular pot of money, who controls it, or what happens to it if the household breaks apart.

This article looks at the different types of children’s savings, how the law treats them on divorce, and what parents can do to protect those funds from becoming the subject of arguments or misguided attempts to reclaim them.

Money saved in the child’s name: Who actually owns it?

It is surprisingly common for parents to assume that, because they opened the account, they have some claim over the money. In reality, that is rarely the case.

Junior ISAs and Child Trust Funds

If the money sits in a Junior ISA or Child Trust Fund (CTF) opened in the child’s name, the position is very clear: the funds legally belong to the child, not the parent who opened the account, and not the parent who paid into it. Even if one parent is listed as the registered contact, that role simply allows them to administer the account. It does not give them a beneficial interest in the money.

When parents divorce, the account, for all practical purposes, stays exactly where it is. The court cannot order that the funds be split between the parents, transferred into the other parent’s name, or used to pay debts. Nor can either parent decide, without good reason, that they wish to withdraw the money. With a Junior ISA or CTF, the funds cannot be accessed until the child reaches 18.

In a divorce, the most the family court may do is direct which parent should act as the registered contact, usually whichever parent is taking the lead on day-to-day arrangements for the child. But that is administrative, not financial.

Standard savings accounts in the child’s name

The situation is similar to ordinary child savings accounts, although the accessibility may differ depending on how the bank structures the account. Again, the key principle is that money paid into an account in the child’s name is presumed to be an outright gift, unless there is clear evidence it was not intended as such.

This can sometimes cause friction, particularly if the separating parents had unequal financial input into the account. The parent who contributed more may feel it is their money and want to reclaim something on divorce. Legally, that argument rarely succeeds.

Money saved in a parent’s name for the child

It is far more common than people realise for parents to have a savings account or a sub-savings pot in their own name, which they think of as being for the child. This may be a separate account for future university costs, a help-to-buy style deposit fund, or simply an emergency reserve.

The problem is that this is money sitting in a parent’s account and belongs to that parent, regardless of how they intended to use it.

During divorce, this type of savings must be disclosed as part of Form E financial disclosure and is treated as the parent’s asset. It forms part of the schedule of resources the court considers when dividing finances. A parent cannot simply ring-fence the account by claiming it’s for their child’s future. The court will listen, and the parent’s intention may play into broader fairness arguments, but the money does not become magically untouchable just because someone had earmarked it for some vague future use.

Where there is goodwill between the parties, they may agree to keep the account intact for the child’s benefit, sometimes documenting this in a consent order. But this is a voluntary arrangement. The court itself will not force it unless doing so is considered part of a fair overall outcome.

What if the money was gifted? Can relatives ask for it back?

This issue crops up frequently when grandparents or other relatives have been generous over the years.

Gifts vs loans: The evidence problem

In family law, a gift is treated as a permanent transfer of value. If Grandma gave £5,000 as a gift for the child’s Junior ISA, there is no return mechanism. It is the child’s money.

However, families do not always communicate clearly. A grandparent may later insist that a payment into the parents’ account was actually a loan. If the marriage breaks down, the grandparent may feel the money would be put to better use with the side of the family they favour. Arguments can arise about whether the money was a gift to the child, a gift to the parents, or a loan repayable on demand.

Family courts deal with this kind of dispute regularly. They look at:

  • Written evidence: Was there any text, letter or agreement saying it was a loan?
  • Behaviour: Were repayments made or expected?
  • Context: Was the money given at a time that suggests parental support, such as helping with nursery fees or buying a car?

If the money was genuinely paid into a child’s dedicated account, it is normally treated as an irrevocable gift. A relative cannot un-gift money from a child simply because the adults have fallen out.

If, however, the money sat in a parent’s account and the purpose was vague, the court might find it was a gift to the parent and becomes part of their matrimonial assets.

Loan claims are upheld only where the evidence is convincing. Vague recollections or informal family arrangements rarely pass that test.

Savings held in trust: Can a parent-trustee influence the outcome?

Some families use trusts to put aside money for children in a more structured way. This is common where grandparents want to shield funds from potential claims on the parents’ divorce or where significant assets are involved.

What happens if a parent is a trustee?

If one or both parents act as trustees of a child’s trust, they must administer the trust in accordance with the trust deed and the law. They are fiduciaries, which means they owe strict duties to the beneficiaries.

Trustees must act solely in the child’s interest and would be in serious breach of trust if they used funds improperly. This means that a trustee cannot use the funds for themselves or divert them elsewhere.

A parent may try to influence spending decisions after divorce, for example, pushing for trust money to pay school fees so they themselves pay less. The other trustees (if any) must apply the trust’s terms, not the parent’s agenda. If trustees disagree, they can apply to the court for directions.

Courts rarely treat trust assets as matrimonial property

Generally, trust funds are not part of the parents’ marital assets and are not subject to division. But the family court may consider the existence of a trust when assessing a child’s future needs, for example, if a trust covers school fees, this may reduce the financial burden on the parents.

A trust is one of the better ways to ensure savings cannot be accessed or misused during or after divorce, but it must be properly drafted and administered.

What happens if one parent spends or withdraws the child’s savings?

Where the money legally belongs to the child—such as a Junior ISA—this is not possible.

Where the money sits in a parent’s account, the other parent may feel morally outraged, but legally the parent is free to use their own money. These situations can sometimes be addressed by:

  • Undertakings (promises to the court not to spend or move the money)
  • Interim agreements while finances are negotiated
  • Compensation within the financial settlement

If a parent misuses trust funds, that is a breach of trust and can result in removal as trustee and personal liability for the misused amount.