Court order

As part of Mr and Mrs X’s divorce settlement the court order states that a single premium bond policy and associated cash ISAs and any income thereon should be used entirely for the equal benefit of the three children of the former marriage and specifically for no purpose other than to fund their university fees and accommodation costs while at university.

Any monies remaining are to be distributed to the children. The order also provides that Mr X will administer these monies in an effective and tax-efficient manner.

In 2009 the policy was valued at £100 000. To provide liquid funds monthly withdrawals began in September 2010 and are invested in the associated cash ISAs up to the investment limit with the remainder invested in a deposit account.

The policy cash ISAs and deposit account are all in Mr X’s name but following...