A Bereaved Minor’s Trust (BMT) is a special type of trust created for children who have lost one or both parents. It is designed to provide for their financial needs during their childhood and is typically established under the provisions of the Trusts of Land and Appointment of Trustees Act 1996 (TOLATA).
One common question that arises is whether a BMT can be extended beyond the beneficiary reaching the age of 18. The answer is yes, but with important considerations.
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The Standard Position:
- Termination at 18: By default, a BMT terminates when the beneficiary reaches 18 years of age.
- Absolute Entitlement: At 18, the beneficiary generally becomes absolutely entitled to the trust fund.
Extending the Trust:
There are several ways to extend a BMT beyond the beneficiary’s 18th birthday:
- Express Terms of the Trust: The most common method is to include specific provisions within the trust deed itself that extend the trust beyond the age of 18. These provisions can be tailored to the individual circumstances of the child and their needs.
- Court Order: In certain circumstances, the court may order an extension to the trust. This may be appropriate where:
– The beneficiary lacks the maturity or capacity to manage their inheritance responsibly.
– The beneficiary has special needs that require ongoing financial support.
– The trust assets are complex or require professional management.
Common Extension Scenarios:
- Education and Training: The trust may be extended to cover the costs of further education or professional training, such as university fees, vocational courses, or postgraduate studies.
- Life Events: The trust may be extended to cover significant life events, such as buying a first home, starting a business, or getting married.
- Vulnerability: The trust may be extended to protect vulnerable beneficiaries, such as those with disabilities or those who may be susceptible to financial exploitation.
Key Considerations for Extending a BMT:
- Beneficiary’s Best Interests: The primary consideration in any decision to extend a BMT is the best interests of the beneficiary.
- Tailored Approach: The terms of any extension should be carefully tailored to the individual needs and circumstances of the beneficiary.
- Professional Advice: It is crucial to seek professional advice from experienced solicitors and financial advisors when considering extending a BMT. They can help to assess the beneficiary’s needs, advise on the most appropriate extension options, and draft the necessary legal documents.
- Tax Implications: Extending a BMT may have tax implications. It is essential to consider the potential tax consequences of any extension before making a decision.
Example of an Extension:
A BMT could be extended until the beneficiary reaches the age of 25 to cover the costs of a university degree and subsequent professional training. The trust deed could specify that the trustees have discretion to release funds for living expenses, tuition fees, and other education-related costs.
Alternative Approaches:
- Protective Trusts: Instead of extending the BMT, it may be possible to establish a protective trust. A protective trust provides a degree of protection for the beneficiary’s assets while still allowing them some access and control.
- Discretionary Trusts: A discretionary trust offers more flexibility than a BMT. It allows trustees greater discretion in how and when to distribute funds to the beneficiaries.
Conclusion:
Extending a BMT beyond the age of 18 can provide valuable support and protection for beneficiaries, ensuring that their financial needs are met and that their inheritance is managed responsibly. However, it is crucial to carefully consider the specific circumstances of the beneficiary and seek professional advice before making any decisions.
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We have a proven track-record of helping clients create Trusts. We are a multidisciplinary firm and have all the expertise inhouse to satisfy the most exacting requirements of our clients. We will guide you through all the necessary legal due diligence in a comprehensive and timely manner. We firmly believe that with the right solicitors by your side, the entire process will seem more manageable and far less daunting.
How to Contact Our Wills and Probate Solicitors
It is important for you to be well informed about the issues and possible implications of creating a Trust. However, expert legal support is crucial in terms of ensuring your wishes are met as you would want them to be.
To speak to our Wills and Probate solicitors today, simply call us on 0345 901 0445, or click here to make a free enquiry. We are well known across the country and can assist wherever you are based. We also have offices based in Cheshire and London.
Disclaimer: This article provides general information only and does not constitute legal advice on any individual circumstances.
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