Creating a comprehensive will is a vital step in ensuring your estate is distributed according to your wishes. For parents, this includes making provisions for minor children in the event of their untimely death. One of the most effective ways to protect your child’s financial future is by including a bereaved minors trust in your will. This type of trust safeguards your child’s inheritance, ensuring it is managed responsibly until they reach adulthood.
At Blackstone Solicitors, we assist clients across England and Wales in preparing legally sound wills tailored to their unique circumstances. In this article, we explain what a bereaved minors trust is, why it is beneficial, and how you can include one in your will.
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What Is a Bereaved Minors Trust?
A bereaved minors trust is a specific type of trust that is established to manage assets left to a minor child when a parent passes away. It is governed by specific rules under UK law to ensure the financial well-being of bereaved children.
Key features of a bereaved minors trust include:
- Eligibility: The trust is designed for children under the age of 18 who have lost at least one parent.
- Tax Advantages: The trust benefits from favourable inheritance tax (IHT) treatment, provided it meets the legal requirements. Unlike discretionary trusts, bereaved minors trusts are not subject to the periodic IHT charges.
- Mandatory Distribution: The trust’s assets must be transferred to the child when they reach the age of 18.
By including a bereaved minors trust in your will, you can ensure that your child’s inheritance is managed appropriately and protected until they are legally able to take control of it themselves.
Why Include a Bereaved Minors Trust in Your Will?
There are several reasons to consider including a bereaved minors trust in your will:
- Financial Security
A bereaved minors trust ensures that your child’s inheritance is safeguarded until they are old enough to make informed financial decisions. Trustees can manage the assets responsibly, using them to meet the child’s needs, such as education, healthcare, and living expenses.
- Protection from External Risks
Without a trust, a minor’s inheritance may be placed in a bare trust managed by the court or an appointed guardian. This arrangement offers limited flexibility and oversight. A bereaved minors trust allows you to appoint trustees of your choice, ensuring that the assets are managed by individuals you trust.
- Tax Efficiency
Bereaved minors trusts are exempt from the inheritance tax charges that apply to other types of trusts, such as discretionary trusts. This can result in significant tax savings for your estate and maximise the funds available for your child’s benefit.
- Tailored Provisions
You can customise the terms of the trust to reflect your wishes. For example, you can specify how the assets should be used and provide guidance to the trustees on managing the funds.
How to Include a Bereaved Minors Trust in Your Will
Incorporating a bereaved minors trust into your will requires careful planning and the assistance of an experienced solicitor. Here are the key steps involved:
- Understand the Legal Requirements
To establish a bereaved minors trust, your will must meet specific criteria under UK law:
- The trust must name a child under the age of 18 as the beneficiary.
- The assets must pass directly to the child when they reach 18 years of age.
- The trust can only be created for the benefit of your biological or adopted children.
It is essential to ensure that the trust’s terms comply with these requirements to qualify for the tax advantages associated with bereaved minors trusts.
- Consult a Solicitor
A solicitor experienced in wills and trusts can guide you through the process of setting up a bereaved minors trust. They will:
- Explain your options and help you decide whether this type of trust is suitable for your circumstances.
- Draft the trust’s terms to ensure compliance with legal requirements.
- Advise on appointing trustees and structuring the trust to reflect your wishes.
- Appoint Trustees
The trustees are responsible for managing the trust’s assets until your child reaches 18. It is crucial to choose individuals who are trustworthy, financially competent, and willing to act in the child’s best interests. You may wish to appoint:
- Family members or close friends who understand your child’s needs.
- Professional trustees, such as solicitors or financial advisers, who bring expertise to the role.
You can also appoint a combination of personal and professional trustees to balance familiarity with professional oversight.
- Define the Trust’s Terms
Your will should include clear and detailed instructions regarding the operation of the trust. Key points to address include:
- Purpose of the Trust: Specify how the assets should be used to benefit your child, such as funding their education or covering living expenses.
- Distribution Rules: Set out how and when funds can be distributed during the child’s minority.
- Trustee Powers: Outline the powers you wish to grant the trustees, such as the ability to invest the trust’s assets or make discretionary payments.
- Review and Finalise Your Will
Once the trust’s terms have been drafted, your solicitor will incorporate them into your will. It is important to review the document carefully to ensure that it accurately reflects your wishes.
You should also review your will periodically and update it as necessary to account for changes in your family circumstances, such as the birth of additional children or changes in your financial situation.
Practical Considerations
When including a bereaved minors trust in your will, there are several practical considerations to keep in mind:
- Communication with Trustees
It is advisable to discuss your plans with the individuals you intend to appoint as trustees. This ensures that they understand their responsibilities and are willing to accept the role.
- Asset Allocation
Consider how your assets will be allocated to the trust. For example, you may wish to designate specific assets, such as property or investments, for the trust, or allow the trustees to decide how to divide the estate.
- Contingency Planning
Plan for contingencies, such as the possibility of a trustee being unable or unwilling to act. Your solicitor can include provisions in the trust for appointing replacement trustees if necessary.
- Interaction with Other Trusts
If your will includes other types of trusts or financial arrangements, ensure that they are compatible with the bereaved minors trust. A solicitor can help you coordinate these provisions to avoid conflicts or unintended consequences.
Conclusion
Including a bereaved minors trust in your will is a practical and effective way to safeguard your child’s inheritance and ensure it is managed responsibly until they reach adulthood. By taking the time to plan carefully and seek expert legal advice, you can provide your child with financial security and stability during a difficult time.
How we can help
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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