The law recognises that a minor can be a legal heir or beneficiary of an estate. However, if the beneficiary of a Will is a minor (someone under the age of 18), they cannot legally accept or receive the gift or part of an estate until they turn 18. So, if they are the beneficiaries of a Will, appropriate measures must be taken to safeguard the inheritance until they reach legal majority. In this article, Will Trusts For Minors, we take a look at these issues in more depth.
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Setting up a trust
The trust’s purpose should be carefully considered by the Will’s creator. If a minor child does not have a trust established for them or there is no Will, a trust will be created for them automatically and will last until they become 18. When the minor child or children reaches 18, the money will be distributed to them by the executor and trustee.
They may instead decide to merely execute the above measures and have the trustee hold the funds until the children reach the age at which they are to receive their inheritance. A “bare trust” describes such a setup. If a beneficiary outlives the testator who left them an inheritance but is still a minor when the testator dies, the interest in the inheritance that the beneficiary would have received passes to the beneficiary’s estate.
Bare Trusts and Conditional Trusts
If a beneficiary is under the age of 18, their inheritance will be placed in a bare trust until they reach that age, and upon the testator’s death, the beneficiary will become fully vested in the trust. Therefore, if the beneficiary survives the testator but then pass away themselves before reaching 18, the inheritance that they would have received will then pass in accordance with the beneficiary’s estate. Because of their vested interest, beneficiaries are entitled to trust income, which is subject to individual income taxation.
However, if the will specifies that the beneficiary’s entitlement is conditional upon their attaining a certain age, such as 21 or 25, then their entitlement is delayed until they achieve that age. A contingent trust is a financial arrangement designed to protect beneficiaries in the event of a specific event. If the beneficiary dies before the contingency is met, the gift is nullified and goes to the next of kin or the testator’s estate. Taxes on inheritances are calculated taking into account factors such as whether or not the testator is a parent or stepparent and whether or not the Will expresses such right.
What is a discretionary trust?
Alternatively, the trustees of a discretionary trust could be entrusted with the responsibility of distributing an inheritance to a minor child. The trustees are then free to use the trust’s assets however they see fit. The Trustees may distribute the trust’s principal and income to any beneficiary or beneficiaries at any time in their sole discretion.
The trustee’s powers and any other pertinent information, such as whether or not they will be held accountable for losses, can be included in the will. But, if you choose to include a discretionary trust for the benefit of minor children in your Will, you should provide your trustees with a Letter of Wishes outlining your preferences for the use and investment of the trust’s assets.
How we can help
We have a proven track-record of advising upon all aspects of private client work. We will guide you through the process and ensure all checks are carried out swiftly and efficiently and we firmly believe that with the right solicitors by your side, the entire process will seem more manageable and far less daunting.to incorporate, what kind of ownership
How to Contact Our Private Client Solicitors
It is important for you to be well informed about the issues and possible implications of setting up a Will trust for minors. However, expert legal support is crucial in terms of ensuring a positive outcome to your case.
To speak to our Trust 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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