Estate to be held upon trust until 21

Jmog

I am an Executor and Trustee for an estate which is to be held upon trust for the deceased's two sons until they reach 21. They are both over 18. Am I (with the other Trustees) simply able to invest this money by opening an account (eg. unit trust) in one of our names or does it need to be in the sons' names?

Keep_pedalling

How much money are we talking about, and how near their 21st birthdays are the beneficiaries?

Yorkshireman99

Jmog wrote: »

I am an Executor and Trustee for an estate which is to be held upon trust for the deceased's two sons until they reach 21. They are both over 18. Am I (with the other Trustees) simply able to invest this money by opening an account (eg. unit trust) in one of our names or does it need to be in the sons' names?

You need to be sure that is a suitable investment for trustees and the account must be in the name as trustees. If you put it in your name and you die it may be treated as part of your estate. As the beneficiaries are over 18 they might easily persuade the court to let them have the funds now.

konark

If both are over 18 they can have the money immediately once they are adults any stipulations in the will are void.

Yorkshireman99

konark wrote: »

If both are over 18 they can have the money immediately once they are adults any stipulations in the will are void.

Please can you provide a cite for this?

securityguy

For bare trusts, it's been the case since 1841 that upon the age of majority the beneficiary can demand that the trust be dissolved. The case, which is still binding, is SAUNDERS v VAUTIER

http://www.bailii.org/ew/cases/EWHC/Ch/1841/J82.html

The court held:

I think that principle has been repeatedly acted upon; and where a legacy is directed to accumulate for a certain period, or where the payment is postponed, the legatee, if he has an absolute indefeasible interest in the legacy, is not bound to wait until the expiration of that period, but may require payment the moment he is competent to give a valid discharge

In 1841, "competent to give a valid discharge" meant 21. Today it means 18.

There's a summary here: https://en.wikipedia.org/wiki/Saunders_v_Vautier

It doesn't apply, or at least doesn't apply in general subject to appropriate drafting, to discretionary trusts or trusts with undefined numbers of beneficiaries. But a trust in the name of a sole beneficiary or a fixed number of beneficiaries, holding money for their sole benefit, as appears to be the case in the OP, is dissoluble once all the beneficiaries are competent to do so.

securityguy

Returning to the OP (a) you have to tell the beneficiaries (and in any event, assuming it's the death of a relative and they might reasonably check, they can look at the will once it is admitted to probate anyway) and (b) as others have pointed out and I have provided the caselaw for, they can demand the money be paid to them anyway. If only one wants the money now then it might matter if the will sets up one trust or two, but on general principles, bare trusts which attempt to keep money from adults have not been enforceable for the past 175 years.

Yorkshireman99

securityguy wrote: »

For bare trusts, it's been the case since 1841 that upon the age of majority the beneficiary can demand that the trust be dissolved. The case, which is still binding, is SAUNDERS v VAUTIER

http://www.bailii.org/ew/cases/EWHC/Ch/1841/J82.html

The court held:



In 1841, "competent to give a valid discharge" meant 21. Today it means 18.

There's a summary here: https://en.wikipedia.org/wiki/Saunders_v_Vautier

It doesn't apply, or at least doesn't apply in general subject to appropriate drafting, to discretionary trusts or trusts with undefined numbers of beneficiaries. But a trust in the name of a sole beneficiary or a fixed number of beneficiaries, holding money for their sole benefit, as appears to be the case in the OP, is dissoluble once all the beneficiaries are competent to do so.

Thanks for that. Why then have solicitors continued to draw up wills for clients that specify an age of 25 or occasionally more? I accept your point about some trusts not being subject to this ruling. Just curious that there is no later case law than 175 years ago.

securityguy

Yorkshireman99 wrote: »

Thanks for that. Why then have solicitors continued to draw up wills for clients that specify an age of 25 or occasionally more? I accept your point about some trusts not being subject to this ruling. Just curious that there is no later case law than 175 years ago.

There's no need for later case law: it's a case, it's binding. There may well be later _cases_, but they won't be reported in the same detail, as they aren't binding (they're in lower courts, and use, rather than challenge, the existing law).

Here's a case from a few years ago which cites SvV:

http://www.trusts.it/admincp/UploadedPDF/201102161450400.jEngClarence%20Dicembre2009.pdf

It's binding. It can just cite it. That's the point of precedent.

As to your other question, trusts which hold money until 25 are valid so long as the beneficiary doesn't challenge it. So it gives the trustees powers to hold the money, subject to the beneficiary not demanding it. If the trust were not drawn like that, then upon (say) the beneficiaries 18th birthday the trust, and the trustees' powers, would lapse anyway. So it's sort of a mutual fiction.

The problem comes, of course, if the person who wrote the will and the trustees think it's binding.

The alternative of course is various sorts of discretionary trust, but those are more complex, more expensive to set up and rely on the utmost probity of the trustees.

Jmog

Sorry sorry sorry, very delayed response - have been tied up with other family issues. Thank you for your response(s).

We're talking around £200k. They are 19 and 20, so very close to 21. They are aware of the will contents and are confident that they don't want the money until they are 21, in fact probably not until several years after that.

Keep_pedalling

Does not sound like they would be in danger of going on a spending binge, so I think I would encourage them to take the money and invest it for the longer term in their own names. As they have no experience of dealing with that amount of money before then I would recomend them seeing an Independent Financial Advisor for advice.