How to look after inheritance for children

bench12

I am a joint executor for my sister's will. The will says "To my nephew xxxxxx, and my niece yyyyy the sum of twenty five thousand pounds (£25,000) each on attaining the age of Twenty Five years."


They are 17 and 15. How do I look after and invest this money for them until they are allowed to have it?

Apodemus

bench12 wrote: »

I am a joint executor for my sister's will. The will says "To my nephew xxxxxx, and my niece yyyyy...”

Sorry, not helpful I know, but you are clearly not a biologist, otherwise your niece would have the ‘x’s and your nephew the ‘y’s!

Apodemus

More seriously, I believe you need to set up a Trust for them and the current wisdom seems to be that you could probably not deny them access to this at age 18 regardless of the original intention of the will.

xylophone

https://www.gov.uk/hmrc-internal-manuals/trusts-settlements-and-estates-manual/tsem1563

http://www.prescient-financial.com/docs/Bare%20trust%20returns.pdf

Check with the solicitor whether the inheritance has "indefeasibly vested" in your children. See above.

If it has, then the trust is a bare trust. If not, then the trust is not bare.

The problem with this is that legally the beneficiaries of a bare trust have the right to call for access to and control of the assets at the age of 18 (16 in Scotland).

You also use the term "invest" - it is not clear that the trust gives you powers of investment.

Therefore whatever type of trust this is you may be confined to some form of deposit account.

Below may be of use.

https://www.bathbuildingsociety.co.uk/savings/business-and-professional-accounts/trust-accounts

https://www.nsandi.com/system/files/asset/pdf/trust-faqs.pdf

justme111

Not a response I am afraid but just further question - how can it be considered to be of a way that allows them access at 18 if the will says clearly 25?
I tried to find the info on this topic before and did not manage which was a matter of considerable frustration. Solicitor that I seen told me it would be discretionary trust and charges for administration and limitations of how it is treated from tax and investment point of view would not be justified so I given up on the idea.

Apodemus

I’m not a lawyer, but I guess the clue is in the term Trust...a Trust means that the assets are held on behalf of someone else and the Trustees are acting on behalf of that person. Once that “someone else” becomes 18 (or 16 in Scotland) they are deemed to be legally competent to make their own decisions, so can dispense with the Trustees and take control of the asset themselves, if they so desire.

xylophone

Not a response I am afraid but just further question - how can it be considered to be of a way that allows them access at 18 if the will says clearly 25?

Read links in my post above.

xylophone

See also

http://trustsdiscussionforum.co.uk/t/bare-trusts-beyond-18/2008/7

https://www.taxinsider.co.uk/763-The_Bare_Essentials_Bare_Trusts.html

xylophone

The part in bold is a conditional gift/legacy. The entitlement to the legacy is contingent on the beneficiary reaching the age of 25.

It seems to me that the wording of the will does not make it clear whether the legacy is on a "when" they reach 25 or "if"they reach 25.

See links in previous posts.

I think the OP should check with the solicitor whether the legacies have indefeasibly vested or not.

bench12

IanManc wrote: »

Was this a home made Will? I would expect a Will that was drawn up professionally to include instructions to the executors on how and where to hold the money until the contingency came to pass, and to deal with the issue of income, e.g. "and the executors of this my Will are to hold the money in trust as trustees for the beneficiaries and also to hold any income received on the money so held after payment of any tax due for the benefit of the beneficiaries and to pay it to them on the occurrence of the contingency".

Hi, the will was professionally drawn up with a solicitor so it is rather frustrating that there is no further guidance in it about what to do with the funds

xylophone

all of the beneficiaries to agree to a Deed of Variation.

Difficult with the children as (at least) potential beneficiaries?

https://uk.practicallaw.thomsonreuters.com/6-386-4134?transitionType=Default&contextData=(sc.Default)&firstPage=true&comp=pluk&bhcp=1


Original beneficiaries
The beneficiary of the original disposition under the will or intestacy rules must make the variation (section 142(1), IHTA 1984 and section 62(6), TCGA 1992). This indicates their agreement to redirect their entitlement. It is irrelevant whether they have received the benefit or not when they make the variation (see also Time limit for making a variation). For example, the deceased's personal representatives may already have transferred the asset representing the beneficiary's interest in the estate to them before they decide to make a variation.
The beneficiary must have capacity to be a party to the deed, that is, they must be at least 18 years old and have the mental capacity to make a gift. They cannot be a minor. Where a variation will affect a minor's interest, then it is usually necessary to obtain the court's consent. For further information, see What if the beneficiary is a minor or an unborn child?.