Money left to child in Trust, but not released until child is 25

Murphy_The_Cat

D, F & P seems to be the most relevant forum for this post.


Many years ago, Aunt Mildred decided that she wanted her great nephews and great nieces to benefit from her wealth.
She set up a Trust for the children and two of the stipulations are that a) the children aren't told that they are going to be benificiaries of the Trust and b) that they only get their share of the trust when they reach 25.
I will shortly become one of the Trustees and I'm very happy to follow through on Mildreds wishes - if any of the children were to find out about the Trust (it won't be from me !), is there any way that the children can insist on getting their mitts on their share on the Trust once they are 18.
Aunt Mildred is no longer with is, so she won't be spilling the beans either.

gettingtheresometime

I think the inheritance can only be kept a secret until the oldest reaches 25 ....won't the others wonder if they inherited anything?

getmore4less

Depends on the exact wording, only you know that.

Murphy_The_Cat

gettingtheresometime wrote: »

I think the inheritance can only be kept a secret until the oldest reaches 25 ....won't the others wonder if they inherited anything?

The 2 children in family A, don't know the 2 children in family B, so won't be any the wiser.
The oldest child in family A will be getting a very nice surprise in about 3 years time. The oldest child in family B will be getting a (hopefully) much bigger surprise in 10 years time - if the Trust performs acceptably well.

getmore4less wrote: »

Depends on the exact wording, only you know that.

I'm not a Legal Beagle, but it looks and reads clearly to me that its hapy times on 25th birthday and npt before - but on a fairly regular basis there are mentions on this forum that when a sprog turns 18 the money is theirs and nothing can be done to stop them getting their mucky mitts on it.

Keep_pedalling

From your opening post it sounds like this was a trust set up in her lifetime not an inheritance, is that the case?

What sort of trust is it?

getmore4less

Is the class of beneficiary open(more can get added) or closed(fixed list)

How do you work out a share before they are all 25?

beanielou

AFAIK 25 is the maximum age money can be in trust until.
When I made my will I did not want any assets to go to my DS until 30, but that cannot happen unless it was that he could not manage money or similar.
AFAIK the beneficiaries cannot insit on getting money earlier but could apply to trustees to have money released but it is at trustees discretion.

Murphy_The_Cat

Keep_pedalling wrote: »

From your opening post it sounds like this was a trust set up in her lifetime not an inheritance, is that the case?

What sort of trust is it?

Yes, it was set up several years ago whilst Mildred was alive, I think about 12 years ago

I don't know what type of Trust it is - what are the words that I should be looking for to describe it ?
The funds in the Trust are actively managed by a financial institutions, from the parameters that were originally agreed by Mildred. From that point on, Mildred wasn't involved where the money in the Trust was invested, but got quarterly statements showing how it was performing.

getmore4less wrote: »

Is the class of beneficiary open(more can get added) or closed(fixed list)

How do you work out a share before they are all 25?

Originally the class of beneficiary was open and more could be added, but by the "rules" of the Trust it is now closed and no more benificiaries can be added.
Child A gets a quarter of the value of the Trust when they are 25.
Child B gets a third of the value of the Trust when they are 25.
Child C gets half of the value of the Trust when they are 25.
Child D gets the remainder of the Trust when they are 25.


In the orginal schedule there were 3 benificiaries and later on Child D became benificiary #4



IIRC, the timescale is circa A 7 years, B 9 years,C 10 years,D 13 years

Murphy_The_Cat

beanielou wrote: »

AFAIK 25 is the maximum age money can be in trust until.
When I made my will I did not want any assets to go to my DS until 30, but that cannot happen unless it was that he could not manage money or similar.
AFAIK the beneficiaries cannot insit on getting money earlier but could apply to trustees to have money released but it is at trustees discretion.

That would be a very acceptable situation for me and (as far as I'm aware), the other Trustee.

Brynsam

beanielou wrote: »

AFAIK 25 is the maximum age money can be in trust until.
When I made my will I did not want any assets to go to my DS until 30, but that cannot happen unless it was that he could not manage money or similar.
AFAIK the beneficiaries cannot insit on getting money earlier but could apply to trustees to have money released but it is at trustees discretion.

The maximum age of 25 applies only where the trust is something actually known as 'an 18-25 trust' (https://www.gov.uk/hmrc-internal-manuals/inheritance-tax-manual/ihtm42816).

Keep_pedalling

Murphy_The_Cat wrote: »

Yes, it was set up several years ago whilst Mildred was alive, I think about 12 years ago

I don't know what type of Trust it is - what are the words that I should be looking for to describe it ?
The funds in the Trust are actively managed by a financial institutions, from the parameters that were originally agreed by Mildred. From that point on, Mildred wasn't involved where the money in the Trust was invested, but got quarterly statements showing how it was performing.






Originally the class of beneficiary was open and more could be added, but by the "rules" of the Trust it is now closed and no more benificiaries can be added.
Child A gets a quarter of the value of the Trust when they are 25.
Child B gets a third of the value of the Trust when they are 25.
Child C gets half of the value of the Trust when they are 25.
Child D gets the remainder of the Trust when they are 25.


In the orginal schedule there were 3 benificiaries and later on Child D became benificiary #4



IIRC, the timescale is circa 3 years, 6 years, 10 years, 13 years

As a trustee it is important that you understand exactly what sort of trust it is for the purposes of tax and making sure the money is handled correctly.

This sounds like a bare trust, in which case the beneficiaries are / were entitled to the money on their 18th birthday and any income generated on their share is subject to income tax payable by the beneficiary.

The secrecy clause seems to be amateurish way of trying to get round the 18 year problem.