wording of will

adviceforeveryone

Just wanted to have to some advice of the wording of a will. 
It states "I give to each of my grandchildren and great grandchildren who shall survive me and attain the age of 18 years the sum of xxxx"
Does that mean only those who reach 18 upon the death are entitled to receive the amount? Or should those not yet reach 18 have it put away until they reach 18?

Thanks 

Robin9

If say your sons are 16, 17 and 18 when you die only the 18 year old inherits - the 16 and 17 get nothing (well they might if they can prove they were dependent on you).

See a solicitor and get it drawn up to protect the young ones.

xylophone

There are two conditions to fulfil - the grandchildren must survive the testator and reach the age of 18. The legacies have not indefeasibly vested in the children.
Therefore this is not a bare trust - see https://www.gov.uk/hmrc-internal-manuals/trusts-settlements-and-estates-manual/tsem1563

Example 3 - not a bare trust

Mr B left the residue of his estate to ‘such of my grandchildren as survive me and attain age 21 years’. If any grandchild dies before age 21, his/her prospective share goes to the other grandchildren who do attain that age.

Here there are two conditions to be met before the grandchildren become entitled to their shares in the estate:-

• they must survive Mr B; and
• they must attain age 21 years

Here the grandchildren did not take immediate vested interests at the death of the testator. This is not a bare trust.

The trustees must make a tax return.

The money will need to be held in an account in the name of the Trustees/executors of the will.

Presumably this will be an accumulation trust.

There is no indication that the Trustees have any powers of investment (and indeed a particular cash sum is specified) so it will have to be some form of deposit account.

The Trustees will need to have regard to the information concerning the taxation of trusts.

https://www.gov.uk/trusts-taxes/trusts-and-income-tax

Malthusian

Robin9 said:

If say your sons are 16, 17 and 18 when you die only the 18 year old inherits - the 16 and 17 get nothing (well they might if they can prove they were dependent on you).
See a solicitor and get it drawn up to protect the young ones.

It's got nothing to do with sons, the paragraph only mentions grandchildren and great-grandchildren.

And those alive but under 18 at the time of the testator's death will not get nothing. I agree with xylophone, any grandchildren and great-children alive at the time of the testator's death will still benefit providing they reach 18, and the money must be held in trust until then. If any die before 18 their share goes elsewhere (rather than their estate), most likely to the residuary beneficiaries.

*edit*

And this has the potential to be an unnecessarily complicated and tax-inefficient way of doing things - is it that important that the shares of any beneficiaries who die in childhood don't get redistributed via their estate (probably to their parents)? Why not simply give XXXX to any GCs / GGCs alive at the time of the testator's death in bare trust?

Malthusian

xylophone said:

There is no indication that the Trustees have any powers of investment (and indeed a particular cash sum is specified) so it will have to be some form of deposit account.

Not true - the Trustees do not need explicit powers to be granted in order to invest in something other than a deposit account (Trustee Act 2000).

The Trustees have a statutory duty to invest the money as a prudent person of business would and a deposit account would be unsuitable as an investment for the share of any beneficiary with a 5-10 year investment timescale or longer (except for day-to-day expenses such as fees and taxes).

xylophone

 Thank you -  yes, the Act does indeed confer wide powers on the Trustees. I should have said "may" rather than "will" on the basis that were the prospective beneficiaries within less than  (say) three to five years of age 18, then investment would not  necessarily be prudent.
Their powers are also subject to a duty of care - it may be that unless  there particular circumstances which render it inappropriate, they would be obliged to take professional advice relating to any investment.
It seems to me that in the case set by the OP, the terms were so narrowly drawn that the Trustees could be held to account by the beneficiaries if there were not a particular sum available at age 18.

And yes I agree that because a contingent trust requires Trust income to be taxed at Trust rates, a deposit account is particularly inefficient.

 

Malthusian

There's generally no obligation to take professional advice - only to take due care and skill.

It is still usually a very good idea as it covers off the Trustees' duties and the cost comes out of the trust fund.

The problem with DIYing investments is not that it is difficult but the catastrophically high cost on the rare occasion it goes wrong. This goes quintuple for lay Trustees where you are liable if it goes wrong but get zero benefit if it goes right.

adviceforeveryone

Thank you everyone .
Grand children are all over 18 years (3) , great grand children ( 4)  are all under 18.. so I think its just the ones over who get amount stated? Im confused by all the above ...
1: should just the grand children over 18 get the amount?
2: should the amount for great grand children go between the grand children or the other beneficiaries have the amount added to their money ?
3: should the great grand children money be kept until they are 18?

xylophone

The Testator's will specifies that  each  ( I think we must infer already born)  grandchild/great grandchild  who both survives him and reaches the age of 18 is to receive a certain specified  sum.
There were seven potential beneficiaries who survived the testator. 
Of those seven survivors, three have already fulfilled the second condition. They are entitled to the specified sum.
Four potential beneficiaries have not yet fulfilled the second condition.  When each one reaches age 18 (and so fulfils the second condition), he becomes entitled to the sum specified by the testator.

In the meantime, the money must be held in trust. This cannot be a bare trust because the money has not "indefeasibly vested" in those beneficiaries. It would seem to be an accumulation trust and as such taxable at trust rates.
See https://www.gov.uk/trusts-taxes/print part 5 Trusts and Income Tax.
The Trustees need to decide whether to deposit/invest the money.
Now, in this particular case, the Testator has specified a certain sum of money for each beneficiary.
To my mind therefore, the beneficiary has the right to receive  at least that sum of money when he has fulfilled the conditions of the will.
In these particular circumstances, it seems to me that the Trustees must ensure that at least the specified sum is available to each beneficiary as soon as he reaches age 18. He would also be entitled to a proportionate share of any income earned up to that point. This may well mean that investing the Trust money may not be the wisest decision.
If the money is held in some form of deposit account, then given the rates of interest currently available on any form of deposit account (let alone those specifically offered as Trust accounts), the rate of return is poor, particularly after Trust income tax rates are taken into consideration.
Should any one of the beneficiaries die before fulfilling the second condition, then his share must remain in the trust until the last survivor reaches age 18 at which point it should be shared between all those who have fulfilled the second condition (or, presumably their heirs as the share of each one would have "indefeasibly vested" when he reached age 18).
I am wondering whether it might be worth making an application to the court to vary the will (necessary as there are minors involved) such that the bequests are left to each beneficiary when (not if) he reaches age 18, thus making the trusts for the minors bare. 
That's my take on the situation but I am no expert, my involvement in trusts being only on a personal/family level.
If unsure, and particularly if there are large sums involved, the executors should take qualified legal advice.

Keep_pedalling

I agree with xylophone, the money needs to be set aside. Without that silly clause about reaching the age of 18 this would be a lot simpler to deal with. Assuming that the residual beneficiaries would receive any bequest to a GC who died before their 18th birthday then if they were in agreement they could complete a deed of variation that would allow each GCs bequest to held in a bare trust for them.

If we are talking about a modest bequest then the trustees could simply deposit each bequest into a JISA in the GCs own name and forget about it.

xylophone

Assuming that the residual beneficiaries would receive any bequest to a GC who died before their 18th birthday then if they were in agreement they could complete a deed of variation that would allow each GCs bequest to held in a bare trust for them.

The problem here is the potential beneficiaries who are minors. Application to court?

https://www.co-oplegalservices.co.uk/media-centre/articles-jan-apr-2018/deed-of-variation-explained/

If we are talking about a modest bequest then the trustees could simply deposit each bequest into a JISA in the GCs own name and forget about it.

The trouble with this is that the bequests have not indefeasibly vested. Once in the JISA, the money is in absolute legal and beneficial ownership of the child - were the child to die, it passes to whoever inherits their estate.

https://www.gov.uk/junior-individual-savings-accounts/if-your-child-is-terminally-ill-or-dies

Now, you could say that if the amount were modest (not to mention the upsetting circumstances), the other beneficiaries (or their parents) would not cut up rusty. But..........where money is concerned...