Putting inheritance in a trust for young beneficiaries

PhizDazy

I am an executor of my late father’s will.

The will is split between his three children and seven grandchildren. It is his request that the grandchildren should not inherit until they reach the age of 25, which would apply to three of the grandchildren (*see footnote)

It occurs to me that we should set up a trust for each under 25 beneficiary (I think one trust each, not a combined trust) so that the money is appropriately invested and maintaining value for them until they inherit. 

Is there any advice anyone can give me over types of products, providers, etc.?

———

*I have ready on other threads that delaying inheritance to an age of above 21 is not enforceable. However for the purposes of this thread, I want to be able to work out how to best execute the will assuming that this is the way that it will work for some or all of the under 25 beneficiaries.

getmore4less

The wording of the will is important to determine the distribution and trust setup.

Some setups will delay distribution till 25.

The will creates the trust(s)

Often with minor beneficiary the executors pass the the assets to the beneficiary parents to administer to relieve themselves of a long term burden.

Sea_Shell

It may not be enforceable over the age of 18, not 21.

Keep_pedalling

What is the exact wording with regards to the GCs inheritance? In most cases these clauses are not enforceable  and the beneficiaries are entitled to the inheritance from18 unless the deceased lived in Scotland where it is 16. 

If they have been left this money absolutely then the it should be held for minors in a bare trust, bare trusts for adults are pointless.

PhizDazy

getmore4less said:

The wording of the will is important to determine the distribution and trust setup.

Some setups will delay distribution till 25.

The will creates the trust(s)

Often with minor beneficiary the executors pass the the assets to the beneficiary parents to administer to relieve themselves of a long term burden.

Thanks for your input.

The age (18 or 21 or 25) is not really the issue. The ‘intention’ of the will would be for the inheritance to be realised at the age of 25 and if that proves acceptable to the beneficiaries then that is what we will try to execute. 

The relationship between one of the parents and their children is not all it could be. The financial status of those particular parents is also not in a good place.  Passing the assets to the parents to administer would not be a good idea.

Hence looking for a mechanism (other than retaining the money in the executor account) to place the funds for a few years.

Keep_pedalling

PhizDazy said:

getmore4less said:

The wording of the will is important to determine the distribution and trust setup.

Some setups will delay distribution till 25.

The will creates the trust(s)

Often with minor beneficiary the executors pass the the assets to the beneficiary parents to administer to relieve themselves of a long term burden.

Thanks for your input.

The age (18 or 21 or 25) is not really the issue. The ‘intention’ of the will would be for the inheritance to be realised at the age of 25 and if that proves acceptable to the beneficiaries then that is what we will try to execute. 

The relationship between one of the parents and their children is not all it could be. The financial status of those particular parents is also not in a good place.  Passing the assets to the parents to administer would not be a good idea.

Hence looking for a mechanism (other than retaining the money in the executor account) to place the funds for a few years.

What the intention of the will and the law are not necessarily the same thing. If they have been given an inheritance absolutely not only are they entitled to it once they are deemed an an adult, they are also responsible for the tax on any assets they have inherited. Unless the will specifies what happens to their inheritance if they die before reaching 25 or it puts the inheritance into a discretionary trust them keeping it back from them until they are 25 is problematic. 

If they are happy to not touch the money for several years then it could be invested but it should still be under their control. 

PhizDazy

Keep_pedalling said:

PhizDazy said:

getmore4less said:

The wording of the will is important to determine the distribution and trust setup.

Some setups will delay distribution till 25.

The will creates the trust(s)

Often with minor beneficiary the executors pass the the assets to the beneficiary parents to administer to relieve themselves of a long term burden.

Thanks for your input.

The age (18 or 21 or 25) is not really the issue. The ‘intention’ of the will would be for the inheritance to be realised at the age of 25 and if that proves acceptable to the beneficiaries then that is what we will try to execute. 

The relationship between one of the parents and their children is not all it could be. The financial status of those particular parents is also not in a good place.  Passing the assets to the parents to administer would not be a good idea.

Hence looking for a mechanism (other than retaining the money in the executor account) to place the funds for a few years.

What the intention of the will and the law are not necessarily the same thing. If they have been given an inheritance absolutely not only are they entitled to it once they are deemed an an adult, they are also responsible for the tax on any assets they have inherited. Unless the will specifies what happens to their inheritance if they die before reaching 25 or it puts the inheritance into a discretionary trust them keeping it back from them until they are 25 is problematic. 

If they are happy to not touch the money for several years then it could be invested but it should still be under their control. 

This is really helpful. Thank you for your input.

 I believe the intention of the will was the the inheritance would be used to be put towards a house deposit for each GC, rather than used as supplementary income. - but that is clearly not enforceable.

I will take this up with the lawyer managing the probate and see where we get to. All the GCs are now 18 and so this may be an academic question.

However, not all of them are financially independent, some are students or not in work. It probably goes beyond the role of an executor to insert myself into their affairs, but I would like to offer them some ideas about how to manage the money well should they wish to put the funds aside until an appropriate time.

Marcon

PhizDazy said:

Keep_pedalling said:

PhizDazy said:

getmore4less said:

The wording of the will is important to determine the distribution and trust setup.

Some setups will delay distribution till 25.

The will creates the trust(s)

Often with minor beneficiary the executors pass the the assets to the beneficiary parents to administer to relieve themselves of a long term burden.

Thanks for your input.

The age (18 or 21 or 25) is not really the issue. The ‘intention’ of the will would be for the inheritance to be realised at the age of 25 and if that proves acceptable to the beneficiaries then that is what we will try to execute. 

The relationship between one of the parents and their children is not all it could be. The financial status of those particular parents is also not in a good place.  Passing the assets to the parents to administer would not be a good idea.

Hence looking for a mechanism (other than retaining the money in the executor account) to place the funds for a few years.

What the intention of the will and the law are not necessarily the same thing. If they have been given an inheritance absolutely not only are they entitled to it once they are deemed an an adult, they are also responsible for the tax on any assets they have inherited. Unless the will specifies what happens to their inheritance if they die before reaching 25 or it puts the inheritance into a discretionary trust them keeping it back from them until they are 25 is problematic. 

If they are happy to not touch the money for several years then it could be invested but it should still be under their control. 

This is really helpful. Thank you for your input.

 I believe the intention of the will was the the inheritance would be used to be put towards a house deposit for each GC, rather than used as supplementary income. - but that is clearly not enforceable.

I will take this up with the lawyer managing the probate and see where we get to. All the GCs are now 18 and so this may be an academic question.

However, not all of them are financially independent, some are students or not in work. It probably goes beyond the role of an executor to insert myself into their affairs, but I would like to offer them some ideas about how to manage the money well should they wish to put the funds aside until an appropriate time.

I don't know how much cash is under discussion here, but presumably something more than 'a modest amount'. If the GC are already 18, then they are entitled to their inheritance and focussing on ensuring they get some good advice from someone properly qualified to give investment advice might be the best way forward. Possibly suggest they spend some of their inheritance on a meeting with an independent financial adviser?