Under 25’s beneficiary of a will

Kidsgrandkids

I’m the executor of a will which stipulates that the beneficiaries can only have their share when they reach 25. Do I need to set up a trust? If so how and where can I save the money on their behalf?  I obviously want to keep charges to a minimum as it isn’t a large amount of money but equally don’t want it to affect my personal tax free interest. 

Flugelhorn

If they are over 18 I think that these days they just have the money

RAS

The first question is whether the clause in the will is legally sound. There are limited circumstances when you can prevent anyone aged 18 or over receiving their inheritance.

If the beneficiaries are under 18, then ask their parents to set up a JISA and pay into that?

doodling

Hi,

The answer depends on the exact wording of the will.

If the bequest is unconditional (other than age) then they are entitled to it at 18.

If there are conditions then, depending on what they are, you might need to set up a trust (which will be a pain and I suggest professional advice).

mebu60

Liaise with the parents and pay it to the <18s now in the most suitably agreed form and to the =>18s however they would like it. 

FlorayG

I hope they are not young children. My grandfather put this in his will and left me £450 in 1962. At that time it was enough for a deposit on a house. When I finally got it age 21 in 1979 ( my parents put it in an account for me) it barely bought me an old banger to learn to drive in. I don't know if it was any legal requirement then but my parents 'did what they were told' as people tended to do in those days. 
If they are young it's a point worth considering, what this money will be worth when they eventually get it

Kidsgrandkids

One of my concerns is that if one of them doesn’t reach the age of 25 their share is split equally between all the beneficiaries. If I’ve already paid their share to their parents it could get complicated. 

mebu60

Kidsgrandkids said:

One of my concerns is that if one of them doesn’t reach the age of 25 their share is split equally between all the beneficiaries. If I’ve already paid their share to their parents it could get complicated. 

As above, I would look to pay it to the individuals not the parents. Formalise what you do in a Deed of Variation.

poseidon1

Kidsgrandkids said:

One of my concerns is that if one of them doesn’t reach the age of 25 their share is split equally between all the beneficiaries. If I’ve already paid their share to their parents it could get complicated. 

From what you are saying the will contains a  contingency that none of the beneficiaries can receive anything unless they survive to age 25. In the event of death their share accrues to survivors.

Unfortunately, and  whether intended by the testator or not, this establishes a contingent trust of all the grandchildren's collective funds until each attains the contingent age.  This leaves you in the invidious position of having to retain custodial trusteeship of their monies  until each attains  the requisite age. 

You certainly should not risk passing this obligation to the various parents for each child, since as you rightly point out what if any child dies thereby triggering their 'trust fund' falling back into residue for the others, can the parent concerned be trusted or even understand that repatriation of that child's funds is required in that circumstance. Like or not, the Will seems to have lumbered you with an ongoing 'trustee ' obligation.

I assume the Will also makes no mention at all of what is to happen to any income arising on each contingent share prior to age 25? Again if not, it is arguable whether any income accrues to a particular beneficiary's share until such time  the contingency is met.  The problem with that is taxation, if income has to be collectively accumulated until age 25, then it is liable to income tax at 45%. It maybe possible to explore whether section 31 of the trustee act can be invoked to attribute a statutory rights to income on attaining age 18 (in which case tax thereon reduces to basic rate) however the wording of the 'contingent gift' clause would need to be wide enough to permit this.

Contingent trusts, especially ones created by testator  without understanding the trust and tax ramifications thereof,  are a right royal pain especially if the children in question are very young and the amounts relatively small..

You undoubtedly require specialist trust advice here, and quickly.

A DOV is a non starter if any of the grandchildren are under 18, and even if over that age it is questionable whether they can vary their collective  contingent  interests in the  estate in favour of their parents. DOVs assume one has legal capacity ( minors do not) and a vested entitlement, again clearly none of the children do.

Marcon

mebu60 said:

Kidsgrandkids said:

One of my concerns is that if one of them doesn’t reach the age of 25 their share is split equally between all the beneficiaries. If I’ve already paid their share to their parents it could get complicated. 

As above, I would look to pay it to the individuals not the parents. Formalise what you do in a Deed of Variation.

A Deed of Variation has no place in this; it's not for OP to make one, since it's not their inheritance they are varying.

OP, as above - one for professional advice.

silvercar

Kidsgrandkids said:

I’m the executor of a will which stipulates that the beneficiaries can only have their share when they reach 25. Do I need to set up a trust? If so how and where can I save the money on their behalf?  I obviously want to keep charges to a minimum as it isn’t a large amount of money but equally don’t want it to affect my personal tax free interest. 

We had similar clause and the over 18s got the money straight away, the under 18s money was put in a savings account which didn’t mature until they were 18 and the account entrusted to their parents. My parent and uncles reasoned that it wasn’t a large amount of money, so if someone sadly passed between the age of 18 and 25, the family would have more concerns than worrying about a redistribution of the small amount. If anyone did want their share of a redistribution either the costs of pursuing would be off putting for a small amount or if push came to shove, others would chip in to cover the shortfall.

What was of greater concern was that the great grandchildren were also given a fixed amount. The problem was that they hadn’t all been born at the time of death, in fact one was born within a few months of the death, so missed out.