Where to put inheritance money for son until he reaches 21?

Keep_pedalling

CottagePotager said:

Keep_pedalling said:

Baldytyke88 said:

CottagePotager said:

In her will she stated he was to receive it when he is 21. As an executor, the money is coming to me.

The executor's primary duty is to carry out the instructions in the will, including managing the estate and distributing assets according to the terms outlined.

True, but in this case the law could very well overrule a clause, that is no more than a wish, that a beneficiary should not receive their inheritance until they reach 21. If that is the case the beneficiary is entitled to receive their bequest now, and it would be a lot easier for the executor just to distribute that bequest.

My son's not about to take me to court🤣

I was not suggesting he was, but as well as being entitled to the money he is also responsable for the taxation on any income it earns, so he really should have control over it. 

poseidon1

CottagePotager said:

Don't have will to hand but something like "to receive x% share on reaching 21"

You really need to clarify the exact nature of this clause. As intimated by Keep_pedalling If your son's legacy is conditional on him attaining age 21 what does the Will state if he dies before that age?

 If there is no alternative beneficary who would take his share on death ( eg it does not fall back into residue) or the will states it would  otherwise fall into his own estate ( to be distributed accordingly), then since he has already attained 18 he can  now legally compell the executor/trustee to transfer the funds to his control, since he would not be potentially defeating anyone else's contingent rights in the legacy by doing so.

Peruse the Will properly and let us have the precise wording to accurately assess your duties and obligations related thereto, and to determine whether this amounts to a full blown 'trust' requiring HMRC trust registration procedures.

Brie

CottagePotager said:

My son's not about to take me to court🤣

Had a giggle at this because earlier today I saw a youtube about a son that took his father to court suing for $60k for emotional distress due to failing to buy him an expensive car for his 21st.  Entitled or what!  (& yes, yanks)  Spoiler alert: the judge wasn't impressed.

If you want him to be able to have the money without any IHT issues why not set up a joint account for you two that requires both signatures to withdraw the money?

Baldytyke88

Keep_pedalling said:

True, but in this case the law could very well overrule a clause, that is no more than a wish, that a beneficiary should not receive their inheritance until they reach 21. If that is the case the beneficiary is entitled to receive their bequest now, and it would be a lot easier for the executor just to distribute that bequest.

This is what AI says, so I am no expert, the OP needs to speak to a solicitor, if in doubt.

"the law is unlikely to overrule a clause in a will that delays a beneficiary's inheritance until age 21, as long as the clause is clearly stated and not deemed unreasonable or against public policy. While a will's provisions generally reflect the testator's wishes, certain clauses like age restrictions are legally permissible and can be enforced by the courts".

doodling

Hi,

Baldytyke88 said:

Keep_pedalling said:

True, but in this case the law could very well overrule a clause, that is no more than a wish, that a beneficiary should not receive their inheritance until they reach 21. If that is the case the beneficiary is entitled to receive their bequest now, and it would be a lot easier for the executor just to distribute that bequest.

This is what AI says, so I am no expert, the OP needs to speak to a solicitor, if in doubt.

[ Snip AI generated drivel. ]

And that is why people don't use AI for anything important - it is often wrong, as it may well be in this case (depending of the precise wording of the will).

wmb194

CottagePotager said:

He'd probably be happy for it to go in an account for 1 year that's not accessible. I presume there are such accounts. 

Yes, there are even three year fixed rate, inaccessible savings accounts. But it isn't all or nothing, you could open a number or accounts with different terms.

https://moneyfactscompare.co.uk/savings-accounts/

Keep_pedalling

Brie said:

CottagePotager said:

My son's not about to take me to court🤣

Had a giggle at this because earlier today I saw a youtube about a son that took his father to court suing for $60k for emotional distress due to failing to buy him an expensive car for his 21st.  Entitled or what!  (& yes, yanks)  Spoiler alert: the judge wasn't impressed.

If you want him to be able to have the money without any IHT issues why not set up a joint account for you two that requires both signatures to withdraw the money?

That would add to the OPs income tax burden. It could also cause an IHT issue if the OP died within 7 years of handing over the lot once the son reached 21.

Keep_pedalling

Baldytyke88 said:

Keep_pedalling said:

True, but in this case the law could very well overrule a clause, that is no more than a wish, that a beneficiary should not receive their inheritance until they reach 21. If that is the case the beneficiary is entitled to receive their bequest now, and it would be a lot easier for the executor just to distribute that bequest.

This is what AI says, so I am no expert, the OP needs to speak to a solicitor, if in doubt.

"the law is unlikely to overrule a clause in a will that delays a beneficiary's inheritance until age 21, as long as the clause is clearly stated and not deemed unreasonable or against public policy. While a will's provisions generally reflect the testator's wishes, certain clauses like age restrictions are legally permissible and can be enforced by the courts".

Computer says wrong! I bet you did not even include the country when you asked the question, but even if your did it would still give the wrong answer. 

We still do not know the wording of the will but typically a clause giving an absolute legacy will say something like this-

I give to my grandson Joe Bloggs the sum of £200,000 to be received at the age of 21

If however the clause says the following then it is a contingent legacy.

I give to my grandson Joe Bloggs the sum of £200,000 subject to obtaining the age of 21

As an executor and trustee you have to treat these very differently. Let’s say Joe Bloggs is currently 15 and both him and the testator reside in England the first clause has been used. The executor / trustee will need to create a bare trust to hold the money as it is already vested in Joe.  Any income earned within the trust is taxed as the income of the beneficiary (Joe) but as they are a minor this is likely to be zero. 

This is where the age clause falls down because once Joe reaches the age of 18 he can take full control of his bare trust close it down and buy a Ferrari. In the OPs case the beneficiary is already adult so creating a bare trust would be pointless. 

If the second clause had been used instead, then the legacy cannot be vested until Joe’s 21st birthday, so will need to go into a contingent interest trust. This is treated very differently than a bare trust for taxation and the trustees will find themselves having to do an annual tax return for the trust and paying a significant amount of the income in tax. This is the reason that this type of clause is used rarely because it creates a lot more work for the trustees and has a far higher tax burden.

Sea_Shell

CottagePotager said:

badmemory said:

It sounds like he has his head screwed on so not a problem there.  I would however suggest to him that he tells no-one about his good fortune.

Quite. Unfortunately he told his girlfriend. They were already together though. I'll have a talk about not telling people if possible.

Let's hope she doesn't develop expensive taste! 😉