Gifts to minors (Vest immediately or contingent)
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katy123
Posts: 365 Forumite
The whole conversation of wills has prompted me to revisited my own wills. I just want to familiarise myself with the options. From what I can gather, most (not sure if all) draft gifts to minors (under 18) as follows:
1. Money & Specific gifts = vest immediately (I.e. they are paid to the parent or guardian)
2. Residuary Gift = contingent on reach a certain age (given that there is a trust)
Now, does this difference occur due to choice or legislation or it is down to will drafters choice? I.e. can residuary gifts vest immediately? and vice versa i.e. money & specific gifts placed into trust making it contingent?
i guess the options don't matter too much as both options provides flexibility in access for the minor. However, vesting immediately causes a potential IHT issue for the minor whereas the trust would not. Thanks.
1. Money & Specific gifts = vest immediately (I.e. they are paid to the parent or guardian)
2. Residuary Gift = contingent on reach a certain age (given that there is a trust)
Now, does this difference occur due to choice or legislation or it is down to will drafters choice? I.e. can residuary gifts vest immediately? and vice versa i.e. money & specific gifts placed into trust making it contingent?
i guess the options don't matter too much as both options provides flexibility in access for the minor. However, vesting immediately causes a potential IHT issue for the minor whereas the trust would not. Thanks.
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Comments
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A minor cannot inherit so any legacy has to be held in trust until they are 18. Note that even if the will says aged 21 or 25 they are still entitled to inherit at 18.The whole conversation of wills has prompted me to revisited my own wills. I just want to familiarise myself with the options. From what I can gather, most (not sure if all) draft gifts to minors (under 18) as follows:
1. Money & Specific gifts = vest immediately (I.e. they are paid to the parent or guardian)
2. Residuary Gift = contingent on reach a certain age (given that there is a trust)
Now, does this difference occur due to choice or legislation or it is down to will drafters choice? I.e. can residuary gifts vest immediately? and vice versa i.e. money & specific gifts placed into trust making it contingent?
i guess the options don't matter too much as both options provides flexibility in access for the minor. However, vesting immediately causes a potential IHT issue for the minor whereas the trust would not. Thanks.0 -
Yorkshireman99 wrote: »A minor cannot inherit so any legacy has to be held in trust until they are 18. Note that even if the will says aged 21 or 25 they are still entitled to inherit at 18.
I'm sure there is an option to vest immediately so the parent or guardian holds the assets (i.e. not in trust) for money or specific gifts.
"Where a gift in your will is going to a child under 16 (which may be a child of a deceased beneficiary), you can give your executors and trustees the option to make the gift to the child's parent or guardian. This does leave the risk that the child will never know about or benefit from the gift (because their parent or guardian will use it up), but it is also possible that the parent or guardian can use the gift for the benefit of the child immediately."
https://www.mylawyer.co.uk/gifts-and-beneficiaries-a-A76045D77082/0 -
Yorkshireman99 wrote: »A minor cannot inherit so any legacy has to be held in trust until they are 18. Note that even if the will says aged 21 or 25 they are still entitled to inherit at 18.
actually, you might be right. Even if it vest immediately and paid to parent/guardian, it is considered a bare trust, part of child's assets.
page 4:
https://www.tbsolicitors.co.uk/wp-content/uploads/2015/06/A-Guide-for-Parents-and-Grandparents-on-gifts-to-minors.pdf0 -
It still doesnt vest until the child is 18, you are just giving the executors the power to hand it over to the parents. They should still hold it until 18 strictly speaking.
A contingent gift is not to do with residue necessarily, it's whether a condition must be satisfied before the person inherits such as turning a certain age. If they died before that age they would never inherit.:heartpuls Daughter born January 2012 :heartpuls Son born February 2014 :heartpuls
Slimming World ~ trying to get back on the wagon...0 -
The problem is that unscrupulous parents if hard up my spend the money.actually, you might be right. Even if it vest immediately and paid to parent/guardian, it is considered a bare trust, part of child's assets.
page 4:
https://www.tbsolicitors.co.uk/wp-content/uploads/2015/06/A-Guide-for-Parents-and-Grandparents-on-gifts-to-minors.pdf0 -
Yorkshireman99 wrote: »A minor cannot inherit so any legacy has to be held in trust until they are 18. Note that even if the will says aged 21 or 25 they are still entitled to inherit at 18.
Just as a point of interest, does the under 18 rule apply to all inheritances?
For example, "I leave my chess set to my grandson Fred".
If Fred is 14 when his grandfather dies, would he have to turn 18 before he can receive it?
Would common sense prevail or would the executor be expected to follow the letter of the law?0 -
The technical reason a minor cannot inherit is that they cannot give a legally binding receipt for it. Hence the executor can be liable. It is up to the executor if they feel the risk is acceptable.dresdendave wrote: »Just as a point of interest, does the under 18 rule apply to all inheritances?
For example, "I leave my chess set to my grandson Fred".
If Fred is 14 when his grandfather dies, would he have to turn 18 before he can receive it?
Would common sense prevail or would the executor be expected to follow the letter of the law?0
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