Posted on 29th December 2020 at 14:41
If you make a gift to a young person in your Will which they receive when they reach a certain age you will create either a bereaved minor’s trust or a bereaved young person’s trust, depending on their age.
A bereaved minor’s trust
A bereaved minor’s trust is created if you make a gift in your Will to your children on the condition that they reach the age of 18.
These trusts can only be created for your children or stepchildren. A grandparent, for example, can’t create this type of trust in their Will for their grandchildren.
The following conditions must be met:
at least one of the child’s parents must have died
the trust must have been created by a parent’s Will, intestacy, or under the Criminal Injuries Compensation Scheme
the trust must meet inheritance tax (IHT) conditions so that the child becomes absolutely entitled to the trust assets no later than their 18th birthday and, before then, the child benefits from any capital growth and income generated.
While the child is under 18, money generated by the trust can be saved or used for the child’s maintenance, education or other benefits. Trustees can therefore use any income and capital directly for the child or by paying the child’s surviving parent or guardian.