Minor Beneficiaries

[navigator61]

Hello
I wonder if anyone could clarify my understanding of the effect in a will when a legacy is left to a child when they reach 18? The will names the executors as the testator's trustees and leaves a legacy to a child when they attain 18. The wording of the legacy does not say the legacies are left in trust but am I correct in thinking that a trust is automatically created in such a situation?
very grateful for any help

[Peridot]

Hi Navigator61,

At the end of the Will are their any technical clauses, specifically mentioning the Standard and Special Provisions of the Society of Trust and Estate Practitioners (2nd Edition)?

If there is then these provisions would allow a minor's gift to be given to the parent or guardian to be held/invested until the child reaches 18. It is always advisable to obtain something confirming receipt of the sum from the parent or guardian of course. If anything were to happen to the fund before the child reached 18 then they would have redress against their parent/guardian.

If there is nothing in the technical clause then yes effectively a trust is automatically created for the child until they reach the stipulated age for receipt of the legacy. The trustee s will be the executors if no-one else is stipulated in the Will.
Depending on the size of the legacy, I would recommend obtaining some independent financial advice as to the best investment you could make until the child is able to receive the legacy.



It is possible to allow sums to be used for the child's benefit or welfare, prior to the time they are due the full sum. For example if they wanted driving lessons or deposit for their first run around car or an educational school trip for example. Do keep accurate records of what has been given prior to the final sum being due and also keep tabs on the interest to which they are also entitled.

Hope that helps, do post again if needs be.

[navigator61]

Hi Peridot
Many thanks for your reply which has reassured me that as there aren't any clauses that either nominate anyone other than the executors as trustees or clauses that provide for the possibility of paying the legacy to a parent or guardian other than releasing sums via them for specific events as you describe before the child reaches 18. My understanding though is such releases would be at the trustees discretion?

The reason for the post is that our daughter seems to think she has a right to effectively be the trustee of her son's legacy and if that was the case we would have serious doubts as to whether the child would get it all at 18.

Many thanks again

[Peridot]

Without the technical clauses it isn't an automatic option, although of course you could take an indemnity from your daughter, but that then leaves your grandchild to have to sue a parent potentially if things went pear shaped. From what you say I think you are being wise. Do make sure you have sought independent investment advice and keep a note of decisions you make just so you can demonstrate that you have done the right thing in respect of the money.

Allowing the release of any funds is discretionary, but can be justified provided the funds are used for the benefit of the child. The example of first cars is always a good one, a first run around is maybe sensible but it doesn't need to be a Ferrari.

There are academic arguments to be had on both sides but as executor and trustee you'll be fine sticking to your guns, provided you can demonstrate you have looked after the funds correctly. Of course if the school trip, driving lessons scenarios arise it is worth considering helping out. You can always insist on paying the 3rd party, rather than transferring to a parent to pay. Just a thought for the future.

[navigator61]

Thanks a million for your replies. I certainly intend to stay firm and retain control of the legacies. We are thinking along the same lines regards possible future payments by paying the third party directly. On the off chance that my daughter continues to dispute this and considers a legal challenge would executor insurance be advisable before I payout residuary shares? (daughter is a beneficiary of the residuary estate)

[Peridot]

I wouldn't have thought it necessary. You could get a receipt for payment of her residue although that isn't compulsory. As long as you have kept records correctly and can evidence with the estate accounts should any questions be raised you should be ok.

Would she be likely to challenge this in Court? If she does then in my opinion I wouldn't fight it but I would definitely get her to sign an indemnity for receipt of the money meant for your grandchild. The buck would then pass to her so to speak and your grandchild would have every right to sue her mother if the funds didn't materialise down the line. Not pleasant for anyone but if you have the indemnity signed from your daughter you have done everything you could as executor and trustee. The other option would be for you to appoint another trustee if you want to distance yourself a bit? How your daughter would feel about that is another possible issue though.

For the meantime I would just say the Will didn't provide for the funds to be paid to parents/guardians. It has not always been the case you could do that. In the past the Will had to stipulate it could happen. With the

Standard and Special Provisions of the Society of Trust and Estate Practitioners

being included in the Wills technical clauses it is now possible without being specific. You have to follow the Will. Once she has received her residuary legacy she may drop the argument for holding her child's legacy too?

When it comes to issuing proceedings people often make the threat and then do nothing so you don't need to do anything other than look after the fund until an event happens. Would she really want to take this to Court to have you explain the reasons why you basically wouldn't trust her to keep the legacy safe?

Don't worry until the event happens (easy for me to say I know), but generally the best thing to do.

Here if you need any support.

[navigator61]

Thanks for all that - have a clear set of arguments going forward now. Hopefully, daughter will accept what the Will does and doesn't say and leave the executors to get on with their roles. Will post any developments post residuary estate being paid out.