As a parent with young children you will wish to give consideration to your children’s future should you die leaving them a sizeable estate.
We can help you plan for your children’s future.
The law dictates that a child under the age of 18 cannot take control of their own finances, nor hold any land in their own name.
A parent will normally appoint a person called a Trustee/Executor to manage a child’s finances whilst they remain under the age of 18.
Many parents have concerns that at 18 a child may not be mature enough or might be taken advantage of if they receive large amounts of money at an early age. However you can postpone the age at which they inherit but there are tax implications in doing so.
Executors and Trustees
Your Will is intended as a guide for the future wellbeing of your family and requires very careful thought. One of your most important decisions will be the selection of your Executors as they will be the ones who will be making financial decisions when you are no longer around. If you have children under the age of 18 you will need to appoint at least 2 Executors, preferably three. Therefore it is importnt to be careful in your selection. Your Executors may predecease you or be unwilling or unable to act. The majority of Executors also take on the role of “Trustee” once the general administration of your estate is concluded. This role will involve forward planning for the children’s future, including providing maintenance and in some cases private eductation. As this role may continue for many years it is important to ensure the chosen Trustee is committed for the long term, at least until your child reaches 18. The Trustee Acts 1925 and 2000 sets down basic guidance which the Trustees must follow. This is where it gets complicated. Call Jeremy Edwards for more information on 01326 318900.
A gift under a Will to a child will either be vested (entitled to it outright but cannot take possession of it until the child reaches 18) or contingent (conditional on reaching a specified age).
What provision should you make for your children?
A gift under a Will to a child will usually fall into three categories:-
1. Bare Trust – the child cannot inherit simply because they are under 18 years of age;
2. Age 18 Trust – an age is specified in the Will i.e. the child shall inherit at 18;
3. Age 18-25 Trust – the Will provides for the child to inherit at an age between 18 and 25.
There are different tax implications for each of these Trusts – call Jeremy Edwards on 01326 318900 for advice on which Trust would be best for you.
The first role of the Trustee is to determine the financial needs of the children and that they are suitably accommodated. In this respect some co-ordination will be required with the children’s Guardians if they are different to the Trustees. This may require changes to the existing family home, the purchase of another property, or if the children move in with the appointed Guardians, changes to their property to accommodate everyone. Once this has been resolved, thought will need to be given to financing your child’s living expenses.
Note different tax rules apply to grandparents and others making gifts to children under the age of 18.
These are individuals who will oversee the upbringing and welfare of your child(ren) who are under the age of 18 at the time of your death should the other parent with parental responsibility have also died. You need to be sure that your Guardians will agree to look after your child(ren) in the event of your death and that they are honest and reliable persons. We recommend at least two Guardians preferably younger than you. We do not recommend grandparents unless they are under 50, because of the risk they might die either before you or shortly after you.
For further information please ring Jeremy Edwards on 01326 318900 or contact Jeremy Edwards at firstname.lastname@example.org
Disclaimer – This only provides a generic outline of the law as at 22.02.12 and does not apply to every factual situation. Therefore it might not apply to your situation. You must obtain specialist legal advice on the facts of your individual case before you take any action and as a result Preston Goldburn Solicitors cannot be liable for any losses you suffer as a result of failing to obtain your own specialist legal advice.