What to do with money left to children in a will?
Discussion
A friend of mine is executor on his sister's will. She has died leaving a small estate of about £20,000 in total, probate was not required and the money is now in his bank account. The will states that £1,500 is to be left to each of her 8 great grandchildren, they are all under 18 (ages 5 to 15) and the balance is left to charity. She did not want the great grandchildren's parents to have ANY control over the money as they are, apparently, a mixture of drug addicts and alcoholics (poor kids).
My understanding is that the will may, by default, form a trust as the children are under 18 and that, therefore, the executor would be deemed as the trustee and will need to hold the funds for each of the beneficiaries until they are 18, but could be used for their benefit before they reach 18. As that right?
He is looking at buying premium bonds for each of the beneficiaries and passing them to each of them as they reach 18, alternatively he could put the £12,000 total into an investment with each child getting their share when they reach 18.
Finally does he have to tell the children about this, or their parents? He really doesn't want to have to tell the parents for the reasons given above and telling a 5 year old would obviously be a problem.
Any guidance would be appreciated. I have obviously told him that he should seek legal advice but that would quickly eat into the estate, which is small enough as it is.
My understanding is that the will may, by default, form a trust as the children are under 18 and that, therefore, the executor would be deemed as the trustee and will need to hold the funds for each of the beneficiaries until they are 18, but could be used for their benefit before they reach 18. As that right?
He is looking at buying premium bonds for each of the beneficiaries and passing them to each of them as they reach 18, alternatively he could put the £12,000 total into an investment with each child getting their share when they reach 18.
Finally does he have to tell the children about this, or their parents? He really doesn't want to have to tell the parents for the reasons given above and telling a 5 year old would obviously be a problem.
Any guidance would be appreciated. I have obviously told him that he should seek legal advice but that would quickly eat into the estate, which is small enough as it is.
Enut said:
A friend of mine is executor on his sister's will. She has died leaving a small estate of about £20,000 in total, probate was not required and the money is now in his bank account. The will states that £1,500 is to be left to each of her 8 great grandchildren, they are all under 18 (ages 5 to 15) and the balance is left to charity. She did not want the great grandchildren's parents to have ANY control over the money as they are, apparently, a mixture of drug addicts and alcoholics (poor kids).
My understanding is that the will may, by default, form a trust as the children are under 18 and that, therefore, the executor would be deemed as the trustee and will need to hold the funds for each of the beneficiaries until they are 18, but could be used for their benefit before they reach 18. As that right?
He is looking at buying premium bonds for each of the beneficiaries and passing them to each of them as they reach 18, alternatively he could put the £12,000 total into an investment with each child getting their share when they reach 18.
Finally does he have to tell the children about this, or their parents? He really doesn't want to have to tell the parents for the reasons given above and telling a 5 year old would obviously be a problem.
Any guidance would be appreciated. I have obviously told him that he should seek legal advice but that would quickly eat into the estate, which is small enough as it is.
CAB?My understanding is that the will may, by default, form a trust as the children are under 18 and that, therefore, the executor would be deemed as the trustee and will need to hold the funds for each of the beneficiaries until they are 18, but could be used for their benefit before they reach 18. As that right?
He is looking at buying premium bonds for each of the beneficiaries and passing them to each of them as they reach 18, alternatively he could put the £12,000 total into an investment with each child getting their share when they reach 18.
Finally does he have to tell the children about this, or their parents? He really doesn't want to have to tell the parents for the reasons given above and telling a 5 year old would obviously be a problem.
Any guidance would be appreciated. I have obviously told him that he should seek legal advice but that would quickly eat into the estate, which is small enough as it is.
This should be a useful overview for your friend: https://m.thegazette.co.uk/all-notices/content/103...
From what you've written, I'm guessing that your friend's sister didn't name the trustees in her will?
From what you've written, I'm guessing that your friend's sister didn't name the trustees in her will?
I am one of two executors currently nearing the end of administering an Estate. In the Will the deceased left a small legacy to each of his two young great grandchildren. We had to investigate what can be done.
The first point to note is that the legacy cannot be paid direct to a minor. So, it has to be directed into a trust fund or something else. We found it difficult to find any firm willing to set up two trust funds. So, having discussed options with the parents of the great grandchildren, we decided to pay the legacy in to a junior ISA for each of them, such JISA to be established by their parents. Contributions into a JISA can come from any source and the maximum is £9000 in any tax year. The parents of the great grandchildren became in effect trustees of the two JISAs and have the ability to control the asset type ie cash, stocks and shares etc. The JISAs are set up with Lloyds Bank.
Problem solved!
R.
The first point to note is that the legacy cannot be paid direct to a minor. So, it has to be directed into a trust fund or something else. We found it difficult to find any firm willing to set up two trust funds. So, having discussed options with the parents of the great grandchildren, we decided to pay the legacy in to a junior ISA for each of them, such JISA to be established by their parents. Contributions into a JISA can come from any source and the maximum is £9000 in any tax year. The parents of the great grandchildren became in effect trustees of the two JISAs and have the ability to control the asset type ie cash, stocks and shares etc. The JISAs are set up with Lloyds Bank.
Problem solved!
R.
Thanks for the replies and the gazette link, very interestng.
No trustees were named in the will, so maybe this makes the executor trustee by default (of a statutory trust)? I stress IANAL.
Junior ISAs not really suitable as I think they have to be set up by a parent (or guardian) for their child, the parents of these children are not financially trustworthy, my friend doubts if the money would end up with the children.
,
No trustees were named in the will, so maybe this makes the executor trustee by default (of a statutory trust)? I stress IANAL.
Junior ISAs not really suitable as I think they have to be set up by a parent (or guardian) for their child, the parents of these children are not financially trustworthy, my friend doubts if the money would end up with the children.
,
Enut said:
I have obviously told him that he should seek legal advice but that would quickly eat into the estate, which is small enough as it is.
A pragmatic approach is required. Yes, he should establish individual trusts for each child, but that would involve ongoing admin and costs to set up properly. There's not much point in doing so if each trust ends up with £2.50 after fees.Enut said:
He is looking at buying premium bonds for each of the beneficiaries and passing them to each of them as they reach 18, alternatively he could put the £12,000 total into an investment with each child getting their share when they reach 18.
He needs to ensure that whatever he does, the result is in the names of the children. Also, being very blunt, is your friend likely to still be alive or have sufficient capacity when the youngest turns 18?Premium Bonds could be a solution, but one issue with them is that a child manages their own PBs once they turn 16.
As others have already said, Junior ISAs would be ideal. Yes, setting them up involves the parents, but could your friend sort out the application forms and just get the parents to sign / provide proof of ID? Remember, anybody can fund a Junior ISA, so the cash wouldn't pass via the parents. Also, Junior ISAs can't be accessed until the child turns 18, so there shouldn't be any danger of the parents emptying the accounts to finance their lifestyles.
Enut said:
He is looking at buying premium bonds for each of the beneficiaries and passing them to each of them as they reach 18, .
So although they all inherited the same amount, at 18 they will all inherit different amounts. One of the kids who maybe inherits £2K is going to be consulting lawyers when their sibling inherits £50K, despite being left identical amounts. Gassing Station | Finance | Top of Page | What's New | My Stuff