Best way to leave money to a child UK

Best way to leave money to a child UK

Best way to leave money to a child UK

It is impossible for a minor to received gifts by a will in English law. As such, the best way to leave money to a child (UK), speaks to the manner in which gifts are held by trustees for the child.


  • Bereaved minor’s trusts are available to children who lose (step) parents.
  • Discretionary trusts may be used to guard against profligacy or divorce longer term.
  • A letter of wishes may be used to guide trustee behaviour.


If a party who is a minor (at the time of death of the testator) is named as the recipient of a gift in a will (and unless otherwise stated) the gift will pass to the will’s trustees to hold on trust for the beneficiary until they reach the age of majority (18). For the avoidance of doubt, it is the executors and not the guardians (appointed by the will), that typically take on the role of trustee.


If a beneficiary is the (step) child of the deceased, the trust which arises may be a ‘bereaved minor’s trust’. From a taxation perspective, Bereaved Minors Trusts are not subject to anniversary and exit charges. Since 2006, ‘bereaved young person’s’ trusts have allowed assets held on trust for those aged 18-25 to receive similarly preferential tax treatment.


In such situations trustees have broad powers to apply capital and income to the benefit of the children named as beneficiaries, under s31 and 32 of the Trustee Act 1925 (TA 1925). Trustees, however, owe a duty of care to the trust and may face difficult decisions around what they can and cannot spend such funds on. One might consider using a professional trustee or simply documenting your wishes around trustee behaviour. You may, for example, wish trustees to co-purchase a larger property in the name of the trust, with the children’s’ guardians, with a view to providing accommodation for them.



Best way to leave money to a child UK

If you wish to exert control over the dispersal of gifts to children over the longer term, a discretionary trust may be considered. This type of trust gives trustees a significant amount of control over how funds are managed and who will ultimately benefit (though you may name beneficiaries).

In order to guide (though critically, not to legally bind), the actions of discretionary trust trustees, a substantial letter of wishes should be made, indicating how the party making the trust wishes the trustees to apply funds.


Discretionary trusts are popular. Amongst the more common applications are those by which testators seek to ‘protect beneficiaries from themselves’. Concerns might centre around a beneficiary’s use of drugs, alcohol or being a spendthrift. The impact of bankruptcy or divorce may also be mitigated. Wealthier clients may simply feel a gift ‘too much’ for a younger beneficiary to handle. Discretionary trusts also allow for ‘generation skipping’ where grandchildren maybe named as beneficiaries.

If you wish to discuss any of the matters raised in this article, contact us now via www.confidencewill for a no-obligation conversation.

Do I need a trust to avoid probate?

Do I need a trust to avoid probate?

To make sense of the question ‘do I need a trust to avoid probate?’ it’s important to understand firstly, why the enquirer wishes to avoid probate at all and secondly, what they might direct into any future, trust.

  • Probate is the authority by which one administers the affairs of the deceased.
  • Care must be taken in using trusts as rules are complex.
  • Avoidance of probate is arguably a poor reason to consider trusts.


When a person dies in England or Wales, someone must take responsibility for distributing or disposing of their ‘worldly goods’ (their ‘estate’). Where a valid will has been identified for the departed, ‘executors’ may have been appointed, by the deceased, to fulfil this role.


‘Probate’ itself describes the legal authority, given by the court, to e.g. an executor, to administer a deceased person’s estate. It is nothing more than this: a role or function. The duration and complexity of the executor’s job, arguably has much more to do with the structure of the dead person’s estate, than it does with administrative aspects of probate itself.


Do I need a trust to avoid probate?

Probate is not required in all cases, irrespective of any trusts which may or may not exist. Where an estate is smaller than £5,000 in value, for instance, it may not be needed. Beneath this threshold, institutions may release monies on seeing only a death certificate.

For estate valuation, it’s important to remember that the deceased’s ‘estate’ is made up of things which they own solely and directly (plus debts). Jointly held assets e.g. bank accounts may pass to co-owners outside of any will. Pensions and insurances may or may not form part of the deceased’s estate, depending on how they are organised.


The above hints at a situation in which a trust may, usefully, help one to avoid probate. Pensions, life insurances and other contingent forms of remuneration (such as Death in Service payments), do not form part of a person’s estate in life. It is only on death that they may crystallise in their estate, so demanding administration through probate. Such payments may be configured so as to pay out directly into an ‘asset protection trust’, outside of the deceased’s estate, whose beneficiaries might be loved ones of the deceased. If the person’s other assets are low in value, probate might thus be avoided.


A trust might further, be used to avoid probate, simply by providing a destination for lifetime gifts (which may so be removed from the estate). It’s worth reflecting on whether such gifts, might, more usefully, be made to the intended beneficiary, in life.


One should be extremely careful around using trusts for several reasons. Non-exhaustively:

  1. The notion of “reservation of benefit”, may result in a gift’s being treated as never having taken place (in law). By way of example, if a property title is transferred into the name of a trust, but the transferor continues to live in the property. In this instance, benefits have been arguably, ‘reserved’ by the transferor.


  1. Any gift (with certain exceptions) that takes place within 7 years of a party’s passing away will fall under scrutiny as part of inheritance tax assessment.


  1. Trusts cost money to establish and operate.


  1. You may trigger Inheritance tax liabilities, payable in life, if assets being transferred to any trust exceed thresholds.


It is highly likely that your anxieties around probate reflect those associated with the unpicking of a complex estate. A general ordering of affairs might save more upset than the introduction of a potentially risky trust structure.

If you’d like discuss the use of asset protections trusts or any aspect of probate, visit our website at