Choosing who to leave cash to is often one of the trickiest decisions you make when organising your estate and writing your Will.
Leaving money in your estate is straightforward for adults, but for younger family members like children and grandchildren who are under the age of 18, you will need to put certain parameters in place.
This is to ensure your children and grandchildren receive their inheritance when legally allowed to do so.
How can I leave cash in my Will to family members under 18?
If you want to leave cash sums to the younger members of your family, you will need to set up a trust.
The trust allows you to protect their inheritance and appoint a trustee to look after it until the beneficiary is legally old enough.
The trustee you appoint may be another member of your family, but they will be responsible for distributing the contents of the trust to your beneficiaries.
What type of trusts can I set up?
When deciding to place cash sums in a trust, it is very important that you understand the different trusts available and the implications that come with them, like additional tax charges.
For any beneficiaries under the age of 18, you can choose to set up a bare trust or a discretionary trust.
Both have the same principles in which you can place the cash in that trust and appoint a trustee to look after it.
However, the difference between them is the element of control of the trustees. If you set up a discretionary trust, your trustee has more control and can make certain decisions as to when any release of cash would benefit your loved ones, adding a layer of protection.
To clarify their responsibilities as the trustee, you can write a letter of guidance that outlines the decisions they can and cannot make. This provides clarity to your trustee but also ensures your wishes for the trust and beneficiaries are met.
Alternatively, a bare trust will hold the cash sum and once your children turn 18, they can access the trust at any time and the trustee must then distribute the cash to your beneficiaries.
Trusts need serious consideration and you will need to factor in additional costs for setting up the trust and the risk of an Inheritance Tax bill.
However, trusts are great for protecting your assets and give you the option to put measures in place to ensure your beneficiaries receive their full inheritance.
Trust us to help you make the right choices
The Palmers Solicitors team is here for you. We can discuss your estate plans with you, offer tailored advice, support and give you the tools to make the right choices for your estate and your beneficiaries.
Our teams across our Essex offices will support you every step of the way because we know the strain of estate planning can take its toll, especially when money is involved, but having the right information and support can make that process much easier. For all estate planning and Will queries, speak with our team.
