Legacies to infants, payable at 18

[fillip15]

Together with my wife, I am executor of my mother-in-law's estate. The latter's will includes legacies of £2,000 to each of four great-grandchildren, only to be received at age 18. They are aged from seven down to 18 months. We need a way to do this that won't rely on the executors' survival for sixteen years. Also, two of these young beneficiaries are non-UK residents.
I believe that for the UK residents the money could go into junior ISAs. Is that correct, and if so what investments would it be proper to put the money in?
For the non-UK residents, would it be OK to set up a trust for each, with a UK-based aunt and uncle as trustees, to look after the funds and then realise them and transfer the proceeds to France at age 18? In this case, what would be the scope of permitted investments?
I would be most grateful for any thoughts.

fillip15

[gryffron]

Hi Fillip,

AIUI the will has ALREADY created the trusts. Which will need to be registered with the HMRC Trust Registration Service website. Trivial and Free. But you need to register each trust separately as a separate account.

You can appoint anyone as trustees. Doesn’t have to be the executors. Could be parents for example. Not sure if this works for non residents though(??), so maybe uk resident aunt and uncle would be easier. The trustees can change during the lifetime of the trust.

Trustees are expected to act in the beneficiaries’ best interests. I can see no reason why the (uk residents) money couldn’t be put in an JISA, as that would obviously be in the child’s interest. What investments are appropriate? Well, anything you like, but once they reach majority they can sue the trustees if they think they have acted improperly. I would go for something fairly conservative. Either cash or global tracker. The latter given their ages.

However, the foreign residents may present some tax problems. I have no idea how a UK trust would be taxed for a foreign resident minor (one for the taxes board maybe?). I don’t think granny will have appreciated just how much difficulty this might cause

Gryff

[Clitheroekid]

You should check the wording of the Will carefully. When I prepare Wills for people leaving small sums of money like this to children I always include a provision that the executors can, at their discretion, just pay the money to the parent of the child, and that a receipt from the parent will be a valid discharge of the liability.

That avoids all the faff of having to set up trusts / ISA's etc when the time and cost of doing so is way out of proportion to the value of the legacy.

[fillip15]

Thank you ever so much for these helpful replies. The wording in the will is this: 'I give free of tax the sum of TWO THOUSAND POUNDS (£2000.00) to each of my grandchildren and great grandchildren alive at the date of my death absolutely upon attaining the age of 18.'
Any thoughts as to what flexibility we (the executors) have? Many thanks again.

[Clitheroekid]

Does the Will incorporate the STEP provisions, and, if so, which edition?