Q&As

How is a 16-year old beneficiary’s interest classified where a testator leaves their estate to their child by Will on an 18–25 trust with the beneficiary having a right to receive trust income from age 18?

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Published on LexisPSL on 21/04/2017

The following Wills & Probate Q&A provides comprehensive and up to date legal information covering:

  • How is a 16-year old beneficiary’s interest classified where a testator leaves their estate to their child by Will on an 18–25 trust with the beneficiary having a right to receive trust income from age 18?
  • Case study
  • Application of IHTA 1984, s 144

How is a 16-year old beneficiary’s interest classified where a testator leaves their estate to their child by Will on an 18–25 trust with the beneficiary having a right to receive trust income from age 18?

Case study

A testator leaves their estate to their child by Will on the terms of an 18–25 trust with the beneficiary having a right to receive trust income from age 18 years (eg under section 31 of the Trustee Act 1925 (TA 1925)). The beneficiary is 16 years old at the parent’s death. It is necessary to establish whether the interest would be treated as an interest under an 18–25 trust or as an immediate post-death interest (IPDI) by virtue of section 144 of the Inheritance Tax Act 1984 (IHTA 1984) on the basis that the beneficiary would have a right to receive the trust income within two years (on attaining 18 years old).

Application of IHTA 1984, s 144

Where a testator leaves assets by Will to their minor child, then depending on the age contingency at which the beneficiary is to take an absolute vested interest, the trust may qualify as a trust for bereaved minors (TBM) or an 18–25 trust, such that the trust is subject to the special tax rules that apply to TBMs or

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