Q&As

What are the conditions for a testamentary gift from a parent to child constituting an 18–25 Trust?

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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:

  • What are the conditions for a testamentary gift from a parent to child constituting an 18–25 Trust?
  • 18–25 Trusts—Conditions
  • Qualifying conditions for an 18–25 Trust
  • Qualifying interests in possession (which preclude the 18–25 Trust rules from applying)
  • Immediate post death interest (IPDI)

What are the conditions for a testamentary gift from a parent to child constituting an 18–25 Trust?

18–25 Trusts—Conditions

Since the coming into force of Finance Act 2006 (FA 2006), all trusts created by Will on or after 22 March 2006 (subject to transitional provisions) are broadly treated as ‘relevant property trusts’ for inheritance tax (IHT) purposes unless they fall within one of the four ‘qualifying interest in possession’ (QIIP) categories (see further below).

However, there are special rules for trusts for children, which are not subject to the usual relevant property regime. These are trusts whereby the child becomes entitled to the trust assets either on attaining 18 years (which qualify as trusts for bereaved minors (TBM)), or at an age between 18 to 25 years (which qualify as 18–25 Trusts).

For background information regarding the taxation of trusts post-FA 2006, see Practice Note: Finance Act 2006 changes to trust taxation.

Qualifying conditions for an 18–25 Trust

The conditions for an 18–25 Trust mirror those for TBM, or a post-FA 2006 A&M trust, except that the age limit is increased from 18 to 25 years.

18–25 Trusts cover the situation where property is held on trust for the benefit of a person who has not yet reached the age of 25 (a young person), and at least one of the young person's parents has died. The trust must be established

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