Leaving Gifts to Children In Your Will
When you are writing your will, there are a number of things that you may want to consider if you are leaving money in a will for your relatives. We understand that everyone wants to put the right provisions in place for when they’re gone, and make sure that, whether you are leaving money to grandchildren in a will or leaving money to children, everyone is accounted for.
Gifting Money – What are the Options?
There are three options that you have when you are planning on leaving money to children or grandchildren in a will. These are:
An outright gift is the least restricted way of leaving gifts to your loved ones. One disadvantage of this method is that it offers very little protection from money and assets being squandered if it is received at the earliest age of 18. Prior to the individual meeting this age, they will not be able access the gifts. The gifts will be held by the executors of your will as trustees until this time. You can avoid a hefty inheritance tax in this way, but it is often thought that it is a lot of responsibility to leave younger individuals.
Age Contingent Gifts
This option can allow you to set a higher age limit for when the child or grandchild will be able to access the gift. This is usually 21 or 25, depending on your preference. If you die before your children or grandchildren reach the age that they will be entitled to the gift, then the trustees of your will will then hold it until they have reached the required age.
The trustees are allowed to distribute the money to the children or grandchildren before they actually reach the required age, but they will certainly inherit any remaining balance of their share when they reach that age.
Gifting in this way is advantageous because it is less likely that a child or grandchild would squander their inheritance if they are a little bit older, and would instead put them into saving accounts. On the flip side, there is a disadvantage in that there is no chance to keep the money in the trust past the required age to provide financial protection.
A discretionary trust will give your trustees the absolute discretion and flexibility to apply trust money to a class of beneficiaries. The trustees of your will have complete control over the capital and income of the trust. They can distribute it to the children and grandchildren when they think that it is an appropriate time, rather than when they reach the age required.
A discretionary trust allows a great deal of flexibility and may allow you to leave assets or part of your estate in a tax-free way. Estate planning solicitors will be able to provide advice for this. With this option, it is also a good idea to prepare a letter of wishes to guide the trustees on how you would like your trust to be handled.
Inheritance and estate planning can seem complex when you are first beginning to put everything in order. If you need expert guidance and assistance, then our specialists can help you if you are leaving money in a will.
Get in touch today and we can help.
All advice is correct at time of publication.