When you start estate planning, you have to research several things. For instance, you should think about your beneficiaries. If you assign a minor to be one of your beneficiaries, you have to be familiar with certain specifications.

For estate planning in the UK, here are some essential things you should note.

Can You Name Someone under 18 as Your Trustee?

According to UK laws, you can include a minor as a beneficiary. However, if you appoint a minor to be a trustee, you should note that they cannot act independently.

They may need a legal representative or guardian to help them with the inheritance. If you appoint a minor to be your trustee, you should make that trustee a trustee of a trust that will be set up for them.

Remember that this trustee will not be receiving any compensation for their services. However, they may receive reasonable compensation for managing the estate or trust.

How Does Setting up a Trust for Minor Work?

Setting up a trust for a minor can be tricky, but it does work. To establish a trust for a minor in the UK, you should know a few things.

The first thing is that you should talk to a solicitor about creating the trust. Keep in mind that in creating a trust for a minor, you do not establish a trust for them.

Instead, you can establish trust for a person who is currently alive. You should include the trust to be valid after the death of the person whose name is mentioned.

There are two ways to handle this: outright gifts or age contingent gifts.

1. Outright Gifts

In this kind of gift, you give away all or a substantial part of your income or assets to your minor beneficiary.

As the minor will be receiving a large amount of money, it is highly suggested that you consult a tax lawyer. You should note that you will be losing a significant amount of money due to taxes in creating this kind of trust.

2. Age Contingent Gifts

You will be giving away either an income or a fixed sum to the minor in this kind of gift. This sum will be released once the minor reaches a certain age.

Age contingent gifts can be far easier to deal with for the beneficiaries. However, take note that the beneficiary of this kind of trust will not have any rights to the trust until their 18th birthday.

Once the beneficiary turns 18, you will have complete control of the management of the trust. You should note that you will not be losing any money because of taxes in creating this kind of trust.

To learn more about the specifics of setting up a trust for a minor, you can consult a solicitor.

How Does a Discretionary Trust Work for Minors?

To better help you understand how a discretionary trust works, you should note that it is different from a trust. You should know that a discretionary trust is when you name a third party to handle the funds, but you don’t specify the amount or how you will use the trust.

Here are some things you should know about setting up a discretionary trust for a minor:

• A solicitor will set up this trust.
• You should note that this kind of trust is normally used to hold assets such as shares or property.
• In this kind of trust, a named professional will always control the trust. Their main goal is to manage the trust and make decisions for the beneficiary’s best interest.
• There are three main types of professionals in the UK who are allowed to manage discretionary trusts. They include bankers, solicitors and accountants.

Final Thoughts

Creating a will is your way of ensuring that your loved ones and other beneficiaries will receive your wealth after your death. For minors, there are a few things you should know about estate planning in the UK. The best way to understand them is through working with legal experts.

Learn more about wills with minor beneficiaries by working with us at Wills and Probate. Our experts will guide you throughout the process of creating a trust in the UK to ensure you do things right. Let us help you secure a better future; give us a call today.