Providing for Children — What Is a Bereaved Minor's Trust?
7 minute read
Understand how to protect your child’s inheritance until they’re ready to manage it themselves.
If you have children, providing for them after your death is likely to be one of the most important reasons for making a will. For parents of children under eighteen, one of the key decisions is how to structure any inheritance so that it is properly protected and managed until a child is old enough to handle it themselves. One arrangement that arises frequently in this context and offers important tax advantages is the bereaved minor’s trust. This guide explains what it is, how it works, when it applies, and what its limitations are.
Table of Contents
What Is a Bereaved Minor's Trust?
A bereaved minor’s trust is a specific type of trust recognised under the Inheritance Tax Act 1984. It arises when a child under the age of eighteen inherits assets from a deceased parent, either through the parent’s will or through the rules of intestacy that apply when someone dies without a valid will.
The essential feature of a bereaved minor’s trust is that the child must become absolutely entitled to the inherited assets when they reach the age of eighteen. Until that point, trustees hold and manage the assets on the child’s behalf, and they have the power to apply income and capital for the child’s maintenance, education, or general benefit during that period.
The trust takes its name from the fact that it is specifically designed for children who have lost a parent. It is recognition in tax legislation that bereaved children need protection and support, and it provides a formal framework within which that support can be given without attracting the more punitive tax charges that apply to other types of trust.
Making proper provision for your children is one of the most important things your will can achieve
When Does a Bereaved Minor's Trust Arise?
A bereaved minor’s trust can arise in two distinct situations, and it is important to understand both of them.
Under a Will
If a parent makes a will that leaves assets to a child outright but specifies that the child should receive those assets at the age of eighteen, with trustees holding them in the meantime, the arrangement will typically qualify as a bereaved minor’s trust for tax purposes. The key requirement is that the child must become absolutely entitled at eighteen, with no conditions or deferrals beyond that age.
This is a common and entirely sensible provision for parents to include in their wills. Rather than leaving money or property directly to a young child who lacks legal capacity to hold assets in their own name, the will directs that the assets be held in trust until the child reaches adulthood.
Under the Rules of Intestacy
A bereaved minor’s trust can also arise automatically when a parent dies without a valid will, and the rules of intestacy apply. Under those rules, a minor child’s share of the parent’s estate will be held on trust until the child reaches eighteen, and that trust will qualify as a bereaved minor’s trust.
This is one of the reasons why dying without a will when you have young children is far from ideal. Whilst the intestacy rules do create a trust to protect the child’s share, they do so in a rigid and impersonal way, with no opportunity for you to express your wishes, choose your trustees, or tailor the arrangements to your family’s specific circumstances. A well-drafted will gives you far greater control.
The Tax Advantages of a Bereaved Minor's Trust
One of the most important reasons to understand the bereaved minor’s trust is the favourable inheritance tax treatment it receives compared to other types of trust. This is an area where the distinction between trust types can make a very significant practical difference.
No Ten-Year Periodic Charges
Many trusts that arise on death are subject to what is known as a periodic charge under the Inheritance Tax Act 1984. This is a charge of up to 6% of the trust fund’s value, levied once every 10 years. Over the course of a long-running trust, these charges can erode the value of the fund considerably.
A bereaved minor’s trust is exempt from these periodic charges. No ten-year charge arises during the period the trust is in existence.
No Exit Charges Before Age Eighteen
When assets are distributed out of certain types of trust before the trust comes to an end, an exit charge may arise. Again, this can reduce the amount that actually reaches the intended beneficiary.
A bereaved minor’s trust is exempt from exit charges in the period before the beneficiary reaches eighteen. When the trustees apply funds for the child’s maintenance, education, or benefit during that time, no exit charge is triggered.
How This Compares to a Standard Discretionary Trust
Standard discretionary trusts, which are widely used in estate planning for a range of purposes, are not eligible for these exemptions. They are subject to both periodic charges every ten years and exit charges when capital is distributed. Whilst discretionary trusts have significant advantages in terms of flexibility and long-term protection, the tax treatment is more costly in the absence of the specific reliefs that apply to bereaved minor’s trusts.
For parents who simply want to ensure that a child’s inheritance is held safely and managed prudently until the age of eighteen, the bereaved minor’s trust offers a simpler and more tax-efficient solution.
What Can Trustees Do Before the Child Turns Eighteen?
Whilst the overarching purpose of a bereaved minor’s trust is to hold the assets safely until the child reaches eighteen, the trustees are not simply passive custodians during that period.
The trustees have the power to apply trust income and capital for the child’s maintenance, education, and general benefit during the trust period. In practice this means they can use the trust fund to pay for school fees, clothing, housing costs, medical expenses, or any other legitimate need that arises in the child’s upbringing. They do not have to wait until the child turns eighteen before making use of the funds.
This is an important practical feature. In the difficult years following the loss of a parent, the trust fund can be used to support the child’s day-to-day welfare and development, not merely preserved in the abstract for a future date.
The trustees have a legal duty to act in the child’s best interests throughout this period, and they should keep proper records of all decisions and transactions. Where trustees are uncertain about how to proceed, taking professional advice is always the sensible course.
The Limitations of a Bereaved Minor's Trust
Whilst the bereaved minor’s trust has clear advantages, it is important to be equally clear about its limitations. Understanding where the trust falls short is essential for deciding whether it is the right arrangement for your family’s circumstances.
The Child Must Take Full Ownership at Eighteen
The most significant limitation of the bereaved minor’s trust is that the beneficiary must become absolutely entitled to the trust assets when they reach the age of eighteen. The trust cannot lawfully defer the child’s entitlement beyond that age and still retain its special tax status.
For many parents, eighteen feels far too young for a child to receive a potentially substantial inheritance outright. At eighteen, a young adult may be in their first year of university, with limited financial experience and no particular framework for managing a significant sum of money. The risk of imprudent decisions, or simply of the funds being spent in ways the parent would not have wished, is a real one.
If you want to defer the age at which a child takes full ownership beyond eighteen, you can do so, but the trust will lose its status as a bereaved minor’s trust and the associated tax advantages. It will instead be treated as an 18 to 25 trust or a standard discretionary trust, depending on its structure, each with its own tax implications.
Less Suitable for Long-Term Protection
A bereaved minor’s trust is designed to address a specific, time-limited need: managing a child’s assets until they reach adulthood. It is not designed to provide the kind of ongoing, flexible protection that a discretionary trust can offer.
If a child has particular vulnerabilities, for example, a physical or mental disability, financial difficulties, or other circumstances that might affect their ability to manage assets independently in adult life, a bereaved minor’s trust is unlikely to be sufficient on its own. In those situations, a discretionary trust is likely to be more appropriate, notwithstanding the different tax treatment.
If a child you are providing for has particular long-term needs, our Guide to providing for disabled beneficiaries explains the options available.
Not sure which type of trust is right for your children? Our specialist will-drafting team can help you think it through. Get in Touch Today — it’s free to enquire.
Bereaved Minor's Trust vs Discretionary Trust: A Quick Comparison
The table below summarises the key differences between a bereaved minor’s trust and a standard discretionary trust, to help you understand which might be more suitable for your circumstances.
| Bereaved Minor’s Trust | Standard Discretionary Trust |
|---|---|
| For the benefit of your children under the age of 18 | For the benefit of anybody you wish to include |
| A Beneficiary receives proceeds upon reaching the age of 18 | A Beneficiary receives proceeds at the trustees’ discretion |
| No 10-year anniversary charge | 6% anniversary tax charged every 10 years |
| No exit charges before the Beneficiary reaches 18 | Exit charges may apply |
| Not suitable for long-term protection beyond the age of 18 | Is suitable for long-term protection |
| Has limited protection for more vulnerable beneficiaries | Protection for more vulnerable beneficiaries |
| Trustees have limited discretionary powers | Trustees have wide discretionary powers |
This comparison makes clear that the two types of trust serve different purposes. A bereaved minor’s trust is a simpler, more tax-efficient arrangement for straightforward situations where the primary need is to manage assets safely until a child reaches adulthood. A discretionary trust offers greater flexibility and ongoing protection, but it comes with more complex tax implications.
In some cases, particularly where a family includes children of different ages or with different needs, it may be appropriate to consider a combination of arrangements within a single will.
Choosing the Right Trustees
Whether you are relying on a bereaved minor’s trust or a discretionary trust, the choice of trustees is one of the most consequential decisions you will make in your will.
For a bereaved minor’s trust, the trustees need to be people who are trustworthy, financially responsible, and genuinely committed to acting in the child’s best interests up and until the child turns 18. They should be comfortable making decisions about the child’s welfare and capable of managing the trust fund prudently.
In many cases, the surviving parent will act as a trustee. This is entirely appropriate in most circumstances, but it is worth also appointing an independent trustee alongside the surviving parent, particularly where the fund is substantial. An independent trustee, such as a solicitor or specialist trustee, provides an additional layer of accountability and continuity, and can be valuable if circumstances change.
It is also important to name substitute trustees in your will, to ensure that the trust can continue to function effectively if a trustee dies or becomes unable to act during the trust period.
Why a Well-Drafted Will Matters So Much
As this guide has shown, the bereaved minor’s trust is a specific and technical arrangement with precise legal requirements. Whether it arises automatically under intestacy or is created deliberately through a will, the terms under which it operates, and the degree of protection and flexibility it provides, will depend significantly on the quality of the drafting.
A will that simply states “to my children at age eighteen” may achieve the broad intention of creating a trust for minor children, but it may not include the detailed provisions that make the trust work well in practice: clear powers for trustees, guidance on how income and capital are to be applied, provisions for the appointment of replacement trustees, or the complementary letter of wishes that allows you to communicate your intentions in a personal and detailed way.
These details matter. A well-drafted will that creates a properly structured bereaved minor’s trust, supported by a thoughtful letter of wishes, gives the trustees everything they need to manage the fund effectively and in keeping with your wishes.
A poorly drafted will, or no will at all, leaves the arrangements to chance and to the blunt instrument of the intestacy rules, which cannot be expected to reflect the particular needs and circumstances of your family.
How We Can Help
At Wise Owl Wills, we have extensive experience in drafting wills that make careful and effective provision for children of all ages. Whether the right solution for your family is a bereaved minor’s trust, a discretionary trust, or a combination of arrangements, we will take the time to understand your circumstances and advise you on the approach that best reflects your wishes.
We draft every provision with the precision and care your family deserves, and we can also help you prepare a letter of wishes that clearly communicates your intentions to your trustees.
Making a will that properly provides for your children is one of the most important things you can do for them. We would be very glad to help you do it well.
Please contact us today to arrange a convenient time to speak with one of our team. There is no obligation, and all enquiries are handled with complete confidentiality.
Frequently Asked Questions
What is a bereaved minor's trust?
A bereaved minor’s trust is a type of trust recognised under the Inheritance Tax Act 1984. It arises when a child under eighteen inherits assets from a deceased parent, either through a will or under the rules of intestacy. The child must become absolutely entitled to the assets at age eighteen. Until then, trustees hold and manage the assets and can apply them for the child’s maintenance, education, and benefit.
What are the tax advantages of a bereaved minor's trust?
The main tax advantages are that the trust is not subject to the ten-year periodic inheritance tax charge of up to 6% that applies to standard discretionary trusts, and no exit charges arise when assets are applied for the child before the age of eighteen. This makes the bereaved minor’s trust considerably more tax-efficient than a standard discretionary trust for straightforward provision for minor children
Does a bereaved minor's trust arise automatically if I die without a will?
Yes. If a parent dies intestate and a minor child is entitled to a share of the estate under the intestacy rules, that share will be held on a bereaved minor’s trust until the child reaches eighteen. However, the terms of an intestacy trust are fixed by law and cannot be tailored to your family’s circumstances. Making a will gives you far greater control over the arrangements.
Can the age at which a child receives their inheritance be extended beyond eighteen in a bereaved minor's trust?
No. The bereaved minor’s trust specifically requires that the child becomes absolutely entitled at age eighteen. If you want to defer the age of entitlement beyond eighteen, the trust will lose its bereaved minor’s trust status and the associated tax advantages. It may instead be treated as an eighteen to twenty-five trust or a standard discretionary trust, each of which has different tax implications.
What can trustees do with the money in a bereaved minor's trust?
During the trust period, trustees can apply trust income and capital for the child’s maintenance, education, and general benefit. This means they can use the fund to pay for school fees, living expenses, medical costs, clothing, and other legitimate needs. They are not simply holding the assets passively until the child turns eighteen.
Is a bereaved minor's trust better than a discretionary trust for children?
It depends on the circumstances. A bereaved minor’s trust is more tax-efficient for straightforward situations where the primary need is to manage assets until a child reaches eighteen. However, it must come to an end at eighteen, and it offers no flexibility or protection beyond that age. A discretionary trust is more flexible and better suited to situations where longer-term protection is needed, for example, where a child has particular vulnerabilities or where you want trustees to retain control beyond the age of eighteen.
Who should I appoint as trustee of a bereaved minor's trust?
You should appoint trustees who are trustworthy, financially responsible, and genuinely committed to acting in the child’s best interests. The surviving parent is often appointed as a trustee, but it is sensible to also appoint an independent trustee for accountability and continuity. A professional trustee, such as a solicitor, can be a valuable addition, particularly where the fund is substantial.
Do I need a letter of wishes alongside a bereaved minor's trust?
A letter of wishes is not legally required, but it is strongly recommended. It gives your trustees personal guidance on how you would like the trust fund to be managed, the values and priorities you want them to reflect, and specific information about your child’s needs and circumstances. Whilst it is not binding, a well-written letter of wishes is enormously helpful to trustees who will be making decisions on your behalf over a period of years.
Disclaimer
This article is intended as general information only and does not constitute legal advice. The information refers to the law of England and Wales. Tax thresholds and legal rules are correct at the time of writing but are subject to change. We recommend that you seek professional advice regarding your own circumstances.
Bio
This article was written by Stephen Rhodes. Stephen was called to the Bar of England and Wales in 1999 and brings over 25 years of in-house experience working with solicitor firms across the Manchester area, with a specialism in Wills and Probate. He now focuses exclusively on will drafting, helping his clients ensure their loved ones are taken care of exactly as they would wish.