Looking after your children in your Will

26 Jul 2011

No-one likes to think about the possibility of premature death but unfortunately accidents happen and parents die while their children are still dependant. It is vital that thought is given to provision for the children in such tragic circumstances.

Turning first to the appointment of guardians. As the appointees will effectively be ‘taking the place’ of the deceased parents, it is vital that consideration is given as to who would be most suitable to perform this role. Clearly it will be necessary to discuss the matter with those selected in order to ensure that they are happy to commit to such an arrangement. It would not be helpful if, on the parents’ death, those chosen to be guardians took on the role with reservations or perhaps declined to take on the role at all.

Many people select their own parents (the children’s grandparents) to be guardians, a natural choice but consideration should be given as to the age and health of the grandparents bearing in mind that they will possibly have to commit to many years of bringing up young, boisterous children and then go through the stresses of teenagers at a time when they themselves should be taking it easy. Siblings are often a convenient choice and sometimes close friends of the parents will accept the role.

The second matter to consider is that of financial provision for the children. Under statute minors (those under the age of 18) cannot give good receipt and therefore will not be allowed to receive either capital or income. Capital will therefore be held in trust by trustees for the benefit, ultimately, of the children. The Trustees are the people who will have control of these funds. Trustees, who are usually (but do not have to be) the same people as the executors of the Will, should therefore be chosen wisely. They should be someone trusted by the testator to invest the fund well and make appropriate decisions concerning the release of funds for the benefit of minor children. Trustees are allowed to release capital and income from a trust fund for the maintenance and education of a minor and a correctly drafted Will will enable guardians to give the appropriate receipt.

The next point to consider is at what age the capital should be released to the children. Under statute minors can inherit capital at the age of 18 and will be absolutely entitled to receive the income from any invested funds at that age. However, it is possible within the terms of the Will to vary the age at which a child becomes absolutely entitled to the capital of the fund. Many people believe that a child has not sufficiently matured by the age of 18 to deal appropriately with large capital sums and therefore they restrict the age of inheritance to 21 or even 25 by which time it is hoped that the child will be sufficiently sensible to spend wisely. Should the child need capital for, say, university fees or to purchase a property and the trustees consider this to be an appropriate use of the fund, the trustees can release capital at their discretion. In addition some parents consider that it would not be ‘good’ for the child to be exposed to large spending power at such a young age and would prefer them to try and make their own way in the world before inheriting what could be a considerable capital sum.

Having looked at the provisions that can be made in a Will, what happens if there is no Will? If there are minor children and no guardians are appointed it will be necessary for those left behind to apply to the Court to be appointed as guardians to the children. Social Services will inevitably become involved and additional stress and uncertainty will be experienced at a time which circumstances dictate, is already stressful enough.

With no Will in place the parents’ assets will be distributed in accordance with Intestacy Law as will the appointment of executors. Those entitled to be executors under Statute will not necessarily be the most suitable people to deal with the complexities of dealing with the administration of the estate and the trust for the minor children that will arise. In addition the powers of the trustees will be restricted also by Statute. The trustees will not be able to release unlimited capital at their discretion but will rather be governed by the rules. In addition there will be no choice as to the timing of the release of capital resulting in the children becoming absolutely entitled to the whole fund at the age of 18 whether they are financially mature or not.

As previously stated, no-one likes to consider the possibility of not being able to bring up one’s own children but the very least we can do as parents is to make appropriate arrangements for those children in the event that we cannot be there with them.