Parents with young children would want to protect their children who are still financially dependent the best possible way, in the event of their untimely death. In this instance, a discretionary trust offers the possibility for the parents' estate to be used for the benefit of the children along the same lines as the parents might have used their resources if they had been alive. The children’s needs and requirements would depend on their age, abilities, etc. and therefore unlikely to be identical and so would be the needs for income and capital. At the time of death one child may be at school or college while another child may be in employment. A discretionary trust offers the flexibility to use the assets to meet the children’s specific needs as they emerge in the future. Although discretionary trusts are subject to anniversary and exit charges, they offer the greatest flexibility possible to allocate assets and income according to the beneficiaries’ changing needs.
Alternatively, parents may set up a bereaved young person’s trust for their children to receive their inheritance (capital and income) no later than on attaining the age of 25. Most parents would prefer deferring their children’s entitlement to capital beyond the age of age 18 which is the statutory age children will otherwise receive their inheritance if a parent die intestate (without a Will).
Other options parents have include setting up a trust with the right of income for the minor beneficiaries until such age they can receive their capital.
It is therefore important for parents with young children making a Will to make adequate protection for their minor children tailored to their family circumstances and any special requirements.