Gary Rycroft advises on leaving gifts with minimum age of 25

Article by Ruth Jackson-Kirkby 19 November 2023

Grandma left my children a fortune – but how do I stop them blowing it all before they’re 25?

My grandmother died two months ago at the age of 93. Always organised and determined to do things properly, she had sat down with a solicitor more than a decade ago – shortly after her husband’s death – and written a will.

Her money was hard-earned, so it was important to her that she had a plan. My grandmother was born in 1930 and as a girl she watched her father work to slowly develop a chain of electrical shops. When she married, her husband built them a home and joined the family business, striving to make a comfortable life for them both.

My grandmother’s will was simple. She left a couple of small financial gifts then the rest of her estate was split equally between her 11 grandchildren and great-grandchildren.

I can understand the logic. By skipping her children, Grandma hoped her money would help her family without triggering any inheritance tax issues for her children who have, by now, built up some wealth of their own. She also hoped to help all her younger descendants get a good education, which was extremely important to her. 

In the 1950s, her grandparents offered to pay for her son, my uncle, to go to private school. Grandma was happy for her son, but unhappy that it put her daughter at a disadvantage. So, she and my grandfather scrimped and saved so my mother could go to private school too.

Grandma was always adamant that money should be evenly shared. While clearing her home I found a notebook where she meticulously wrote down who had been given what for Christmas every year and how much it cost. In one case, over 30 years ago, she bought my cousin’s present – socks – at a discount so he got the £2 she’d saved in cash to keep things fair.

However, Grandma’s determination to be fair when handing out her estate created a different issue. In leaving money to her great-grandchildren, she made a will with seven minors as beneficiaries. I didn’t see a problem at first – after all it would be a wonderful leg up for my young children to receive a few thousand pounds.

But then the solicitors valued her estate. Grandma had not ended up in a care home as she had assumed she would. She lived independently, and frugally, until the very end. As a result, there was more to be handed down than she likely anticipated.

When the calculations were done, we realised that each beneficiary would receive a high five-figure sum. I spoke to my sister and cousins and we all agreed that we were not keen for small children – including my two toddlers – to receive such large sums.

The money will stay invested until they turn 18. But with years of investment growth, they stand to inherit close to a six-figure sum.

Like many young adults, I was not the most sensible soul when I was 18. While I may not have blown the money on wild nights out or a Ferrari, I would certainly have rapidly chipped away at it with shopping sprees, travel and probably a fairly silly car. 

First, we tried to alter the will using what is called a deed of variation. This is a document that allows a beneficiary to alter what they receive in a will. They are often used if someone wants to pass their gift on to someone else – usually for inheritance tax purposes – or if a child or grandchild has been born after the will was made and needs to be included. We thought, as the legal guardians, we would be able to use a deed of variation to put a cap on how much money the great-grandchildren would receive. 

We were wrong. ‘If you want to try to vary the will via a deed of variation, this cannot be done without the permission of the Court of Protection, if there are minor beneficiaries, as they do not have the legal standing to make decisions about the variation or sign any documents,’ says Julia Peake, technical specialist in tax, trusts and estate planning at Canada Life.

In effect, we can’t change the will without going to court and paying around £1,000 in legal bills.

Next we tried to lock away the money until the great-grandchildren reached an age where the money would, hopefully, be used sensibly. We agreed that 25 seemed wise. However, our solicitor told us that, even as legal guardians of the beneficiaries, we cannot do anything to increase the age at which they receive the money. I believe that had my grandmother’s solicitor warned her about how much her great-grandchildren would receive, and at such a young age, she would have avoided this situation.

‘I encourage will-makers to leave gifts with a minimum age of 25 to become entitled, but with a ‘power of advancement’ incorporated in the will so the executors can advance capital or income before that age at their discretion,’ says Gary Rycroft, a partner at Joseph A Jones & Co Solicitors LLP. ‘A trust is therefore created until age 25.’

Instead, my cousins and I are left wondering how we prepare our children to be sensible when they receive this money. Do we tell them, and risk it curbing their ambition to earn for themselves when they know payday is coming? Or should it be an 18th birthday surprise?

One trust expert I spoke to saw a case where a father simply didn’t tell his child about an inheritance and hid any letters referring to it when they turned 18. His plan was to keep it a secret until he felt they were old enough to handle the money responsibly. It didn’t work: once his child was of age, they needed to sign forms relating to the trust, so he had to come clean.

The lesson we can all learn from my grandmother’s will?

I would familiarise yourself with common mistakes in wills before you meet with a solicitor. Consider who you want to inherit your estate, at what age and who will manage the money in the intervening years. And get good legal advice.