Can I make sure that my children/grandchildren dont spend their inheritance until they are older than 18?
Yes, by including a Childrens Trust in your Will, their inheritance is controlled by the Trustees and need not be paid out until they are e.g. 21 or 25. However, changes in the taxation of certain Trusts, in the 2006 Budget, mean that, now, if you choose an age to inherit as being over 18 then, at the time the children/grandchildren inherit, there will be a pro-rated 6% tax to pay on the amount inherited in excess of whatever the Inheritance Tax (IHT) allowance is at the time they inherit In practise, this means that, 0.6% tax is levied for every year over 18 that money is in the trust. As an example, if money goes into trust when a child is aged 15 and the trust says that they cannot inherit until they are 25, then, for each of the 7 years from 18 until 25, a tax of 0.6% is levied (4.2% in total over the 7 years) on any money in the trust that is in excess of the Inheritance Tax (IHT) allowance in force at the time. The IHT allowance is shown in 5 below.
