Contingent pecuniary legacies

I have an estate where there are various cash legacies to minors. The wording is ’ I give to x the sum of x subject to his surviving me and attaining 25 years of age’.

Step 2nd Edition included.

Two questions:

  1. Can the legacies of £5,000 each be paid to parent or guardian now or must the Trustees invest?
  2. Are the residuary beneficiaries (charities) entitled to the income in the meantime? I believe so but on current rates would at best be minimal.

Would a Deed of Variation be possible whereby the charities surrender their right to income and the legacies could then be paid out to minors parent/guardian? . The youngest cash legatee is 4 years old…

Many thanks

Kathy Melkerts
Melkerts Solicitors

I believe the power to pay leagcies to parent/guardians applies only to vested legacies, not contingent legacies

In the circumstances, I would be wary of paying the legacies over to the parents or guardians of the intended beneficiaries.

The charities may also be wary of agreeing to assign their entitlement to the beneficiaries. However, if the costs of maintain the trusts until the beneficiaries attain age 25 is explained, it may be commercially viable for them to step aside.

In general, unless the testator stood in loco parentis to any of the beneficiaries, all that they are entitled to upon attaining age 25 is the specified sum. The costs of administering the legacies up until that time fall on the residuary gift. Although residue will be entitled to the income during this period, such income may be unlikely to cover the trustee’s annual costs.

In response to the actual questions posed:

  1.  No, the trustees have a duty to invest, and
  2.  Other than where the testator was in loco parentis to any particular beneficiary, yes, together with any capital appreciation.

Paul Saunders FCIB TEP

Independent Trust Consultant

Providing support and advice to fellow professionals

A practical solution may be to advance the legacies to the children absolutely under s 32 Trustee Act or powers under the Will (if any). If under s 32 you would have to be able to justify it as a benefit to the beneficiary, but I would have though one could argue that there is a benefit in simplifying the arrangement in light of the relatively modest amount. An advance would remove the income problem, and would also allow the trustees to pay to the parents, thereby avoiding the necessity for investment by the trustees.

Diana Smart
Gordons LLP

Thank you Paul.

That is very helpful.

Kind regards

Kathy Melkerts
Melkerts Solicitors