I am struggling to understand the benefit of using a bereaved minor trust rather than a bare trust. The income tax for the BMT is obviously standard rate of tax for £1,000 with the trust rate of tax for the excess which could compare unfavourably with bare trusts. The IHT position looks to be largely the same so why would someone use a BMT rather than a straightforward bare trust?
There is no point in using a BMT for any purpose, unless there is concern about the minor dying before 18.
You might ‘use’ a bereaved minor’s trust if you never bother to make a will.
Some (typically older) wills contain a class gift to ‘such of my children as attain 18 years of age’ or something similar.
But no-one sets out to fall within s. 71A because of tax reasons. As you say a bare trust is probably better.
Suppose the parents were divorced and the father was a very unpleasant character which neither mother nor young son would want anything to do with. The mother might make a Will leaving her estate to her son on condition that he reaches 18, then some default provisions (eg to the mother’s siblings). The son cannot make a Will till he is 18. If the estate passed to the son and the son died before 18, his inheritance would then pass to his father under the intestacy rules (which the mother, and possibly son too, would probably have wanted to avoid). If the son inherits only if he reaches 18 and he died before 18, the mother’s siblings would inherit. If the son did make it to 18, he could be encouraged to make a Will as soon as possible to avoid any risk of the father inheriting.