On the death of a bereaved minor after settlor's death

If a minor beneficiary of a bmt dies under the age of 18 and the settlor also having passed away is
the gift still treated as being part of the minor beneficiary’s estate and distributed according to rules of intestacy. If no substitute provisions were made by the testator - with no iht charge?



The BMT rules in s71A IHTA can apply on intestacy or under a will or compensation scheme. With intestacy the death of the minor under 18 means that the related capital share is distributed according to the successive classes of relatives but if none to the Crown as bona vacantia. A will is not prevented by the conditions for relief for specifying a gift over or in the last resort a default clause which all Wills should advisedly contain to avoid what would otherwise happen, a partial intestacy. The issue does not arise with an inter vivos trust which cannot qualify as a BMT.

Jack Harper

A BMT may arise under a will or on an intestacy (the latter creating statutory trusts).

A sole beneficiary under a BMT which trust arises on an intestacy has, prior to attaining age 18, only a contingent interest. Accordingly, on death under age 18 no part of the beneficiary’s contingent interest forms part of his estate and thus such interest does not pass under the beneficiary’s intestacy. It is assumed that the beneficiary never existed in ascertaining how the property is to be distributed.

Am I missing something Jack?

Malcolm Finney

If he’s intestate he’s intestate and the intestacy rules apply not as regards his own death but that of the deceased parent as if the child never existed:

" AEA 1925 s47(2)
If the trusts in favour of the issue of the intestate fail by reason of no child or other issue attaining an absolutely vested interest—

(a) the residuary estate of the intestate and the income thereof and all statutory accumulations, if any, of the income thereof, or so much thereof as may not have been paid or applied under any power affecting the same, shall go, devolve and be held under the provisions of this Part of this Act as if the intestate had died without leaving issue living at the death of the intestate;
(b) references in this Part of this Act to the intestate “leaving no issue” shall be construed as “leaving no issue who attain an absolutely vested interest”;
(c) references in this Part of this Act to the intestate “leaving issue” or “leaving a child or other issue” shall be construed as “leaving issue who attain an absolutely vested interest.”

Jack Harper

I should have mentioned that if the child dies under 18 leaving issue they can take the deceased parent’s share by substitution on the statutory trusts under s47(1)(i) and (4B)-(4D).

Here “issue” includes all direct descendants of an individual. Adopted children and illegitimate children have the same right to benefit from their intestate parent’s estate as children of the parent’s marriage. Stepchildren are not included.

The Marriage and Civil Partnership (Minimum Age) Act 2022 will raise the age of marriage and civil partnership to 18 in England and Wales. This means that 16 to 17-year-olds will no longer be able to marry or enter a civil partnership under any circumstances, including with parental or judicial consent from 26 February 2023.

Jack Harper