Specific legacy contingent to 21

Hi

I am a little confused and hope that someone could point me in the right direction!

In a client’s Will, a property was left to his two grandchildren as tenants in common in equal shares but contingent on the grandchildren reaching age 21. The Will does not specifically state that this legacy was held in Trust for the grandchildren, although due to the residuary estate being held in trust, the Will does provide details of who Trustees should be and also provides various trustees powers etc. although I would presume (rightly or wrongly) that this would be relevant to the Trust of residue, rather than to the whole Will.

The grandchildren were under 18 at the time that the client died and just recently, one of the grandchildren has attained age 21 and the other grandchild will be 21 in the next twelve months.

Am I correct that as this legacy was made to the grandchildren who were minors at the time of the client’s death, their entitlement under the Will will have automatically been ‘in trust’ (bare trust) with the Executors as Trustees. Then, as there is a contingency, the capital shares will vest absolutely at 21.I assume that the grandchildren will have been entitled to any income from date of death. As the specific legacy is a real property (it is a residential house), would there be an issue in the 1st grandchild’s share vesting to them absolutely at 21? I am presuming not because the 2nd grandchild is over 18?
Any help would be appreciated so that I can understand the legal side and then apply the tax to the situation!
Thanking you in advance
Jo Hamilton

A contingent legacy cannot be a bare trust whilst there is an unsatisfied contingency, because the beneficiaries are not absolutely entitled. It will be a relevant property trust unless (and until) a beneficiary attains 18 within 2 years of death which, if s.31 TA 1925 has not been amended, will effectively give that beneficiary an interest in possession in their respective share, read back to date of death as an IPDI under s144(3) IHTA. It is quite possible that part of the fund will be taxed as an IPDI and part as relevant property depending on the ages of the respective grandchildren at death.

Thank you for your clarification on this, it is so very helpful.