Terminally-ill testator wishes for the executor to buy gifts for her minor child on each of the child’s birthdays.
The gifts she wishes to be made are not hugely valuable; they are figurines based on the film Labyrinth. The figurines do not form part of her estate, and the executor will need to buy them.
In other words, the testator wants to make a legacy like this:
On my child’s ninth birthday, my executor shall buy my child a blue Labyrinth figurine.
On my child’s tenth birthday, my executor shall buy my child a yellow Labyrinth figurine.
On my child’s eleventh birthday, my executor shall buy…and so on.
Is this the best way to structure such a gift? Does any difficulty arise from a minor not being able to give a valid receipt? Is such a gift vested or contingent?
If the minor is also the residuary beneficiary and the “prior gifts” will fall into residue if they fail, it seems to me that the attempt to postpone vesting/payment of those prior gifts will fail as the minor is the only person entitled to them whatever happens.
Perhaps the way forward might be to give residue t the minor contingent upon them attaining a specified age with specific sums vesting on specific birthdays.
Perhaps along the lines of: I give the residue of my estate to X, contingent upon them attaining age 30 years. If they are under the age of 30 at the time of my death then upon the event of each of their birthdays before they attain the age of 30 years my Trustees are to pay them the sum of £x absolutely, free of all taxes and expenses.
The gift would also need to establish what is to happen to income until they attain the specified age (accumulate/interest in possession?) and identify an alternative beneficiary should they fail to attain the specified age.
Paul Saunders FCIB TEP
Independent Trust Consultant
Providing support and advice to fellow professionals
Thank you for the very helpful answer, Paul. I was not 100 percent sure I understood the first paragraph, but my understanding of what you are saying is, if the minor’s interest in the residue vests on the parent’s death, then one cannot postpone the vesting of the gift because the gift has already vested?
If a legacy is given to the minor subject to conditions or a contingency and a failure of that legacy would result in it falling into residue, of which the minor is the sole beneficiary, and attempt to defer payment of the legacy beyond the vesting in possession of residue will fail.
Let’s say the minor is given a legacy of £10,000 contingent on attaining age 30, and residue contingent on attaining age 18. Provided they attain age 18 their right to residue includes the right to the legacy should they fail to attain age 30. Accordingly these rights merge so that the legacy also vests at age 18 notwithstanding the attempt to defer payment to age 30. An alternative beneficiary would need to become entitled should the minor not attain age 30 to prevent the legacy falling into residue.
Paul Saunders FCIB TEP
Independent Trust Consultant
Providing support and advice to fellow professionals
Hi Paul, my thoughts are that leaving the residuary estate absolutely to the minor and leaving a series of legacies of figurines to be given on each birthday does not count as postponing the minor’s vested interest in the residue. If the legacy becomes due on a given birthday, we have not postponed an interest in the figurines that the minor was already entitled to as part of the residue. What has happened is we have had to wait until that particular birthday to determine exactly what assets form part of the residue. Am I missing something? Thank you for your assistance with this