Bereaved Minor Trusts: How They Protect a Child’s Inheritance After Losing a Parent

A bereaved minor trust is the law’s way of protecting a child’s inheritance when that child has lost a parent. It holds what the child inherits until they turn 18, keeps it managed by people you trust, and does so with more favourable tax treatment than most other trusts. For a bereaved minor trust to apply, the child must be under 18 and have lost a parent, and the trust must meet specific legal conditions.

This article explains what a bereaved minor trust is, how it works, its tax treatment, and how it compares with the alternative most parents consider.

What Is a Bereaved Minor Trust?

A bereaved minor trust is a trust that holds a child’s inheritance until they reach 18, where the child has lost a parent. It can be created by a parent’s Will or arise automatically under the intestacy rules when someone dies without a Will. The defining feature is the age: the child becomes fully entitled to the inheritance at 18, and not before.

While the trust runs, the trustees hold and manage the money, and they can use it for the child’s benefit, for things like maintenance, education, and general welfare. The child is protected from receiving a lump sum before they are legally an adult.

How Does a Bereaved Minor Trust Work?

A bereaved minor trust works by holding the inheritance in the hands of trustees until the child’s 18th birthday. You name the trustees in your Will, they take responsibility for the money when you die, and they manage it for your child until the trust ends.

Until the child turns 18, the trustees can apply the funds for the child’s benefit, covering the practical costs of raising and educating them. On the child’s 18th birthday, the trust ends and the remaining inheritance passes to them outright. That automatic transfer at 18 is the trust’s defining rule, and its main limitation.

What Is the Tax Treatment of a Bereaved Minor Trust?

A bereaved minor trust receives favourable inheritance tax treatment compared with a standard discretionary trust. Because it is a specific category recognised in law for children who have lost a parent, it is not subject to the ten-year and exit charges that apply to ordinary relevant property trusts.

That favourable treatment is one of the reasons the structure exists, but tax should never be the only reason to choose it. The right question is whether holding the inheritance to 18, and no later, suits your child.

Inheritance tax rules, reliefs and thresholds change over time and depend on your circumstances. Always take current, tailored advice before relying on any figure.

Bereaved Minor Trust or 18-25 Trust: Which Is Right?

The difference comes down to the age your child inherits. A bereaved minor trust must hand over the inheritance at 18. An 18-25 trust lets you delay full inheritance to any age up to 25, in return for a limited tax cost on the portion held beyond 18.

For many parents, 18 feels too young to receive a significant sum outright, which is why the 18-25 trust exists as the natural next step. If you are comfortable with your child inheriting at 18, the bereaved minor trust is simpler and more tax-efficient. If you would rather wait, the 18-25 trust buys you those extra years.

Is a Bereaved Minor Trust Right for Your Family?

A bereaved minor trust fits where you want a child’s inheritance protected and managed until they turn 18, and you are content for them to receive it in full at that age. It is most relevant to parents thinking about what happens if they die while their children are still young.

If 18 worries you, or your family situation is more complex, it is worth comparing it with an 18-25 trust or a discretionary trust before deciding. A free consultation is there to work through which structure protects your children best.

Frequently Asked Questions

At what age does a bereaved minor trust end?

A bereaved minor trust ends when the child turns 18. At that point the trust closes and the remaining inheritance passes to the child outright. If you want to hold the inheritance beyond 18, you would need an 18-25 trust instead, which allows you to delay full entitlement to any age up to 25.

Who can create a bereaved minor trust?

A bereaved minor trust is created by a parent for their own child, either through the parent’s Will or automatically under the intestacy rules if they die without one. The child must be under 18 and must have lost a parent for the trust to qualify, which is what gives it its favourable tax treatment.

Does a bereaved minor trust pay inheritance tax charges?

A bereaved minor trust is not subject to the periodic ten-year and exit charges that apply to ordinary discretionary trusts, which is its main tax advantage. The wider inheritance tax position still depends on the size of the estate and the allowances available, so it is worth confirming the full picture with advice.

TL;DR: Bereaved Minor Trusts

A bereaved minor trust holds a child’s inheritance until they turn 18 after the loss of a parent, with favourable tax treatment, making it a simple way to protect a young child’s inheritance.

• It applies where a child under 18 has lost a parent, created by Will or under intestacy.
• Trustees manage the money and can use it for the child’s benefit until they turn 18.
• The child receives the inheritance outright at 18, which is its main limit.
• It avoids the ten-year and exit charges that apply to ordinary discretionary trusts.
• To delay inheritance past 18, an 18-25 trust is usually the better fit; a consultation confirms which.