Executor of Will protecting infant’s inheritance

Some people worry about the safety of your infant children’s inheritance upon your passing. This is a genuine concern that needs attention when making a Will. Start by thinking of the role of the executor of your will.

On the other hard, if a beneficiary is under 21 years of age he/she does not have legal capacity. Without capacity a minor is  unable to provide an executor a Release from his/her obligations.

If a Will doesn’t say at what age a beneficiary is able to receive his/her inheritance it doesn’t matter. It’s the inability to provide a Release that stops a child from receiving his or her inheritance before 21.

With infant beneficiaries what are the options?

You can find online statements such as “the guardian holds the inherited assets on behalf of the minor beneficiaries until they attain the age of majority”.  Such a statement is wrong.

It assumes that the executor of a will can simply pay the child’s inheritance to the guardian. Is an executor allowed  to do this?

Some Wills may specifically allow the trustee to pay a gift or bequest to the parent or guardian of a minor beneficiary. There may be clauses that also say that the receipt of the parent or guardian is acceptable in place of a receipt from the minor beneficiary.

If a Will has such a clause then a trustee does have discretion. The payment may be made to a parent or guardian. If a Will does not contain such a clause there is no option. The can’t just pay over a child’s inheritance to the child’s parent or Guardian.

This must be the case. It makes no logically sense otherwise. Where one person is appointed as executor and trustee in a Will and a different person as Guardian it makes no sense for the executor to simply pay over the inheritance to the Guardian.

Every time a Will names one person as executor and a different person as Guardian the executor must ask why the appointed Guardian wasn’t also named as executor.  Paying a Guardian a child’s inheritance is not an option.

Section 68 of the Probate and Administration Act should put an end to any lingering doubts.

Public Trustee and Section 68

Section 68 says that if a trustee is still holding funds which cannot be distributed immediately because the person entitled to it is unable “to give a discharge” then the trustee can seek the Public Trustee’s consent to “pay those funds to the Public Trustee”.

A trustee who finds the job too onerous or too much to handle has the legislative option of ‘passing the buck’ to the Public Trustee.

Section 68 (2) says that the receipt of the Public Trustee “shall constitute a full and sufficient discharge”.  This means a trustee doesn’t have to wait until all beneficiaries are 21 to be discharged from his/her duties. The Public Trustee can provide the discharge.

So executors please take note. Do not simply pay a child’s inheritance to his/her guardian in order to wrap up the estate quickly. If you don’t wish to continue until the child reaches 21 consider paying the inheritance to the Public Trustee. If you pay the child’s inheritance to his/her guardian and the money is gone before the child reaches 21 you’ll have to answer to the beneficiary.

 

14th February 2021

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