Age-based gifts in wills – when they work and when they don’t

Many people want their will to protect younger beneficiaries from receiving a large inheritance too soon.  We are often asked to prepare a will that will “leave my assets to my child but only when they turn 25”.  That may sound straightforward.  However, such gifts are more complicated than they seem and a direction about age in a will does not always have the effect the will-maker expects.  Most importantly, under s121 of the Trusts Act 2019, once a beneficiary of a will turns 18, they may be legally entitled to their share of the estate even if the will directs that they should only receive their gift when they reach a specified age older than 18.

Why could the beneficiary receive the gift early?

Section 121 of the Trusts Act 2019 reflects a longstanding rule associated with the 1841 case of Saunders v Vautier.  In broad terms, beneficiaries who are 18 or older, have mental capacity and together hold the entire beneficial interest in trust property may agree to bring the trust to an end and require the property to be distributed. The statutory requirements are more detailed, but the key message for will-makers—and anyone preparing a will—is that an age restriction may sometimes be overcome once the beneficiaries turn 18.  If a will gives a beneficiary a vested interest and merely delays enjoyment of that gift until a specified age, such as 25, the beneficiary may be able to require earlier payment under section 121.  This right does not depend solely on the will-maker’s intention: the law may treat the beneficiary as already owning the gift even though the will directs the trustees to hold it for a few more years.

The lesson from Telford v Telford

The 2023 High Court decision Telford v Telford illustrates how these rules operate in practice.  Barry Telford’s’s will directed that his children share the residue of his estate when they reached 25 and included substitution provisions for grandchildren.  After Barry died, his children, then aged 21 and 23, asked the trustees to distribute their shares immediately under section 121 of the Trusts Act 2019 rather than waiting until they turned 25.  They argued that, between them, they held the whole beneficial interest in the estate and, because they were adults, could require the trust to end.  The trustees opposed distribution before the children turned 25.

The Court accepted that the children were entitled to their shares of the estate without waiting until they turned 25.  The decision depended heavily on the terms of the will.  The Court considered that the gifts took effect when their father died because entitlement was not conditional on the children reaching 25; only enjoyment of the gifts was postponed.  In other words, the will did not provide that the children would become entitled to their shares only if they reached 25.  Because the children were adults, had capacity and together held the relevant beneficial interests, they could require distribution under section 121.  The age restriction in their father’s will therefore did not achieve the intended delay in payment.

Conditional gifts – the crucial issue

Whether an age restriction is effective depends on the precise wording of the will.  If the gift takes effect on the will-maker’s death and only enjoyment is postponed, an adult beneficiary may be able to require early payment.  In contrast, an age restriction may remain effective if entitlement itself is genuinely conditional on the beneficiary reaching the specified age.  Determining which type of gift the will creates requires careful analysis of both the gift and the will as a whole.

There is no magic formula or set of words that will guarantee that an age-based gift is effective.  If an age restriction is disputed in court, the court will interpret the will as a whole.  It may consider the wording of the gift, the direction for payment, any substitution clause, the treatment of income, the trustees’ powers to apply money for education or support, and what happens if the beneficiary dies before reaching the stated age.

Drafting involves more than choosing an age

Writing a will is often more complicated than it first appears.  A gift to a child at 25, or at any other age over 18,may seem simple, but the beneficiary’s rights under the Trusts Act 2019 can affect whether the restriction works as intended. Legal advice can help ensure that the will addresses those rights and gives effect to the will-maker’s intentions.  If you want a gift to take effect only when a beneficiary reaches a specified age, consider the following questions:

• What age do you want the beneficiary to become entitled to the gift?
• What should happen to the gift if the beneficiary does not reach that age?
• Should trustees be able to use part of the gift for the beneficiary’s education, health, housing or general welfare before the beneficiary reaches the specified age?
• Should trustees have discretion to distribute early, or should the age condition be strict?
• What happens if several beneficiaries have different ages or family circumstances?

These choices involve trade-offs.  A strictly conditional gift may prevent early access, but it can also mean that a beneficiary who dies shortly before reaching the specified age receives nothing and the gift passes to someone else under the will.

What you should keep in mind

If you want your assets to pass to your family subject to age restrictions, you should consider the available options and obtain legal advice before settling the wording of your will.  In some circumstances, a family trust may offer greater flexibility, although it also introduces cost and administrative complexity.  Otherwise, remember that small drafting differences in your will can produce very different results, so age-based gifts should form part of an estate plan tailored to your circumstances rather than being copied from a standard document.  Your Harkness Henry lawyer can provide you with detailed advice about your options and ensure that the wording of your will reflects your intentions.

This article is current as at the date of publication and is only intended to provide general comments about the law. Harkness Henry accepts no responsibility for reliance by any person or organisation on the content of the article. Please contact the author of the article if you require specific advice about how the law applies to you.