An 18 to 25 trust is a trust that is created by a Will and qualifies for special inheritance tax treatment. It is often chosen by parents who want to delay their children’s entitlement to their inheritance beyond the age of 18. Under an 18 to 25 trust, a beneficiary needs to become entitled to the capital in the trust by the age of 25.
An 18 to 25 trust needs to have been created by the Will of one of the beneficiary’s parents. Up until 22 March 2006, anyone could make one.
The advantage of an 18 to 25 trust over a bereaved minor’s trust is that your children’s entitlement will be delayed to age 25 rather than age 18.
There can be an inheritance tax cost associated with an 18 to 25 trust which needs to be considered carefully and in particular the potential advantages and disadvantages of this type of trust as against the bereaved minor's trust which would instead enable your children to inherit at 18.
You should consider using an 18 to 25 trust in your Will if:
you are, or expect to be, the parent or step-parent of a child under the age of 25; and
you want your child or children to become entitled to your estate when they reach 25.
If you think your children will not be mature enough to receive large sums of money at age 25, you may like to consider leaving your estate on discretionary trusts, or giving your children a life interest in your estate.