Most parents want to give their children, or other close relatives, the best start in life. As such, many may consider leaving gifts to these people. This could be specific items, or sums of money – legacies. But some people prefer to put an age stipulation on when the beneficiary can receive this legacy. Here, I talk about the different ways of doing so and their implications.

Contingent Interest Or Vested Interest? What Is The Difference, And The Pros And Cons Of Each?

What Is Vested Interest?

In terms of legacies, a Vested Interest refers to a gift where the beneficiary does not have to satisfy any conditions to receive the legacy. The law does, however, stipulate that a minor cannot give a ‘valid receipt’ until they are 18 years of age. This is not a condition on them receiving the legacy, just that they are not able to receive it until they are 18. Sometimes, however, there are provisions for the parent or guardian of those beneficiaries to receive the legacy on their behalf until they are 18. The money does belong to them, and if they were to die before they reached 18 years of age, the money would belong to their estate.


What Is Contingent Interest?

Compared to a Vested Interest, a Contingent Interest is a little more uncertain as the legacy is based on conditional terms, such as attaining a particular age.

A Contingent Interest becomes a vested interest once the condition has been met. For example, it could be the inheritance of an estate to a child once they reach a certain age.


What Are The Pros And Cons Of Leaving Vested Interest Legacies To Minors?

Leaving a vested legacy to a minor (without any conditions) offers the peace of mind and assurance that they will have access to the money immediately, without the administrative burden of the Executors having to act as ‘trustees’ to look after this money, especially if the sums are relatively small.

On the other hand, it must be understood that any inheritance may be spent as the beneficiary sees fit. Of course, this may result in the money being used in a way the parent would deem inappropriate, as minors can be unpredictable.

What Are The Pros And Cons Of Leaving Contingent Legacies To Minors?

Leaving a contingent legacy to a minor, which is subject to the condition that the child attains a certain age, can provide a parent with peace of mind that the inheritance can only be accessed when the beneficiary has reached, what the parent deems, to be a responsible age.

However, if a parent dies before the child reaches this age, it will mean the child will have to wait to be able to access the funds, which could cause a period of hardship for the child. Also, the Executors would need to administer this legacy as “trustees” until the age is met. There are, however, provisions which can be incorporated within the Will to allows the trustees to ‘advance’ money to the beneficiaries – but this would be the Trustees’ decision now, not the parents.

Should You Leave A Vested Or Contingent Legacy To A Minor?

Understanding the differences and talking through your own family circumstances so that your wishes can be carried out is an essential first step towards planning for the future and handing down your legacy to your beneficiaries.

I am a professional Will writer based in Leicester with over 18 years’ experience in this area of law. Get in touch today for a friendly, sensitive service that offers free home visits and weekend and evening appointments to make the process as easy as possible for you or your loved one.