Bereaved Minor's Trust & 18-25 Trust: 2026/27 UK Guide
Parents planning for what happens to their children's inheritance if they die young can use two specially favoured trust types. This guide explains how a Bereaved Minor's Trust and an 18-25 Trust work, and why they avoid most of the Inheritance Tax charges that apply to ordinary discretionary trusts.
A Bereaved Minor's Trust is a trust set up under a will, on intestacy, or under certain compensation schemes, for the benefit of a person under 18 who has lost a parent. To qualify, the trust must give the child an absolute right to both the capital and any income by the time they reach 18 — the trustees cannot have discretion to withhold the fund from the child once they reach that age.
What an 18-25 Trust Is
An 18-25 Trust works in a similar way but allows the person setting up the trust (usually a parent in their will) to delay the child's absolute entitlement to the fund until a chosen age between 18 and 25, rather than requiring it at exactly 18. This can suit parents who feel a young adult may not be ready to manage a significant inheritance immediately on turning 18.
Why These Trusts Are Favoured
Both trust types exist outside the standard "relevant property regime" that applies periodic (10-year) and exit charges to most discretionary trusts. Parliament created these categories in recognition that trusts for the children of a deceased parent serve a particular protective purpose, and should not be taxed as heavily as trusts used more generally for broader estate or tax planning.
Charges Compared With Ordinary Trusts
A Bereaved Minor's Trust faces no periodic charges, and generally no exit charge either when the child becomes entitled to the capital at 18. An 18-25 Trust can attract a modest exit charge when the fund vests, but this is calculated only on the period between the child's 18th birthday and the actual vesting date (up to age 25), at a reduced effective rate compared with the charges that would apply to funds held in an ordinary discretionary trust for the same length of time.
Payments Before the Vesting Age
Even though the child does not have an absolute right to the fund until the relevant age, trustees typically retain discretion to apply income and capital for the child's maintenance, education and general benefit in the meantime — for example, covering school fees, university costs, or other significant needs — in line with the trust deed and general trustee powers under trust law.
Who Can Use These Trusts
These specific reliefs are only available for trusts set up for the testator's own child (which can include a step-child treated as a child of the family in some circumstances) following the death of a parent. Trusts for grandchildren, nieces, nephews, godchildren or other relatives do not qualify for this treatment and would generally be taxed under the ordinary discretionary trust rules instead.
A Bereaved Minor's Trust is a trust set up under a will, intestacy, or the Criminal Injuries Compensation scheme for a child under 18 who has lost at least one parent, giving the child an absolute right to the capital and income by the time they turn 18, and receiving favourable Inheritance Tax treatment as a result.
What is an 18-25 Trust?
An 18-25 Trust is similar, but delays the child's absolute entitlement to the trust fund until an age between 18 and 25 (chosen by whoever set up the trust), rather than requiring it at exactly 18, while still qualifying for beneficial (though not identical) Inheritance Tax treatment.
Why do these trusts get special Inheritance Tax treatment?
Because the beneficiary is a child who has lost a parent, and the trust is designed to give them full entitlement to the assets by a set age, these trusts are largely kept outside the standard 'relevant property regime' that applies periodic and exit charges to most discretionary trusts, recognising the particular vulnerability of bereaved children.
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Does a Bereaved Minor's Trust face periodic or exit charges?
No periodic (10-year) charges apply to a Bereaved Minor's Trust, and there is generally no exit charge when the beneficiary becomes absolutely entitled to the capital at 18, reflecting its favoured status compared with an ordinary discretionary trust.
Does an 18-25 Trust face any charges at all?
An 18-25 Trust can attract a modest exit charge when the beneficiary becomes entitled to the capital, but only calculated on the period between their 18th birthday and the date they actually become entitled (up to age 25), and at a lower effective rate than the charges applying to an ordinary discretionary trust.
Can trustees make payments to the child before they reach the vesting age?
Yes, trustees typically have discretion to use income and capital for the child's maintenance, education and benefit before the vesting age, in line with the trust deed and general trustee powers, even though the child does not have an absolute right to demand payment until the set age is reached.
Can these trusts be set up for a grandparent or other relative?
No — these specific reliefs apply only to trusts set up for the testator's own child (or a child treated as their own, such as a step-child in some circumstances) following the death of a parent, not trusts for grandchildren, nieces, nephews or other relatives generally, which would instead usually be taxed as ordinary discretionary trusts.
Do I need a solicitor to set up this kind of trust?
These trusts are usually created through carefully drafted will clauses, so most parents put them in place with a solicitor when writing or updating their will, ensuring the trust meets the specific conditions needed to qualify for the beneficial tax treatment.
What happens if the child dies before reaching the vesting age?
If the child dies before becoming absolutely entitled, the trust fund normally passes according to the terms set out in the will (for example, to siblings or a substitute beneficiary), and the special Bereaved Minor's or 18-25 Trust tax treatment simply ceases to apply once the original beneficiary's interest ends.
Do these trusts affect the parent's own estate for Inheritance Tax when the will is made?
Assets passed into a qualifying Bereaved Minor's Trust or 18-25 Trust on death are generally treated in the same way as an outright gift to the child for the purposes of the deceased parent's estate, so they do not attract the extra trust charges that would apply if the same assets were left in an ordinary discretionary trust instead.
Disclaimer: Trust and Inheritance Tax rules can change; check the current position at gov.uk. This guide is general information, not legal or tax advice. Always seek independent professional advice for your specific situation, particularly when drafting a will.
