Can I delay inheritance from my children until they are 25 years old?

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As a parent you may be concerned about the maturity of your child/children to manage wealth at an early age.

The question is: Can you cause a delay inheritance from your children, until they are older?  

The short answer is: technically yes, but it’s complicated.

The starting point – Saunders v Vautier

Often, lawyers will tell you that drafting a minimum age clause into your will is a “smoke screen” and that your child/children would be entitled to challenge your will and inherit early when they reach 18.  For the most part, this is true.

We look at the long standing case of Saunders v Vautier as an example of this. It determines that if a beneficiary who has full legal capacity reaches 18, they will be able to challenge the clause that prevents them from receiving their inheritance at a later date. This is provided that they have a vested interest in the gift.

If there is more than one beneficiary (e.g. more than one child entitled to the same gift) these beneficiaries must be acting unanimously in order to challenge the will.

In this case, it is possible to draft a will which can prevent a child becoming entitled to their gift until they reach a later age.

Contingent v Vested interests

A Will-maker can decide on: a “vested interest” or a “contingent interest”. 

Contingent interests in a will can (with careful drafting) prevent your children from inheriting under your will until they reach a certain age.

Under a will, an interest will be granted to a beneficiary (e.g. your child) but an event must occur, or that beneficiary must satisfy some condition, before the gift can be released to the beneficiary.  An example of such a condition is the need to obtain a certain age.

A Vested interest will exist if a person has a certain interest in the property being gifted even if the gift is postponed or delayed.

It was held in the case of Austin & Anor v Wells & Ors [2008] NSWSC 1266 that, “If the person’s interest depends upon a contingency which may or may not occur, he or she does not have a vested interest, but a contingent interest.”

Example Drafting

If you need to create a contingent interest under a will, careful drafting would need to be done.  

For example, this is provided that “if” your child reaches 25, particular gifts will be dispersed to them, and should they fail to reach this age as a condition precedent another beneficiary such as a charity or a grandchild will inherit under your will instead. 

In this case, because the child reaching 25 is a condition precedent and, in the event that the child passes away prior to attaining this age another beneficiary will become entitled. The child therefore does not hold a vested interest in the gift and has no immediate entitlement. 

The courts have upheld wills drafted in this way, making this a good strategy for those who would prefer that their children do not inherit wealth before they are ready.

Diagram showing how a contingent gift works - i.e. putting a condition in place to send money only if a condition is met (reaching age 25)

To delay inheritance requires careful drafting

An experienced lawyer is needed to draft a clause which contemplates a contingent interest.

You must also take care to ensure that the interest granted under your Will isn’t construed as a “vested” interest (i.e. your child will definitely inherit as opposed to they might inherit). 

If this is to occur your child can challenge your Will to inherit as soon as they turn 18, and not when you desire them to.  

It is important to ensure your Will reflects your wishes as there could be other consequences of creating a contingent interest without a lawyer’s advice.

Still have questions about delay inheritance? Contact us today

Our Estate Planning team can assist you in drafting your Will to reflect contingent interest and/or vested interest. Speak with our client engagement team today on (07) 3252 0011 or email enquiry@corneyandlind.com.au for an appointment today.