Can I prevent my children from receiving their inheritance until they are 25 years old?

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It is not uncommon for will-makers to be concerned about their child receiving an inheritance before they have the maturity to manage the wealth responsibility.  So is it possible to make a will which delays your child or children receiving their inheritance until a later age?

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

The starting point – Saunders v Vautier

Lawyers will often tell you that drafting a minimum age clause into your will is a “smoke screen” and that should your children reach 18 they will be entitled to challenge your will and inherit early.  For the most part this is true.

The long standing case of Saunders v Vautier sets the principle that where a beneficiary reaches 18 and has full legal capacity, provided that they have a vested interest in the gift, the beneficiary will be able to challenge a clause which prevents that beneficiary from receiving their inheritance until a later date.  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.

It is possible, however, to draft a will which can prevent a child becoming entitled to their gift until they reach a later age.

Contingent interests

A Will-maker can give two types of interests under a Will: a “vested interest” or a “contingent interest”.  Contingent interests in a will are better able to withstand a challenge by your children and can (with careful drafting) prevent them from inheriting under your will until they reach a certain age.

A contingent interest under a will is an interest which has been 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

Careful drafting is needed to create a contingent interest under a will.  For example, a contingent interest would be created is a will 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.  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 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)

The need for a lawyer

You will need an experienced lawyer to draft a clause which contemplates a contingent interest.  Care must be taken 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.  There can be other consequences of creating a contingent interest and advice should be taken when you are making your will to make sure it reflects your wishes.