How Can Your Minor Beneficiaries Receive Their Inheritance?
A beneficiary who is under 21 years old is also known as a minor beneficiary.
As a minor beneficiary (including an illegitimate child), he is not able to claim any inheritance left to him by, for instance, his deceased parent(s), until he reaches the age of majority (i.e. 21 years old).
How then is the inheritance for a minor beneficiary managed, so that he can receive it later?
If the Deceased had Written a Will
Where a testamentary trust is created
A testamentary trust is a trust created under a will, for the holding of certain assets “on trust” for the minor beneficiaries, by a trustee.
A trustee is a person appointed in the will, who is conferred certain powers to carry out the instructions of the deceased, with regard to the management of assets held “on trust.”
To hold assets “on trust” means for the trustee to hold the deceased’s interest in the assets for the minor beneficiary, by assuming the legal title to such assets.
Hence, in the case where the deceased had left behind such a will that created a testamentary trust, the trustee will hold and manage the designated assets according to the deceased’s wishes.
For example, the deceased could have set up a testamentary trust to hold funds on trust for his children’s education and maintenance. If so, then the trustee will take on the role of managing such funds for such purposes, for the minor beneficiary until he turns 21.
How will the trustee manage the minor’s inheritance in trust?
Following the death of the deceased, an application to the court for a Grant of Probate has to be made by an executor appointed by the deceased in his will.
An executor is responsible for managing and distributing the deceased’s assets as a whole, whereas the trustee is responsible for managing the proceeds belonging to the minor beneficiaries (elaborated below).
Since both the executor and trustee’s roles overlap, it is not uncommon for an executor and trustee to be the same person.
Where the executor and trustee are not the same person, the executor, upon obtaining probate, will transfer the proceeds belonging to the minor beneficiary over to the trustee to manage.
This could involve the straightforward withdrawing of monies from the deceased’s bank accounts and transferring them to the trustee.
Or, the executor may have to first sell and liquidate the deceased’s assets before the executor can transfer the beneficiary’s share over to the trustee.
Usually, the executor has to produce the certified true copy of the Grant of Probate when doing such transfers or when selling the deceased’s assets.
The trustee has the duty to hold, manage and distribute the assets on the beneficiary’s behalf. Here are some specific expectations and duties of a trustee:
- Know the terms of the trusts (as provided in the will);
- Safeguard the trust assets;
- Maintain and keep up-to-date the accounting records relating to the trust;
- Maintain and keep updated information of relevant trust parties (including the deceased, trustee, protector (i.e. persons appointed to supervise the trustee), beneficiary);
- Disclose the fact that they are acting as trustees to certain entities when carrying out transactions for the trust in prescribed instances.
Where no testamentary trust is created
Where there is no testamentary trust, the assets will not be held in trust and the executor has to uphold his duty of distributing the deceased’s estate in accordance to the deceased’s wishes spelt out in the will.
This means that where a minor beneficiary is to inherit certain assets, the executor has to ensure that these assets are ultimately distributed to the child according to the deceased’s instructions in the will.
This may be done by liquidating the assets (as mentioned above) and disbursing the funds appropriately for the minor beneficiary’s use in education, maintenance etc.
But, where a testamentary guardian is present, the executor disburses the funds to the minor beneficiaries’ testamentary guardian(s) instead, who will then use/manage the funds for the minor’s benefit accordingly (see below).
However, without a testamentary trust with instructions on how to manage the designated assets, the executor runs the risk of second-guessing the deceased’s intentions of how the minor’s assets are to be used or disbursed.
As a result, the executor may not be able to manage the minor’s inheritance the way the deceased would have wanted it.
To prevent such a situation from arising, it is thus advisable for you to set up a testamentary trust in your will when setting aside assets for your child/children.
Who is a testamentary guardian?
A testamentary guardian may be appointed in the deceased’s will.
A testamentary guardian is a person who legally steps into the deceased’s shoes after his death, shouldering the responsibility of taking care of the deceased’s child (who is also the minor beneficiary in this context).
Where a testamentary guardian is appointed, the guardian will have custody over the minor beneficiary, and he has the power to make decisions affecting the welfare of the minor.
Some of the responsibilities of a guardian include:
- Paying for the minor’s education and maintenance;
- Investing and managing the child’s assets;
- Handing over the deceased’s estate when the child is of age.
Distributing the inheritance upon beneficiary turning 21
Once the minor beneficiary turns 21 years old, the executor, trustee or guardian will distribute the beneficiary’s assets to the beneficiary.
At this point, their duties would have discharged, and they are no longer accountable for the assets they used to hold when the beneficiary was still a minor.
Failure to distribute inheritance
Since the trustee has the responsibility of identifying, locating and distributing the assets to the beneficiary, he must make the reasonable effort to locate and ensure that the assets are claimed by the beneficiary.
Otherwise, the trustee may be sued for breach of fiduciary and statutory duties.
Similarly, the executor or guardian may face legal proceedings if they fail to uphold their duties.
If the Deceased Did Not Write a Will
Generally, where the deceased did not leave behind a will, the next-of-kin of the deceased may make a court application for the Grant of Letters of Administration to obtain a court order authorising and appointing a person to administer the deceased’s estate, in accordance to the to the Intestate Succession Act (for non-Muslims) or the Administration of Muslim Law Act (for Muslims).
Additionally, the court requires a co-administrator and surety to be appointed.
A surety is someone who plays a guarantor role, such that if the administrators cause the minor beneficiaries to suffer loss due to their failure to discharge their duties, the surety will be held financially responsible.
Applying to the Public Trustee
Where you are unable to appoint a co-administrator and/or surety to fulfil the requirements to obtain a Grant of Letters of Administration, you may apply to the Public Trustee to manage the minor beneficiaries’ funds.
This application can be done online, and you will be required to furnish information related to the deceased.
Once approved, the Public Trustee will administer and distribute the deceased’s assets that are to be distributed to the minors.
Since the minor beneficiary is not able to claim his inheritance until he turns 21, the Public Trustee will invest the money that is held in trust until the beneficiary reaches the age of majority.
Do note that there are statutory fees payable for having the Public Trustee invest the minor beneficiaries’ funds:
|Amount of Interest Earned||Charge|
|For the first $1,000||5.50%|
|For the next $1,000||4.50%|
|For the next $1,000||3.50%|
|For amounts in excess of $3,000||2.25%|
*taken from the Ministry of Law website
The minor’s guardian may also obtain funds from the money held by the Public Trustee for the maintenance of the minor by submitting an application for maintenance allowance.
The Public Trustee will assess the information, documents and proof provided for financial hardship or circumstances before deciding on the amount of maintenance allowance.
For example, monthly payslips or bank account statements.
Should your application be successful, the allowance will be credited into your joint account with the minor beneficiary via GIRO every 3 months.
Claiming the inheritance upon beneficiary turning 21
2 weeks before a minor beneficiary turns 21, the Public Trustee’s Office will notify him via a letter on how he can claim his trust money.
The minor beneficiary simply has to follow the instructions and furnish the required documents to claim his trust money. More information on the process is available here.
The minor will receive the trust money within 4 weeks after the date of his 21st birthday, or the date that the Public Trustee’s Office receives his documents, whichever is later.
Failure to claim inheritance
In the event where a minor beneficiary who has attained his age of majority fails to claim his inheritance, his trust money will simply be held by the Public Trustee, until he makes a claim with the following documentary proof:
- Front and back of NRIC
- Front page of bank account passbook or bank statement
These documents may be submitted online (under the “Submission of Supporting Documents” section). The money will then be deposited in the minor’s bank account within 4 weeks.
However, do note that while the trust money remains uncollected, the Public Trustee will no longer invest the trust money.
As can be gleaned from above, distributing assets to a minor beneficiary involves a careful process of estate planning, involving crucial steps like will-making and deciding on executors and/or trustees.
You may wish to consult our probate lawyers for legal advice on this matter and assistance in ensuring your loved ones are provided for after your passing.
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