Legal background to trusts and estates: minor absolutely entitled to trust property
If property is left absolutely to a minor, it cannot be transferred until the minor reaches the age of majority. This is because a minor is not able to give a valid receipt.
Until then it is held in a trust for the minor. The trustees have the discretion to use income arising from the property, for the minor’s maintenance and education. Otherwise, the income is accumulated for the absolute benefit of the minor.
Trustees can pay up to half the capital for the minor’s benefit.
If there is not sufficient income to pay for the minor’s maintenance and education, trustees can use capital for this purpose. In strictness, they should apply to the court for permission. Sometimes they do not bother. Normally we would accept this action.
For guidance on the taxation of a bare trust for a minor, see TSEM1568.