Grandchildren and Inheritance UK 2026: Intestacy, Wills & IHT Planning

Updated: 20 May 2026 • Reading time: 7 min

Many people want to leave something to their grandchildren — directly in their will, or via trusts set up specifically for younger beneficiaries. The law in England and Wales imposes strict rules on when grandchildren inherit on intestacy(if there is no will), how minors hold inherited property, and the inheritance tax consequences of generation-skipping gifts. This guide covers all three.

Grandchildren Under Intestacy: The Per Stirpes Rule

When someone dies without a will in England and Wales, their estate is distributed under the intestacy rules in the Administration of Estates Act 1925. The rules distribute assets to the closest living blood relatives, starting with the deceased’s own children. Grandchildren only become entitled where their parent — the deceased’s child — has already died.

This is called the per stirpes rule (Latin: “by the branch”). Rather than cutting out an entire branch of the family when a child predeceases a parent, per stirpes passes that child’s share down to their own children (the deceased’s grandchildren), who divide it equally between them.

If all of the deceased’s children are alive, grandchildren receive nothing on intestacy — however close the relationship, however great the need. A will is the only mechanism that allows grandparents to provide directly for grandchildren regardless of whether their children survive them.

Leaving Money to Grandchildren in a Will

A will can leave money, investments, property, or any other asset directly to named grandchildren. The testator chooses the amount, the timing, and the conditions. Common approaches include:

1. Outright specific legacies

A fixed cash sum or a named asset (for example, a savings account or a share portfolio) left directly to a named grandchild. Simple and certain. Where the grandchild is under 18 at the date of death, the executor holds the legacy on trust under section 31 of the Trustee Act 1925 until the grandchild reaches 18, unless the will directs otherwise. There is no tax charge on the trust itself in this scenario.

2. A share of residue with a per stirpes clause

Instead of fixed sums, the testator leaves each child a share of whatever remains after debts, expenses, and specific legacies are paid, with a per stirpes substitution clause that passes a predeceasing child’s share to their own children (the testator’s grandchildren). This is the most common structure in professionally drafted wills for parents with adult children and living grandchildren.

3. A generation-skipping direct gift

Where the testator wants grandchildren to benefit regardless of whether their parent survives, a direct gift to grandchildren in the will achieves this. Common where the testator’s adult children are already financially comfortable and the estate would face double IHT — once in the grandparent’s estate and then again in the adult child’s estate. Passing directly to grandchildren removes one layer of tax.

Minors Cannot Hold Property Directly

A person under 18 cannot hold a legal estate in land (Law of Property Act 1925 s.1(6)) and cannot give a valid receipt for significant sums of money without a trustee acting on their behalf. This means:

• If a grandchild under 18 inherits land, the property must be held by trustees until the grandchild reaches 18 (or longer if the will specifies). The trustees manage the land in the meantime.
• If a grandchild under 18 inherits cash, the executor holds it on trust under the statutory trust in section 31 Trustee Act 1925. Interest (income) can be applied for the child’s maintenance, education, and benefit during minority; the capital vests absolutely at 18.
• A well-drafted will can defer the age of outright receipt beyond 18 — for example, 21 or 25 — to ensure the grandchild is mature enough to manage a significant inheritance. Setting the age above 18 may trigger the relevant property regime (periodic IHT charges) depending on the trust structure, so specialist drafting advice is worth seeking for larger legacies.

Inheritance Tax on Gifts to Grandchildren

Gifts to grandchildren in a will are subject to IHT in the same way as any other testamentary gift — they fall into the estate, and IHT at 40% applies to the amount above the available nil-rate band (£325,000 in 2026, potentially increased by the residence nil-rate band up to £175,000 additional relief). There is no additional generation-skipping tax in England and Wales.

The IHT advantage of skipping a generation is timing, not rate. If you leave assets to your adult child, and they die shortly after with an already large estate, those assets may be subject to IHT twice in short succession. Leaving assets directly to grandchildren removes the intermediate generation’s estate from the chain. Quick succession relief (section 141 IHTA 1984) provides partial relief where the same assets are taxed twice within 5 years, but direct gifts to grandchildren avoid the issue entirely.

For lifetime gifts to grandchildren:

• Annual exemption — £3,000 per year (one year’s unused allowance can be carried forward)
• Small gifts exemption — up to £250 per recipient per year (cannot be combined with the annual exemption for the same person)
• Wedding/civil partnership gifts — up to £2,500 from grandparents
• Normal expenditure out of income — regular gifts funded from surplus income, not capital, may be fully exempt with no limit if the pattern is established and documented
• Potentially exempt transfers (PETs) — larger outright gifts become fully exempt if you survive 7 years from the date of the gift

Trust Structures for Grandchildren

Where grandchildren are young or a grandparent wants to manage when and how a legacy is paid, a testamentary trust is the appropriate vehicle. Options include:

• Bare trust — the grandchild is the absolute beneficial owner from the outset. The trustees hold the assets and manage them until the grandchild turns 18, at which point the grandchild can demand the assets. No periodic IHT charges. Income is taxed at the grandchild’s marginal rate (low for most children). Commonly used for JISA/ISA wrappers and investments for minor grandchildren.
• Trust for bereaved minors (s.71A IHTA 1984) — available only where a parent creates the trust in their will (or it arises on intestacy). Cannot be used by grandparents directly. Assets must vest absolutely at 18. No IHT periodic or exit charges.
• Age 18-to-25 trust (s.71D IHTA 1984) — also parents-only. Vesting deferred to 25. Reduced exit charges between 18 and 25; no periodic charge.
• Discretionary trust — trustees have wide discretion over distribution. Relevant property regime applies: periodic charges at up to 6% of trust value on each 10-year anniversary, and exit charges on distributions. Suitable where flexibility across multiple grandchildren (or varying needs) is the priority.

For most grandparents, a bare trust or an outright gift with a deferred vesting date is the simplest approach. Where the potential legacy is large or where there are concerns about a grandchild’s financial maturity, a discretionary trust with professional trustees offers the most control.

Frequently Asked Questions