Definition
A contingent interest is a right to receive inheritance or trust property only if a specific condition is met, such as reaching a certain age or surviving another person.
Until that condition occurs, the beneficiary has no guaranteed entitlement to the property. If the condition is never met, the gift fails and the beneficiary receives nothing.
What Does Contingent Interest Mean?
Under UK law, a contingent interest depends on an uncertain future event known as a "condition precedent"—something that must happen before you inherit. According to HMRC's Trusts, Settlements and Estates Manual, a contingent interest is "dependent on an event which is not certain to occur," such as reaching age 30. This contrasts sharply with a vested interest, where the beneficiary has a guaranteed right to property even if they must wait to receive it.
Contingent interests can only exist as equitable interests (beneficial rights recognized in law), not as legal estates in land, precisely because they depend on future uncertain events. They appear in both wills (as conditional gifts) and trusts, where trustees manage property until conditions are satisfied.
The most common form is age contingency—making inheritance conditional on reaching a specific age. Sarah's will leaves £100,000 to her daughter Emma "when she reaches age 25." Emma, currently 22, has a contingent interest. She must wait three years, and if she dies at age 24, her interest disappears entirely—her own estate receives nothing because her right never vested. The gift would then pass to alternative beneficiaries named in Sarah's will or back to the residuary estate.
Parents typically use age contingencies at 21, 25, or even 30 to protect children from receiving substantial sums before developing financial maturity. Other common conditions include surviving another person (David leaves his £280,000 house to brother James "if James survives me by 30 days"), completing education, or reaching marriage milestones. During the waiting period, trustees hold and invest the property, ensuring it's protected until the condition is met.
The wording in wills and trust deeds must be absolutely clear. Vague conditions cause gifts to fail completely. A trust stating grandchildren inherit "when they're responsible enough" creates uncertainty and would likely be void, whereas "when each grandchild reaches age 21 or completes a university degree, whichever comes first" provides clear, enforceable conditions.
Common Questions
"When should I make my children's inheritance contingent on reaching a certain age?" Most parents choose age 21, 25, or 30 for substantial amounts over £50,000. While 18 is the legal age of majority, many parents worry it's too young for large inheritances. Age 25 is particularly popular because most people have finished education, started careers, and developed better financial judgment. The appropriate age depends on the amount involved and your children's circumstances.
"What happens if my child dies before reaching the age I specified in my will?" The gift typically fails completely unless you've named substitute beneficiaries. However, Section 33 of the Wills Act 1837 provides an important exception: if the beneficiary is your child or descendant who has their own children, those grandchildren automatically inherit the gift instead—unless your will indicates a different intention. This substitution only applies to your direct descendants, not other beneficiaries.
"Is a contingent interest in a trust the same as being a beneficiary?" All contingent interest holders are beneficiaries, but not all beneficiaries hold contingent interests. With a contingent interest, you're a beneficiary whose entitlement depends on meeting a condition like reaching age 25. Until then, trustees manage the property and you have no guaranteed right to receive it. If the condition is never met, you receive nothing—the interest fails entirely.
Common Misconceptions
Myth: If I leave money to my child "when they turn 25," they automatically get it at 18 because that's the age of majority
Reality: Age contingencies in wills override the default age of 18. If your will specifies age 25, the inheritance must be held in trust until then, and your child has no legal right to demand it earlier—even though they're legally an adult at 18. Trustees must hold and invest the money until the condition is met, following the terms you've set out in your will.
Myth: A contingent interest is the same as simply delaying when someone receives their inheritance
Reality: A contingent interest means the beneficiary has no guaranteed entitlement at all until the condition is met. If they die beforehand, they typically receive nothing. This fundamentally differs from a vested interest with deferred payment, where the beneficiary's right is guaranteed but payment is delayed. With a vested interest, if the beneficiary dies before the payment date, their estate still inherits. With a contingent interest, it usually fails completely—a crucial distinction that even professional trustees sometimes struggle with.
Related Terms
Understanding contingent interest connects to these related concepts:
- Vested Interest: The opposite of a contingent interest—a vested interest guarantees the beneficiary's right to property regardless of future events, though payment may be delayed.
- Contingent Beneficiary: The person who holds a contingent interest and will only inherit if specific conditions are met.
- Age Contingency: The most common type of contingent interest, where inheritance depends on reaching a specified age like 21 or 25.
- Trust: The legal mechanism commonly used to hold and manage property during the contingency period until conditions are satisfied.
- Conditional Gift: A gift in a will that creates a contingent interest by imposing conditions on when or whether beneficiaries inherit.
Related Articles
- What to Include in Your Will (Complete Checklist): Understanding contingent interests is crucial when deciding whether to make gifts to minors or impose age conditions on inheritances.
- What Is a Trust? (And How Do They Work in Wills?): Contingent interests commonly operate through trusts—this article explains how trustees manage property during the waiting period.
- Setting Up a Trust for Your Children in Your Will: Most trusts for children involve contingent interests with age contingencies, protecting assets until children reach maturity.
- How to Leave Money to a Minor in a Will: Leaving money to minors almost always involves contingent interests, as UK law prevents minors from directly inheriting.
- Discretionary Trusts in Wills Explained: Discretionary trusts create contingent interests where the "condition" is trustee approval—a flexible alternative to fixed age contingencies.
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Legal Disclaimer: This glossary entry provides general information about UK legal terminology and does not constitute legal advice. The distinction between contingent and vested interests can be subtle and depends on specific wording in wills and trust deeds. For advice specific to your situation, consult a qualified solicitor.