ARTICLE
27 March 2024

Using Trusts For Disabled Beneficiaries

GS
Gorvins Solicitors

Contributor

Gorvins Solicitors
As a parent of a child with disabilities or severe learning difficulties, you'll be well aware of the increased care and support your child requires on a day to day basis.
UK Family and Matrimonial
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As a parent of a child with disabilities or severe learning difficulties, you'll be well aware of the increased care and support your child requires on a day to day basis.

Therefore, working out how your child will be provided for if you are no longer here to do so is vital, however difficult it may be to consider.

Parents consider a variety of options when planning for this scenario;

1) Parents will leave money to siblings on the agreement that they will look after their disabled sibling;

2) They will leave the money to their disabled child; or

3) They will leave that child nothing.

However, huge problems can be encountered with each option here – what if the sibling dies, gets divorced or encounters their own large debts or financial hardships meaning they may lose the money they were holding onto for this purpose? What if all the money is spent on their care and they lose their benefits? What if they are subjected to "mate crime"? This can be avoided by including a trust in your will.

What is a trust?

A trust is an arrangement where you leave your assets to be managed by a trustee who holds your assets on behalf of a beneficiary. Trusts can be arranged in a variety of different ways and can specify precisely how and when your assets pass to your beneficiaries. Trusts are usually written into wills and only take effect after you pass away, although it is also possible to set up trusts while you are still living.

Does that mean the funds will be inaccessible until then?

No, monies can be advanced as you wish. The arrangement is flexible and you can leave a letter of wishes to your trustees, letting them know what your wishes are for the funds in the trust. It is then up to the trustees to consider these when you are not here to make those decisions.

Benefits of using trusts

If your child is at risk of being financially exploited, such trusts will ensure that their inheritance is always preserved for their benefit to preserve their long-term care and health as well as provide long term financial stability. It may also mean that they are less likely to be targeted for mate crime and/or predatory marriage as it can provide safeguarding.

In addition, it means that their inheritance could be used to fund subsequent care that also may be required as they age. Depending on their disability, benefits may become means tested and this means that the inheritance you'd hoped would improve their quality of life may end up replacing their benefits and they then become a self-funding payer until their capital monies fall to the point they will be entitled to means tested benefits once more.

So instead of leaving them inheritance outright, a discretionary trust will ensure their means tested benefits are unaffected. You need to choose trustees you are confident in and a professional acting as a trustee can be very useful.

Leaving funds outright will also create a huge issue if your child lacks mental capacity. It is likely your child will then need a Deputy appointed by the Court of Protection to manage their financial affairs.

If you are considering setting up a trust, our highly skilled and experienced Wills Trust & Probate solicitors can help you through the process.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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