Looking After Beneficiaries with a Disability

Recently I was consulted by parents who had a son on the Autistic Spectrum.  They did not have a large estate but were aware that should they leave a proportion to him absolutely he would not be able to cope and he would be vulnerable to people taking financial advantage of him. There was also the risk that a sizeable inheritance would affect any benefits to which he may become entitled in the future.

Two of the most important matters parents of a disabled child or indeed vulnerable adult need to bear in mind are who will look after their child when they are no longer around to do so and who will deal with their child’s finances if that child is unable to do so themselves.

For a disabled or vulnerable child a guardianship appointment can be extended to express the wish that the guardian is also responsible when the vulnerable child becomes an adult.  This gives guidance to the wider family and indeed social services who you would like to apply for a deputyship order to manage any money to which your child may become entitled to in their own right.

The best option to protect a vulnerable child or adult’s intended inheritance is to establish a trust. Whilst there is a specific statutory form of trust for disabled beneficiaries it offers little flexibility as all income is payable to the beneficiary, which can cause difficulties particularly if the income is not spent by or on behalf of the beneficiary and accumulates in the hands of the beneficiary.

There is also the question of who qualifies as “a disabled person”. The definition is statutory and whilst your child may qualify at the time your Will is made, it is possible that the definition may change over time.  Indeed, this type of trust was introduced by statute in 2005 and the qualifying criteria changed in 2014.

The most common type of trust used to manage and protect money where there is a disabled or vulnerable beneficiary is a discretionary trust. Under this type of trust, the parents can leave a proportion or often the whole of their estate to the trust. The trust will have a class of beneficiaries, commonly children, grandchildren and other family members who can benefit from the trust at the discretion of the trustees.

This type of trust can be established on death by means of your Will or set up in your lifetime and is often accompanied by a letter of wishes giving guidance to the trustees on making distributions and expressing your wishes.  Whilst it needs to be said that there are some tax implications of this type of trust, it is often the case that the flexibility that it provides usually outweighs any tax disadvantages.

If you have a beneficiary for whom it is appropriate to consider a trust Andrew and his colleagues will have an initial discussion with you free of charge with you and will suggest a trust tailored to your needs. Contact Andrew on 0117 9621 205 or email andrewjack@amdsolicitors.com.

This article is provided for general information purposes only and represents our understanding of the relevant law and practice as at the date of uploading. This article should not be relied upon as legal advice pertaining to any specific factual situation. Legal decisions should be made only after proper consultation with a legal professional of your choosing.

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