If your child has a disability, whether they are a child or adult, you will understandably be concerned to make arrangements to protect them after your death. It is therefore more important than ever for you to put in place an appropriately drafted Will.
If you do not make a Will, or if your Will leaves your estate directly to your disabled child, this may result in them no longer being entitled to the means tested benefits they were receiving before they inherited. If your child is vulnerable, there is a risk that they could be financially exploited.
Also, if your child has difficulties with or is unable to manage their own financial affairs, then they would not be able to deal with their inheritance without the on-going involvement of the Court of Protection.
You might be tempted to leave nothing to your disabled child and perhaps instead leave what would have been their inheritance to other relatives on the understanding that they use this to look after your child.
However, this approach can lead to problems. Your Will might be challenged either by your disabled child directly or by social services on their behalf. The relatives you have asked to use their inheritance to benefit your child may not follow your instructions or may be unable to do this, e.g. if they lose control of the inheritance as a result of their divorce, bankruptcy, mental incapacity or death.
Often therefore the answer will be to include a suitable Disabled Beneficiary Trust arrangement for your disabled child in your Will. This can provide protection for your child and at the same time avoid these issues.
Disabled Beneficiary Trusts
The Trust will come into effect when you die and is managed and controlled by Trustees chosen by you. They can then ensure that the inheritance is used to benefit your child, preserve your child’s entitlement to means tested benefits and protect them from both themselves and others.
The Trust can also be used to benefit other family members if you wish. If correctly drawn up, Disabled Beneficiary Trusts can qualify for favourable tax treatment.
Case Study
John and Sue are in their late 30’s and have four young children. Their eldest son Alex has considerable learning difficulties. After talking through their particular circumstances with their solicitor, John and Sue decide to make Wills which provide that after they have both died, John’s brother and Sue’s sister will act as the executors and Trustees and their joint estates will be left 25% into a discretionary Disabled Person’s Trust for Alex’s benefit and 25% for each of their other children.
The Trust arrangement they have chosen means that after they have died, the Trustees will invest the Trust fund and decide when, how and to what extent this will be used for Alex’s benefit. This flexibility enables the Trust to take account of Alex’s circumstances as they change over time and puts the decisions to be made in the hands of the people John and Sue believe are best placed to look after Alex’s interests.
How Nelsons can help
Jane Sutherland is a Partner in our expert Wills, Trusts & Probate team.
It is vital that you take legal advice from a solicitor who has both expertise and experience in this area. This should ensure that the Trust arrangement included in your Will is both correctly drafted and most importantly, tailored to the circumstances and needs of your particular family situation. It really is not a case of one type of Trust fits all.
For more advice or information on Disabled Beneficiary Trusts, please contact Jane or another member of the team in Derby, Leicester and Nottingham on 0800 024 1976 or via our online form.