Posted on 2.3.16 by Tasoula Addison
Being the carer for a relative, young adult or close family friend who is disabled is a demanding and taxing task. Planning for your future and that of a dependent with a disability can also appear very daunting for many people as matters are made more complex through the circumstances. With the right guidance and advice, however, it really doesn’t have to be a daunting process. There are many ways to protect those that you care for with a disability, ensuring that everything is in place for a bright future with their best interests at the forefront.
Planning for the Future in your Will
A Will allows a testator – the person making the Will – to plan for the future of those they love and care for in a precise, efficient and cost-effective manner. You might want to consider appointing a legal guardian who would take responsibility for your child’s up-bringing and welfare needs. This is important for any parent, but if your child has a disability there will undoubtedly be additional issues that need careful consideration when selecting an appropriate guardian. It is also important to keep your Will up-to-date, especially if you or your beneficiaries – those who are set to benefit from inheritance – have a change in circumstances.
For a disabled person, receiving money from an inheritance can have unexpected penalties, if the person who left the inheritance did not put the correct arrangements in place. The reason is that receiving a lump sum could mean that certain benefits are no longer available, meaning that the inheritance simply replaces the government funded money and services until the inheritance level drops back below the threshold to receive means-tested benefits.
This doesn’t have to be the case if you receive the correct advice.
Trusts for a Disabled Person
A Discretionary Trust or Disabled Person’s Trust is a way to protect the inheritance from affecting any benefits the person with a disability receives. Most people set the relevant trust up in their Will, but it may be a good idea to set up a trust in your lifetime if you expect your disabled child to receive other significant gifts, for example from other family members. First of all, let’s just cover what a trust is so we are all clear.
Simply put, a trust is a way of holding assets (finances and possessions) in a separate pot. Including a specialist trust in your Will goes a long way in protecting vulnerable or disabled beneficiaries by providing on-going financial assistance. Trust law can be extremely complicated, and setting a trust up in the wrong way can have negative tax consequences. This means it is more important than ever to use the expertise of a qualified professional to make sure the trust is drafted correctly, and that it is specifically tailored to your individual circumstances. This ensures that the disabled beneficiary is left in the best financial position possible.
As the beneficiary doesn’t ‘own’ the assets in the trust, they aren’t included in any financial assessment for benefits (assuming the trust has been set up correctly). This way the benefits are protected, meaning the beneficiary receives a true benefit from their inheritance, which can then be used to pay for things such as holidays or additional equipment that might improve their quality of life. The most crucial decision when setting up a trust is deciding who you are going to appoint as trustees. These are the people you appoint to look after the inheritance. There are different ways to manage how the trustees can distribute the trust fund, and the best way to do this will depend on your own personal circumstances.
The benefits of building a specialist trust are that:
- You have full knowledge that any benefits your beneficiary receives won’t be affected
- The disabled beneficiary’s monies and finances will be looked after in a sensible manner
Power of Attorney
Drafting a Lasting Power of Attorney (LPA) means you can appoint a trusted person(s) to act on your behalf and in your best interests if you no longer have the capacity to do so. If you are a carer or have dependents who need your help, an LPA means those who need your help continue to receive it in the event you can’t continue.
The thought of not being able to manage our own affairs – financial and welfare – isn’t a pleasant thought, but it is unfortunately something that can happen to any one of us. Appointing an Attorney gives that person the legal power to control your finances, medical decisions and personal welfare. If you are the carer of a person with a disability, this legal document may be very useful to have.
It may also be advisable for the disabled person to set up a Lasting Power of Attorney, assuming they are able to do so.
Court of Protection
If you don’t make an LPA and lose the capacity to make your own decisions, an application has to be made to the Court of Protection by a family relative or close personal friend to gain legal control of your affairs. This process is much more time consuming and expensive than if someone had made an LPA whilst they were well enough to do so. It’s always more efficient and cost-effective to plan ahead for these possibilities rather than waiting till they occur.
One of the best ways to care and protect those who you look after is to plan for the future and put the correct procedures in place. It’s also best to do things properly from the start with a qualified professional, this way complications down the line are drastically minimised.
Carers of Young Adults with a Disability Event – 3rd March, 6pm – 8pm
To receive more information on how you can help a person with a disability plan for the future and what steps you can take to make things easier, we are hosting a free event on the evening of Thursday 3rd March. To book your place please ring 0161 930 5101 or book online here.