Last Updated on 15.2.23 by Michael Smoult
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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 just 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, get divorced or encounter 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 means tested 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 lifetime trusts.
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 receiving means tested benefits and care, they will probably need those benefits more than ever if you are no longer around. If you leave your child an outright inheritance, and as a result they have assets over £6,000, their benefits may be affected. If this amount reaches over £16,000 they may lose those benefits altogether. Higher limits apply for care funding but it’s the same principle.
This means the inheritance you’d hoped would improve their quality of life may end up replacing their benefits and they end 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.
To discuss how you can plan for the future and speak to someone who is a qualified professional, give us a call on 0161 930 5101. We can offer an initial consultation to see if our services and your requirements match up and then define the steps forward. You can also contact us by emailing actonit@gorvins.com
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Michael Smoult
Partner & Head of Wills, Trusts & Probate, Wills, Trusts & Probate