PERSONAL ESTATE PLANNING SERVICES

Disability Trusts

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If you have a child or beneficiary (of any age) with special needs, a disability, is vulnerable and receiving state benefits, or has addictions and are subject to undue negative influences and you wish them to benefit from your will, a disability trust is an effective way to deal with their inheritance. You can pass money, property, shares or any other assets into the trust.

A disability trust is a lifetime discretionary trust and is established by the parents or other relatives, as a way of making long-term financial provisions for a child or beneficiary with a disability.

It is worth bearing in mind that not making any provision for a disabled child on the grounds that another member of the family will look after them or that the state will provide, may not be a wise course of action.

“If insufficient provision is made, it is possible for Social Services and the Department of Social Security to challenge the Will. In turn, this can result in an unpleasant, unhelpful and costly legal disputes.”

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FAQs – Disability Trusts

What could happen if I don’t make provision for a beneficiary with Special Needs?
Under the Inheritance Act (1975), if insufficient provision is made, it is possible for Social Services and the Department of Social Security to challenge the Will. In turn, this can result in an unpleasant, unhelpful and costly legal dispute.
How can a Disability Trust help?

A trust is useful because assets, once populated into the trust do not belong to the “beneficiary” of the trust (i.e. the disabled son, daughter, grandchild or another beneficiary who is intended to benefit). This means that the capital or assets held in the trust are not considered when assessing entitlement to state benefits such as income support or local authority obligations to fund care.

Who looks after the assets or fund in a Disability Trust?

The trust assets will be looked after by a minimum of two trustees (maximum four) and by establishing the trust, the settlor (you) is saying who they wish to look after their assets on behalf of the beneficiary.

What happens if I don’t establish a Disability Trust for my Special Needs beneficiary?

In the absence of a trust, where the disabled beneficiary is unable to manage their money, the Court of Protection may have to get involved and appoint a receiver. This receiver may not be the person the settlor would have wished to look after their beneficiary’s assets.

What other considerations do I need to think about when settling a Disability Trust for Special Needs?

A defining characteristic of a properly drawn up lifetime discretionary trust is that the intended beneficiary e.g. son or daughter etc belongs to what is termed a ‘class’ of people and is not the sole beneficiary of the trust. Therefore, additional beneficiaries need to be appointed who may also inherit from the trust or on the death of the disabled child or beneficiary. It is usually envisaged that on the death of the disabled child or beneficiary, the trust will be divided between remaining beneficiaries.

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