When you are the parent of a disabled child or one who has Special Educational Needs (SEN) it’s important to make a Will to ensure they have the provision they need after your death.
But this isn’t always completely straightforward. It may be that your child isn’t capable of managing the money you leave them in your Will by themselves, for instance. In which case, there would have to be someone you trust to oversee the spending for them.
Then again, it may be that once they inherit the money, they no longer qualify for some of the support services they have been receiving for years from the local authority. That’s because means testing shows they would have the cash to pay for those services themselves (despite having become dependent on them).
If the child is too disabled to understand they’ve been left money and how to use it, sometimes an application is made to the Court of Protection by someone who helps the child with their money. Of course, this can often be manipulated, with the person in charge spending some of the money themselves.
This shows then that there is a lot to take about when considering your Will and leaving a disabled child money.
And its why trusts within Wills are regularly used in such circumstances, to ensure the disabled child is protected. That’s because Trusts involve others looking after the money for the child, but there is a level of protection there too.
There are two types of trusts it is possible to use for a disabled child when it comes to making out your Will. These are Discretionary Trusts and a Disabled Persons Trust. We’ll go on to outline the differences of both Trusts here:
Discretionary Trusts
The most common Trust to use in this situation and certainly the most flexible. Using a Discretionary Trust means you can rely on trustees to control the beneficiaries’ assets. The trustees decide together who will benefit from the assets, and when. Not all the assets are given away at once. This is a good way of ensuring your vulnerable child has money if he or she needs it, but they don’t actually control that money themselves – they have to approach the trustees for it. It also means that any benefits they may receive from the government won’t be affected ie they can’t be means tested on the money.
Disabled Persons Trust
Another type of Trust where the child doesn’t control the finances and when they do receive the money, it isn’t means tested, the Disabled Persons Trust is actually quite specific. By that, we means it can only be used for someone who is classed as disabled. That means someone who is not capable of managing their property and financial affairs, and/or would – or in fact, does – qualify for government help in the form of an attendance allowance or disability living allowance. PIP at certain rates also counts.
The Disabled Persons Trust isn’t as flexible as the Discretionary Trust, in the sense that the money can only go to the disabled person and not benefit any other family member. But it means there is less tax liability. Meanwhile, the other family members can only benefit once the disabled person has passed away. At which point, the money is taxed the same way a Discretionary Trust would be.
Talk to the team at Probate-a-Will for advice
Which form of Trust you prefer is, of course, dependent on whether the tax issue, or flexibility, is more important to you. To find out more about either a Discretionary Trust or a Disabled Persons Trust, do get in touch with the team here at Probate-a-Will. We are happy to provide advice and take you through the whole Will writing process.
Our Will writing and probate staff are all fully qualified probate practitioners with the appropriate law degree qualifications for probate and estate administration. Most of our probate staff are solicitors or have law degree qualifications.
We charge a fixed fee for probate services and Wills and which will be agreed upfront. We are happy to come and speak to you at home either during the day or in the evening.
