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Planning for the Disabled & Vulnerable  

Disabled & Vulnerable Persons Will Trust

 

A trust can be a way of protecting money and property for a disabled relative or friend. It could help support a disabled person if they: receive means-tested benefits, social care or housing or might struggle to make decisions about money and property.  A trust is a legal mechanism to hold assets for someone. The settlor (i.e. you) creates a trust by giving property to a trust fund. The settlor chooses trustees who then hold the trust property (along with any income from it) on behalf of one or more beneficiaries. The trustees have discretion to decide how the trust assets should be used to benefit the beneficiaries.

 

 

 

 

 

 

 

 

 

 

Trusts can be set up for many reasons, but are particularly useful for people who need looking after and might not be able to manage their finances themselves. Specific trusts are available for disabled persons and such trusts are flexible as they are able to adapt to the beneficiary’s changing circumstances and any future needs that might arise. The trust can be created during your lifetime or through your Will so that it takes effect on your death.

 

A Disabled Persons trust must have a disabled person as the primary beneficiary, but there should also be other beneficiaries named (such as other children or family members). The Trustees have a lot of flexibility and discretion as they will decide which beneficiaries will benefit from the trust fund and to what extent. As the trust is discretionary, the beneficiaries do not have an absolute right to the trust fund, only the potential to benefit from it. This is particularly helpful as it means that the trust fund is not taken into account if the beneficiaries are in receipt of means tested benefits.

 

 

 

 

 

 

 

 

 

 

 

 

Vulnerable beneficiary trusts can claim ‘special tax treatment’ as long as the beneficiary qualifies under HMRC rules and the circumstances of the trust allow. Broadly speaking, ‘special tax treatment’ aims to tax the beneficiary’s proportion of the trust as if their usual rates, reliefs and allowances applied so that they gain maximum financial benefit.  

 

All trusts are subject to tax, be it capital gains tax, income tax or inheritance tax. However, when the beneficiary is disabled, the trust may be eligible for special tax treatment. There are various conditions that must be satisfied, but ultimately, the aim is to reduce the tax payable by the trust so that funds are preserved for the benefit of the disabled person.

HWT have years of experience helping family members arrange Will trusts for  disabled or vulnerable people and this is both a rewarding and complex area that requires careful planning and consideration.  When we speak to parents of a vulnerable or disabled beneficiary they are generally concerned and sometimes even frightened of what might happen if they should die. The Will trusts we arrange for our clients give parents and carers some peace of mind that the legacy they are leaving for their disabled or vulnerable child is going to be looked after and protected should they pass away.  Protected from taxation and loss of benefits but perhaps more importantly their legacy will be looked after by people they know and trust and who have the best interest of the beneficiary at heart. 

 

“Vulnerable people often need special Will trust arrangements to protect them, their finances and health and welfare needs if a carer passes away. Working with Phab, we aim to help families of vulnerable people plan for a more certain future should a carer die"   Neal Astbury   HWT

Neal Astbury is the founder and CEO at HWT (Heritage Wills & Trusts) with over 20 years experience running a successful Legal & Professional Will Writing Company specialising in arranging Will trusts for vulnerable and disabled people. Member of both the Institute of Professional Will Writers and the Society of Will Writers.

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