As a parent of a child with disabilities or severe learning difficulties, you understand the increased level of care and support your child needs on a daily basis. Planning for your child’s future care, especially in the event of your absence, is crucial, despite how challenging it may be to think about.
Parents typically consider various options for addressing this scenario:
- Leaving money to siblings with the agreement that they will care for their disabled sibling;
- Leaving the money directly to the disabled child; or
- Choosing not to leave anything specifically for the disabled child.
However, each of these options can present significant challenges. For instance, what happens if the sibling who is supposed to care for the disabled child passes away, gets divorced, or faces financial difficulties that jeopardise the funds intended for their sibling’s care? What if all the money is spent on the disabled child’s care, leading to loss of government benefits? What if the disabled child becomes a victim of exploitation or abuse by others? These risks can be mitigated by establishing trust in your will.
What is a trust?
A trust is a legal arrangement in which your assets are managed by a trustee who holds them on behalf of a beneficiary. Trusts can be structured in various ways and can specify exactly how and when your assets are transferred to your beneficiaries. Typically, trusts are included in wills and become effective only after your passing. However, it is also possible to establish trusts during your lifetime.
Does that mean the funds will be inaccessible until then?
Yes, you have the flexibility to dictate how funds are distributed. The arrangement allows for flexibility, and you can leave a letter of wishes to your trustees outlining your preferences for the trust funds. The trustees will then take these wishes into consideration when making decisions after you are no longer able to do so.
The Benefits of using trusts
If your child is vulnerable to financial exploitation, establishing such trusts will safeguard their inheritance, ensuring it is always used for their benefit to support their long-term care, health, and financial stability. This approach can also reduce the risk of them being targeted for mate crime or predatory marriage, providing additional safeguarding.
Furthermore, this arrangement allows the inheritance to be used for future care needs as they age. Depending on their disability, receiving an inheritance could impact their eligibility for means-tested benefits, potentially replacing these benefits until their capital reduces sufficiently for them to regain eligibility.
Instead of leaving an outright inheritance, a discretionary trust can protect their means-tested benefits. It’s important to select trustees you trust, and having a professional trustee can be beneficial.
Leaving funds outright can present challenges if your child lacks mental capacity, likely requiring 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, trusts & probate solicitors can guide you through the process.
