Trusts For Disabled Indviduals
It is important to ensure that your loved ones are adequately provided for in the event of your death. This is why everyone is advised to make a Will and regularly update it.
When planning your Will, you may come across obstacles if someone you wish to provide for happens to be suffering from a disability. These obstacles may deter you from benefiting them at all, which can cause problems in the long run.
The need for a Trust
We believe that it is important to take specialist advice at the outset to minimise these difficulties.
Possible problems include:
- Gifts to individuals receiving means tested benefits may affect their ability to continue to receive these benefits or to receive these benefits in the future
- If you leave a gift to a person, who is not mentally capable of dealing with their affairs a court of protection application may have to be made for an individual to be appointed to deal with the finances of the recipient and to accept the gift
- If you decide not to benefit an individual because of the problems highlighted above, they may have a claim against your estate especially if you were maintaining them, prior to your death.
The Solution could be to create a Disabled Person’s Trust.
What is a Disabled Person’s Trust
This is a trust created in your Will of which the person with the disability is the principal beneficiary. There are also other potential beneficiaries who can be, for example, other children or favoured charities.
The Trustees have discretion as to who should benefit from the trust from the class of beneficiaries. In doing this they can have regard to any letter of wishes you may have written, setting out how you would like the trust to be run.
As the Trust is discretionary, the disabled person will not lose their entitlement to state benefits and the likelihood of a claim being made against your estate by the disabled person or someone on their behalf diminishes.
If you create this type of trust, it also may not be necessary for a Court of Protection application to be made.
Tax and Disabled Person’s Trusts
The tax treatment of a disabled persons trust is much more favourable than other trusts. However tax is a complex issue and depends on various factors including whether the trust is set up in your lifetime or in your Will. We will be able to advise you on the tax implications of the trust if you decide to proceed down this route.
Finally
The quality of life of a disabled beneficiary can be sustained without compromising their benefit entitlement with the use of a disabled person’s trust in your Will.
For further information please contact in the first instance:
Kelly Greig
t: 01752 675042
e: kelly.greig@footanstey.com
