All too often, making a will is one of those things that gets put on the list of things you need to do but don’t quite get around to, that is until something happens to make it a priority. If you don’t make a will and something should happen to you, it can cause problems for loved ones and those left behind. If there is no will then intestate provisions apply meaning that assets aren’t always divided or attributed as per your wishes. We take a look at why making a will with vulnerable children is so important.
Children with Disability and Special Educational Needs
If you have a child with special educational needs (SEN), or a disability, they won’t necessarily be able to make decisions for themselves and they could be taken advantage of as people try to access their inheritance. If they have means tested benefits or support, having an inheritance can often lead to this being withdrawn. These children don’t just need protecting while they are a minor, they need protecting in adulthood too.
Making a will doesn’t just apply to who gets the money but how that money is used. This includes arranging a trust as a solution to protect vulnerable children. A trust doesn’t just apply to vulnerable or disabled children though. It also applies to adults that can’t take care of themselves.
In order to ensure that your child isn’t at risk of being parted with their assets, a trust is an advisable option. There is more than one option to consider when it comes to arranging a trust. Let’s take a look in more detail:
Discretionary Trusts
A flexible type of trust, and the most common, a discretionary trust ensures that the child/young adult doesn’t just receive the assets at a specified age. A discretionary trust can hold all or some of an estates assets. Trustees control the assets within the trust and can apply the assets for the benefit of the beneficiary.
Naming someone as a beneficiary doesn’t necessarily mean that they will receive all of the benefits. The good news is that any assets aren’t counted towards and means tested benefits either. The assets will stay within the trust as long as required.
When to Use this Trust:
- Children who aren’t good with money
- Unsatisfactory partner
- Vulnerable children
This kind of trust is advisable for vulnerable children when they need the funds while not being in control and not being affected.
Disabled Persons Trust
The Disabled Persons Trust is not as flexible as the discretionary trust. It protects funds for the benefit of vulnerable children but can’t be used for all vulnerable children.
It ensures that they don’t have control over the assets and that any means tested benefits aren’t affected.
The primary beneficiary of the trust must be classed as disabled as defined in legislation. In simple terms, it’s someone who’s incapable of managing their own property and financial affairs, and/or would (or does) qualify for attendance allowance, disability living allowance or PIP at certain rates.
All funds within the trust have to be used for the benefit of the disabled person and cannot be used for anyone else during the disabled person’s lifetime.
Why Choose a Disabled Person’s Trust?
The funds can’t be used for the benefit of other children or family members if the disabled person does not need them. So, why use this type of trust without the flexibility of a discretionary trust? It’s all to do with tax. When the disabled beneficiary has passed away, others can benefit from the trust but it becomes subject to the same tax rules as a standard discretionary trust.
It’s about weighing up which is more important for your family – tax or flexibility. While you may not be sure at this stage as to which is the best choice of trust for your loved ones, it is imperative that you take steps to protective disabled or vulnerable children. We are happy to help with any questions you may have and to assist you in making a will to provide for disabled or vulnerable children. You can contact us on 01934 756717.