Providing For Disabled or Vulnerable Beneficiaries - Guest Blog: Karen Salt, Nelsons Solicitors 

If you have a child or grandchild who has a disability or is vulnerable to abuse from others or themselves, you will understandably be concerned about making appropriate arrangements for them when you die. In a new series of blogs, we will look at a number of different scenarios which we hope will be useful in explaining why you might wish to consider the use of Trusts in your Wills and the ways that this can be done to protect vulnerable and disabled beneficiaries.

Case Study

Mark and Susan are married and have two children, Claire who is 12 and Penelope who is 18.

Claire was born with Cerebral Palsy and is physically and mentally disabled. She is wholly dependent upon Mark and Susan and will likely require care for the rest of her life. Mark and Susan would like to ensure that Claire is provided for financially for the rest of her
life after they have both died and make an appointment with their solicitor to discuss this. Mark and Susan don’t want to leave anything directly to Claire in their Wills. This is because she will not be able to manage her own finances. Also, any inheritance left to Claire would disentitle her from receiving the means-tested welfare benefits she would otherwise be paid.

Their initial thoughts are that it would be best to leave everything to Penelope after they have both died as they trust her to do the right thing for Claire. However, the solicitor explains to Mark and Susan that this could lead to problems. Their Wills could be challenged by Claire either directly or by social services on her behalf. Penelope might decide not to honour their wishes and take all the inheritance for herself. Penelope might be unable to provide for Claire if she were to die or lose mental capacity
during Claire’s lifetime. If Penelope were to divorce or become bankrupt, the inheritance could end up with her ex-spouse or creditors and would then no longer be available for Claire.

After meeting with their solicitor, Mark and Susan decide to make Wills that leave everything they own to the survivor of them and, when they have both died, half to Penelope and half into a Disabled Beneficiary Discretionary Trust for Claire’s benefit. The Disabled Beneficiary Discretionary Trust arrangement chosen by Mark and Susan will operate as follows:

• It will be set up only once they have both died.
• It will hold the half share of their joint estates they wish to be used for Claire’s benefit as the Trust Fund.
• The Trust will be managed by the Trustees Mark and Susan appoint in their Wills – they have chosen their solicitors to act but they could have appointed family members or friends if they preferred.
• The Trustees will decide when, how and to what extent the Trust Fund will be used for Claire’s benefit. They could, for example, pay for specialist medical equipment or care she might need and for holidays or items and services to improve her quality of
  life from this.
• The Trustees will be able to take into account Claire’s changing circumstances and requirements over time.
• If there is any Trust Fund remaining at Claire’s death, Mark and Susan’s Wills set out how this is to be inherited – they have chosen to leave this to Penelope or if she had died then to her children.  

There are a number of benefits that the Disabled Beneficiary Discretionary Trust arrangement provides:

• The Trust Fund will be managed by the Trustees for Claire’s benefit.
• The inheritance held in it will not be treated as belonging to Claire unless it is paid out to her so she will still receive the means-tested welfare benefits she is entitled to.
• Drawn up correctly, the Trust can also qualify for favourable tax treatment.
• Disabled Beneficiary Discretionary Trust