Providing for a Vulnerable or Disabled Loved One Through a Trust

For some people, writing a Will and bequeathing assets to loved ones might feel like a fairly straightforward task. For others, it can be a great deal more complex. One of the reasons for this might be if you are seeking to provide for the future of a family member who is disabled or otherwise vulnerable.

In certain situations, leaving a lump sum outright to a disabled or vulnerable adult might not be an ideal solution.

This could be because:

1. It might mean that the individual would lose access to benefits and support they rely on for daily living.
2. The individual's specific type of disability or vulnerability could mean they would struggle to manage the responsibility of handling the money themselves.

Why could leaving money to a vulnerable or disabled adult cause problems with benefits?

For many disabled and otherwise vulnerable adults, their benefit eligibility is based on income and any savings they have. Though some disability benefits like Personal Independence Payments (PIP) are not means tested, others are. For example, if an individual requires care at home, the amount they will receive from social services to pay towards that care will depend on an affordability assessment. Income and savings are also taken into account for things such as housing benefit and universal credit.

A disabled person can only have savings of up to a certain threshold before their benefits will be reduced or stopped altogether. For example, if someone is claiming Universal Credit, they will only be eligible for a reduced amount of financial assistance if they have more than £6,000 in savings, and none at all if they have over £16,000.

This means that if someone who was receiving means tested benefits was to inherit a lump sum from an estate, it could reduce the amount of benefits they would receive, or even make them ineligible altogether. In these situations, the money they had inherited would then need to be used to cover their daily expenses and care instead.

This might not be an issue if you were bequeathing a substantial amount of money that would be enough to cover all daily living expenses and more for years to come. However, if you were simply passing on a 'nest egg' with the hope of offering the same kind supplementary financial support that you had been able provide during your lifetime, it might not have the intended effect.

For example, you might intend the money you pass on to be spent on things such as:

• Allowing disabled adults to have access to a holiday.
• Providing peace of mind in case of financial emergencies.
• Purchasing mobility aids, equipment and therapies that would otherwise be inaccessible.
• Maintaining and repairing mobility aids and equipment.

But if the lump sum made the individual ineligible for the benefits and support they rely on, in all likelihood they would need to spend all the money simply on replacing the income from the benefits and not on things such as the above.

Why might a vulnerable or disabled adult struggle with managing a lump sum?

In some situations, you might have concerns about whether the family member you wish to support would be able to take on the responsibility of managing a lump sum on their own.

This might be because:

• They have a profound learning disability, neurodivergence or brain injury that means they are unable to manage their own financial affairs.
• They are extremely unwell and would not be able to take on any financial responsibility.
• They have a condition such as Alzheimer's disease or dementia.
• They have a history of addiction.
• They have a history of bankruptcy.
• They might be vulnerable to financial abuse.

In situations such as these, leaving a lump sum to the individual could well be impractical or even harmful.

How could a trust be a solution?

Whether you are concerned about how your loved one would manage a lump sum on their own, whether you're concerned that the money would affect their access to benefits and support, or whether both these factors are a concern, a trust could be an ideal solution.

A trust is a legal mechanism that allows assets to be held by one group of people (the trustees) for the benefit of another (the beneficiaries). In situations like the ones above, establishing a trust in your Will would enable you to safeguard money to be used for the benefit of a disabled or vulnerable loved one without handing over the ownership of that money.

In order for any funds in the trust to not be subject to any affordability assessments for benefits or support services, the trust would need to be a discretionary trust. This type of trust may also qualify as a vulnerable beneficiary trust (sometimes called a disabled person's trust), which can be beneficial for tax purposes.

In a discretionary trust, no beneficiaries have an absolute right to any assets held within the trust. Rather, it is up to the trustees' discretion when to release funds.

A specialist solicitor will be able to advise on how a discretionary trust (including vulnerable beneficiary trusts) can be structured in order to help protect any means-tested benefits the beneficiaries might receive.

Once a trust has been established for the benefit of the disabled or vulnerable individual, the trustees would be able to release funds to the individual beneficiaries if required, though doing this may temporarily affect benefit eligibility. Trustees would also be able to make purchases on behalf of the beneficiaries, or send funds directly to service providers or landlords.

Choosing trustees

If you are considering setting up a discretionary trust in your Will, one of the most important decisions you'll need to make is who to appoint as trustees.

There might be other family members who you feel would be a clear choice, perhaps someone who is close to your disabled or vulnerable loved one and already understands their specific requirements and needs. Equally, a close friend might be able to take on the role.

In cases where you don't have any obvious candidates, you might want to explore the possibility of appointing a professional trustee, such as a solicitor. You can read more about the process of appointing a professional trustee in our help guide.

Getting started with a trust

If you're interested in exploring how including a discretionary trust in your Will could help to support a disabled or vulnerable loved one in the future, we're here to help.

The process is relatively straightforward, and is usually done as part of the task of estate planning. Our specialist solicitors would be able to help you design and establish a trust that would truly benefit any family members you are leaving behind.

Please don't hesitate to get in touch if we could help you with this.

FAQs

Why might leaving a lump sum to a disabled or otherwise vulnerable family member in your Will not be in their best interest?

There are a few reasons why leaving a lump sum inheritance to a disabled or vulnerable family member might not be in their best interest. It may be because their particular disability or vulnerability makes it difficult for them to take on financial responsibility, or it might be because taking direct ownership of a lump sum would mean they became ineligible for benefits and support they are reliant on for daily living costs.

Can leaving money in trust to a disabled adult protect their eligibility to benefits and support?

If you are concerned that leaving money directly to a disabled adult would take away their eligibility to the benefits and support systems they rely on, you might be considering whether leaving money to them in trust would be a better solution. Discretionary trusts can be structed in a way to allow funds to be made available to disabled adults whilst helping to protect their eligibility for means-tested benefits.

How easy is it to establish a trust in your Will to provide for a disabled or vulnerable loved one?

The process of working with a solicitor to establish a trust in your Will is very straightforward. A specialist solicitor will be able to talk you through all your options and make sure everything is in place for when it is needed. You can even appoint a solicitor to act as a professional trustee if required.