Parents and grandparents naturally want to leave something to a disabled child or relative. But leaving money to them outright can sometimes leave them worse off.
The problem with leaving it outright
- Means-tested benefits can be reduced or stopped if their savings go over the limits.
- Care funding may change, with the money used to pay for care that would otherwise be funded.
- If they lack capacity, nobody can manage the money without a court-appointed deputy.
- They may be vulnerable to financial abuse or poor decisions.
Using a trust instead
A trust in your will lets trustees you choose hold the money and use it for the person's benefit: holidays, equipment, a better home, extras that make life better. Common options include discretionary trusts and disabled person's trusts. Each has different tax rules and effects on benefits, so this isn't a DIY job.
A letter of wishes
Alongside the will, a letter of wishes tells trustees what matters to the person, their routines, likes and the support they need. It's one of the most valuable things you can leave.
If your child is approaching adulthood, see when a disabled child turns 18.
This is specialist work. Talk to a specialist about the right trust for your family.
Frequently asked questions
Will an inheritance stop my child's benefits?
Disability benefits like PIP aren't means-tested, but means-tested benefits like Universal Credit are affected by savings. Above the upper capital limit they can stop altogether. An inheritance can also affect how care is funded.
What is a discretionary trust?
A trust where trustees decide how and when to use the money for the beneficiaries. Because nobody is entitled to it, it usually isn't counted as their savings for means-tested benefits.
What is a disabled person's trust?
A trust that meets special tax rules for a disabled beneficiary and can get better tax treatment. Whether it's right depends on the person's situation and benefits.
Who should be trustees?
People you trust to understand the person's needs and act fairly, often a mix of family and a professional. Choose replacements too.
Request a call back
Tell us a little about your situation and we'll call you, usually within one working day, to understand what you need. If it would help, we'll then put you in touch with a specialist, such as a solicitor who deals with wills and powers of attorney. We'll always tell you who they are before passing on your details. We don't give advice ourselves, and there's no obligation.