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Extra Support Where It’s Needed
What are Disabled Person’s (also known as Vulnerable Beneficiary) Trusts? Well, they’re a type of Trust that have specific support built in to help people with disabilities or those who are vulnerable.
These terms can encompass a whole range of conditions, so it’s important to consider what kind of support they will need to be provided with when you’re building your Trust.
Who qualifies for a Vulnerable Beneficiary Trust?
There are guidelines on who qualifies to be named as a Beneficiary on a Disabled Persons, or Vulnerable Beneficiaries, Trust. These are determined by the HMRC and can be someone with a mental disorder, or someone who qualifies as disabled under a “benefits” test (not necessarily receiving the benefits).
Determining what qualifies as a mental disorder or condition in this case, they refer to the Mental Health Act 1983, which includes:
- Bipolar Affective Disorder
- Major Depressive Disorder
- Anxiety Disorders
- Obsessive Compulsive Disorder
- Eating Disorders
- Autistic Spectrum Disorder
- Alzheimer’s and other forms of dementia
- A learning disability incl. Down’s Syndrome
- Brain injuries dependent on symptoms
They can also be a person who are eligible for any of the following benefits:
- PIP (Personal Independence Payment)
- Disablement Pension
- Constant Attendance Allowance
- Armed Forces Independence Payment
Having one of the above conditions doesn’t automatically qualify someone as disabled, however. They must also be found to be incapable of managing their affairs.
How Can a Trust Help me Protect my Assets?
Choose exactly who has access to your assets.
Enjoy your privacy – Trusts aren’t public documents, unlike Wills.
Save on inheritance tax – don’t let your loved ones lose out.
Provide better financial support for your dependants’ futures.
Give your loved ones quicker access to their inheritance when you’re gone.
Gain better flexibility over how your assets are managed in the long-term.
The Trusts we offer are an optional addition to our Bespoke Will service. Click here to find out more about Bespoke Wills.
Who Can I Appoint as a Trustee?
You’ve got to make sure that no matter what type of Trust you’re creating, you choose responsible and reliable trustees. All trustees (and there can be more than one per Trust) must meet the following criteria:
They must be at least 18 years of age.
They can be a family member, friend or professional acting on your behalf.
If you’re creating a Trust which will be effective whilst you’re alive, you can be the trustee.
You must be confident that they have the best interests of the beneficiaries at heart.
We advise you to choose at least 2 trustees, but no more than 4. Make sure there’ll be no tension between the trustees.
If you’d rather have someone outside of your family be a trustee, you can appoint a professional such as a solicitor, Trust company or accountant.
They’ll need to fully understand the responsibility of managing the Trust on your behalf.
It’s a good idea to name substitute trustees, to replace a trustee should anything happen to them.
Discretionary Trust Case Study
A Trust can include any wishes about how your estate should be handled by the trustee, and you are able to express more complex wishes in how you’d like your estate to be managed.
Steven and Alison have a single child, Claire, who has been diagnosed with Bipolar Affective Disorder and OCD. Although she lives independently, her conditions are classed as severe and she regularly needs ongoing support and experiences periods of crisis which mean she’s admitted to hospital.
One of her biggest struggles is managing her finances, whether she is in depression or mania. She has blown large amounts of money in the past and her parents are concerned about leaving her assets in their Will which she could have unrestricted access to.
To combat this, Steven and Alison decide to create a Discretionary Disabled Persons Trust and name Claire as the main Beneficiary. They appoint Claire’s uncle, James, as the Trustee, as he knows about her condition well and is knowledgeable enough to manage the assets within the trust on her behalf.
When Alison and Steven die, James takes over management of the Trust. He has a letter of wishes which explains how Alison and Steven would like to have the assets used, but he also has flexibility to make decisions himself dependent on Claire’s situation at that time. He can access money within the Trust to pay for things she needs, such as private healthcare and counselling sessions, as well as personal needs such as clothes.
How does the Discretionary Trust Help?
By managing Claire’s needs in this way, she isn’t able to access large sums of money when she is unwell, but can have things paid for as she requires them. This independent support from her uncle allows her to get the financial support her parents wanted her to have, but without the risks. As she doesn’t get regular payments or a one-off sum of money directly, her PIP benefits payment remains unaffected.
Things of value you have in your possession, which are able to be passed on to another person.
A person who receives money or other benefits from a Will or Trust.
A person who relies on another as a primary source of income.
The sum of a person’s assets – legal rights, interests and entitlements to property of any kind – less all liabilities at that time.
Passing on private property, rights, and other assets upon the death of an individual.
A tax on the estate (the property, money and possessions) of someone who’s died.
Government standard rules which apply when someone dies without leaving a valid will, which dictate who is able to inherit that person’s assets.
A document that is able to be accessed by anyone should they request it.
The person or entity that establishes a trust.
A person who is given the responsibility to manage assets that have been set aside in a trust for the benefit of someone else.
A legal document that expresses how a person wishes their assets to be distributed after their death.
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