Caring for Vulnerable Beneficiaries

1. Get a will

Preventing intestacy (i.e. dying without a will) is particularly important for parents with vulnerable children because your vulnerable child will almost certainly inherit from your estate directly, thus invalidating their entitlement to means-tested benefits, and also making it very difficult for any of your family or friends to assist them without expensive and stressful Court of Protection and Local Authority intervention.  

Having a will removes those problems by:

a. Appointing your choice of legal guardians (if your child is under 18 on your death), thereby preventing the need for any stressful intervention from the local authority.

b. Appointing your chosen trustees, enabling them to manage assets in your child's best interests, both immediately after your death and into the future.

c. Protecting your child's valuable benefit entitlements.  

2. Which type of trust arrangement is best for my vulnerable child?

There are several types of trust arrangements you can add to your will.  Here are a couple of the most popular examples:

A Vulnerable Person's Trust (also known as a "VPT" or a Disabled Trust) is specifically designed to allow your chosen trustees to manage the assets you leave to your child, with minimal additional tax implications.  Uniquely, VPTs also qualify for the Residence Nil Rate Band allowance in your will, in the same way as a direct gift to a child would.  To qualify, your vulnerable child must be in receipt of means-tested benefits such as PIP.

A Discretionary Trust (also known as a "DT") is slightly more complex to operate but DTs are very popular with many families, as they offer more wide-ranging protection.  For instance they can benefit multiple beneficiaries at the same time, so they are popular for families with multiple protection needs.  A DT is also a good way to prevent inheritance tax on the death of any of your beneficiaries, thus preserving assets for future generations.  DTs do not qualify for residence nil rate band, but that aspect can potentially be taken care of elsewhere in your will.  DTs can also protect benefits, in the same way as a VPT.

3. How do I find out what is best for my family?

Click below to book a free 1-2-1 chat with one of our friendly, specialist advisers.  They'll go through all the options in your situation and help you make the very best decisions for your family, without obligation.