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Disabled Person's Trust

britishroses
britishroses Member Posts: 4 Listener
My daughter is physically disabled and her daughter, my granddaughter, has autism and will always need support they both have the highest ESA and the highest rate of PIP both components. My estate is under the IHT threshold at the moment however, it will gain over the next few years, either a house or the money to purchase a house will be part of my estate and my wishes are to make sure they have a house to live in for the rest of their lives, money to maintain the property will be provided also. Can I make a Disabled persons Trust in my Will for both of them?  Can I make my daughter one of the trustees and would I just say in my Will that when my daughter dies the entire estate will be my granddaughters? Or would the trust have to be wrapped up and another one set up? Thanks in advance for any and all help!

Comments

  • janer1967
    janer1967 Member Posts: 12,915 Disability Gamechanger
    Hi there 

    Sorry nobody has answered your question we are not legal professionals.  Some members may have relevant experience to offer 

    However I suggest you get some expert advice to make sure you do this right 
    I have professional experience in HR within public,  private, and charity sectors.  If I can help I will 
  • chiarieds
    chiarieds Community Co-Production Group Posts: 11,079 Disability Gamechanger
     Hi @britishroses - & welcome to the community. As mentioned above you would need guidance from an appropriate solicitor. I've looked online & there's some general advice about trusts for disabled & vulnerable people. Please see: https://www.renaissancelegal.co.uk/resource/trusts-for-disabled-vulnerable-people/    which mentions both Discretionary & Disabled Person's trusts.
    I hope some of this may be of interest. :)
  • Tori_Scope
    Tori_Scope Posts: 6,688

    Scope community team

    Welcome to the community @britishroses :) Have you been able to take a look at the useful links chiarieds has posted above? 
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  • britishroses
    britishroses Member Posts: 4 Listener
    Thanks, I've check out the links and they are very informative!
  • Caz_Alumni
    Caz_Alumni Scope alumni Posts: 624 Pioneering
    edited April 14
    Hi @britishroses :)

    Just wanted to add my welcome to the community. Good to hear that you found those links to be informative. 

    There is also some further information about Leaving money to a disabled person in a will trust - so you might want to have a read of that guidance too.

    Most importantly - as has already been mentioned and as is set out in the Scope guidance as well - you should seek further legal advice if you are considering including a trust in your will. Your legal representative is definitely the best person to help answer all of the more detailed questions that you have about setting up a trust for your family members. 

    All the best with this. Once again, a very warm welcome and I look forward to seeing you around the community in the future :)
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  • jameswardle
    jameswardle Member Posts: 5 Connected
    Hello. British Roses

    I've just been through a very similar process setting up a trust for my disabled brother following the death of our parents.  As other people have suggested Renaissance legal are very very good for advice. (the probate forum on money saving expert also has some very helpful knowledgeable people) Make sure you do get expert advice some solicitors are worse than useless even if STEP qualified.  Some suggestions from me below. 

    It's more usual in your will to leave your estate to a Discretionary trust,  then your trustees can decide to convert this into a disabled person trust if appropriate.  If the value of the trust is under £325K there is no advantage in a disabled person trust over a discretionary trust.

    For IHT you have an allowance of 325k + a Nill rate residence band of £175k. this NRRB can only be claimed if your house is directly inherited and not via a trust.    but best practice is still to leave everything to a discretionary trust. and then your trustees can make a deed of variation for an assignment of £175k worth of the house to your daughter after your death to be able to claim this extra allowance. This won't impact her benefits if she lives there.

    The benefit of the discretionary trust is that when your daughter dies it can simply continue for your granddaughter and in fact up to 125 years.   If you left everything to a disabled person trust I understand you would need to have a separate trust for each of them.  and the disabled person's trusts are subject to IHT.

    It would give your daughter a conflict of interest if she was both a beneficiary and a trustee.  Imagine your granddaughter once an adult wanted money to buy a car but her mum said no. would that create conflict.  But many people including me do exactly this.

    Trusts can feel complicated when you start looking at them but actually once you get your head around all the conflicting information they are not that hard. (thinking of a trust as a tiny limited company helped me).  Good luck and if you have more questions please ask.

    Thanks

    James

  • britishroses
    britishroses Member Posts: 4 Listener
    edited April 21
    Thank you for all the information and advice! @jameswardle do I have to include specific wording in the discretionary trust to give the trustees the ability to change the type of trust it is and if so, do you by any chance know what that wording is? I was told that my daughter could be one of the trustees and the beneficiary without if affecting her benefits as she doesn't own the trust and doesn't have the right to take either income or capital from the trust, is this right? My main concern is to provide a home for them with funds to maintain it, it sounds like a discretionary trust is the best way to go under the circumstances. 
  • jameswardle
    jameswardle Member Posts: 5 Connected
    Hello British roses

    The trust wording is something your solicitor will include when drafting the will it's frankly paragraphs of complicated Legalise. but basically, if you ask your solicitor to ensure your trustees have permission to transfer the assets of the trust. which should be a standard provision of any trust will.

    I would be cautious allowing your daughter to be both trustee and beneficiary if she is claiming means-tested benefits. you can probably get away with it for now as her roles as trustee and beneficiary are considered legally distinct,  but who knows how  DWP will crackdown on things in 10 years time, 

    Unless your assets are worth more than £325K I would agree that a discretionary trust is a good idea. but...,

    I would recommend getting to a point where you have a good idea of what you want to do, can then either get renaissance legal (or another very experienced trust solicitor to draft your will) or ask them to review your plans.  It will cost you a few hundred pounds but it is well worth it if you can potentially save your children 10 s of thousands, by not overlooking somthing.

    Thanks
    James





  • britishroses
    britishroses Member Posts: 4 Listener
    Thanks, James!

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