Trusts for the Disabled

If you have a child or a dependent who suffers from a disability you will no doubt be concerned about how they will manage in the event that something happens to you.

Creating a Disabled Person’s Trust (also known as a Vulnerable Person’s Trust) either during your lifetime or by Will can give you confidence that you are providing for them in the event of your death and also allows you to choose the people who will manage the fund.

A correctly set up trust will also protect your beneficiary’s rights to receive means tested benefits.

At JMW, our expert solicitors can help you set up your trust with the minimum of hassle, giving you the peace of mind your wishes will be carried out in the event of the unexpected. Call us for on 0345 872 6666 or complete an enquiry form.


Who qualifies for a Disabled Person’s Trust?

For the purposes of creating a Disable Person’s Trust, a disabled person is:

  • a person unable to administer his or her property or manage his or her affairs because of mental disorder within the meaning of the Mental Health Act 1983, or
  • a person in receipt of either attendance allowance or disability living allowance, by virtue of entitlement to the care component at the highest or middle rate or an equivalent payment (e.g. Personal Independence Payment)


Why create a Disabled Person’s Trust?

This type of trust allows you to put away assets to be used for the disabled person’s benefit during their lifetime, meaning expenses, such as daily living costs, care fees and accommodation, can be taken care of after you have gone without affecting their entitlement to receive means tested state benefits. A Disabled Person’s Trust also receives special tax status when compared to a standard trust.

The tax benefits include:

  • Trustees are able to pay income tax based on the disabled person’s income tax position rather than at higher trust rates.
  • Trustees are able to utilise the disabled person’s annual capital gains tax allowance (£11,000 in 2014/15) rather than the lower trust capital gains tax allowance (£5,500 in 2014/15) before capital gains tax becomes due
  • No inheritance tax is payable on transfers out of the trust to a disabled beneficiary
  • The trust is not subject to the 10 year inheritance tax charge.

Assets transferred into such a trust are potentially exempt transfers, meaning that if the transferor survives seven years there will be no inheritance tax to pay on the transfer into the trust.

JMW are recommended by charity websites as experts in working with families with children with disabilities and we can even act as a professional trustee alongside friends and family to take some of the weight off their shoulders.


Contact JMW

For more information, or simply to speak to a friendly, experienced solicitor about the process of setting up a Disabled Person Trust, call JMW on 0345 872 6666 or complete an enquiry form.

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