Child

Disabled or Vulnerable child

If you are the parent of a disabled or vulnerable child have you considered what will happen when you and your partner/spouse pass away?

If you die without a valid Will, your assets will pass in accordance with the intestacy rules. Contrary to popular belief, your whole estate may not pass automatically to your spouse or civil partner. Your children may inherit part of your estate. On the death of the surviving spouse or civil partner, everything passes to your children.

There are many reasons why it may not be appropriate for a disabled/vulnerable child to directly receive a potentially large inheritance. Firstly, it may adversely affect any means tested benefits or local authority funding that your child receives. It is also possible that they may well be vulnerable to financial abuse from others. Furthermore, they may well not have the capabilities to manage their inheritance.

Preparing a suitable Will is the best method of ensuring that your disabled child is correctly provided for.

Key considerations for your Will

How to benefit your child

It might be tempting to ring-fence a sum in your Will and leave it to a relative, with the hope or condition that they ‘look after’ those funds on behalf of your disabled child. This is not something we usually recommend and involves an element of risk. The request is not binding and they are not obliged to use the funds in the way you wish. Those funds will be treated as part of that relative’s estate and may no longer be available to your child if they die themselves. The fund could also be depleted in the event of that relative’s bankruptcy or divorce.

Trusts

The best solution is to include a trust in your Will, to which your disabled child’s share of your estate would fall on your death. This would protect the funds from the risks outlined above as the trustees have a legal obligation to manage the funds in accordance with the terms of the trust. It also provides flexibility to cater for uncertainty over what your child’s needs are going to be in the future. You could also provide for what happens to the ‘trust fund’ in the event of your child’s death.

It is also helpful to have a Letter of Wishes alongside your Will, in which you explain the reason for the Trust and how you intend for it to be used. Whilst such a letter is not binding, it serves as useful guidance to your trustees.

Trustees

Your choice of trustees is key, as these are the people who would look after funds for your children. Ultimately, you should choose individuals that you trust completely. Often, people choose two family members; but it is also possible to appoint a trusted professional, along with the family members, to provide impartial advice and guidance.

If you would like to meet with one of our Consultants to discuss any of the issues raised in this article or any other Estate Planning topic please telephone 01732 868190 or click here. Don’t delay ~ Act today!

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