Any inheritance received directly by a disabled or vulnerable beneficiary can affect the means tested benefits he or she might be in receipt of.
An inheritance can also affect housing arrangements that he or she has in place. In some circumstances, you may simply have concerns that the funds will not be used in the best way possible.
Disabled Person’s Trusts
By establishing a disabled person’s trust under a Will (as opposed to other types of trust), funds held for the vulnerable person will not be subject to the harsh tax regime which applies to other types of trust. There have also been changes in recent years which further improve the Capital Gains tax position of assets held in disabled trusts,
Who is entitled to the benefits of a Disabled Person’s Trust?
In the past, the benefits of Disabled Person’s Trusts have only been available for a few disabled people. Eligible individuals included those claiming Attendance Allowance or receiving middle or higher rate care components of Disability Living Allowance.
Changes to the benefits regime are underway. Disability Living Allowance is being replaced by Personal Independence Payment and it is proposed that all those receiving Personal Independence Payments will qualify for a Disabled Person’s Trust whereas lower rate Disability Living Allowance Claimants would not have qualified.
There are other qualifications as to how income and capital in the trust should be dealt with, which are also subject to change.
If you are interested in setting up a Disabled Person’s Trust, we suggest you contact one of our specialist Wills & Tax Planning solicitors for advice concerning your situation.
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