Comparing Disabled Person Trusts And Special Needs Trusts

At Blackstone Solicitors, we pride ourselves on offering comprehensive legal services tailored to the unique needs of our clients across England and Wales. One area of particular importance is the establishment of trusts for individuals with disabilities. In this article, we will compare disabled person trusts and special needs trusts, highlighting their similarities, differences, and the benefits they offer.

Please click here to find out more about our Wills, Trusts and Lasting Power of Attorney Services.

Free Initial Telephone Discussion

For a free initial discussion on how we can help you deal with the legal implications of creating a Trust, get in touch with us today. We are also experienced in dealing with all aspects of Wills and Probate and we will review your situation and discuss the options open to you in a clear and approachable manner. Early expert legal assistance can help ensure you avoid the stress of dealing with these issues on your own. Simply call us on 0345 901 0445 or click here to make a free enquiry and a member of the team will get back to you.

Understanding Trusts for Individuals with Disabilities

Trusts are legal arrangements where one party, known as the trustee, holds and manages assets on behalf of another party, the beneficiary. Trusts can serve various purposes, including estate planning, asset protection, and providing for loved ones. For individuals with disabilities, trusts are often used to ensure their financial security and well-being without affecting their eligibility for means-tested benefits.

What is a Disabled Person Trust?

A disabled person trust, also known as a disability trust, is specifically designed to benefit individuals with disabilities. These trusts are established to ensure that the beneficiary’s needs are met without jeopardising their eligibility for means-tested benefits, such as Disability Living Allowance (DLA) or Personal Independence Payment (PIP).

What is a Special Needs Trust?

A special needs trust, while similar in purpose to a disabled person trust, is a term more commonly used in the United States. These trusts are designed to provide for the needs of individuals with disabilities without affecting their eligibility for government benefits such as Supplemental Security Income (SSI) and Medicaid.

Key Features of Disabled Person Trusts

1. Means-Tested Benefits Protection: One of the primary advantages of a disabled person trust is that it allows the beneficiary to retain eligibility for means-tested benefits. The assets held in the trust are not considered when assessing the beneficiary’s financial resources, ensuring they continue to receive essential support.
2. Tailored to Individual Needs: Disabled person trusts are highly flexible and can be tailored to meet the specific needs of the beneficiary. This includes provisions for medical care, education, housing, and other personal requirements.
3. Trustee Discretion: Trustees have the discretion to manage and distribute the trust assets in a manner that best serves the beneficiary’s interests. This flexibility ensures that the beneficiary’s changing needs can be accommodated over time.
4. Protection from Creditors: Assets held in a disabled person trust are generally protected from creditors, providing an additional layer of financial security for the beneficiary.

Key Features of Special Needs Trusts

1. Government Benefits Protection: Special needs trusts are designed to ensure that the beneficiary remains eligible for government benefits such as SSI and Medicaid. The assets held in the trust are not counted as part of the beneficiary’s resources.
2. Customised Support: Like disabled person trusts, special needs trusts can be customised to meet the specific needs of the beneficiary. This includes provisions for medical care, education, and other personal needs.
3. Trustee Management: Trustees of special needs trusts have the authority to manage and distribute the trust assets in a way that best supports the beneficiary. This ensures that the beneficiary’s needs are met over time.
4. Creditor Protection: Assets in a special needs trust are generally protected from creditors, providing financial security for the beneficiary.

Comparing Disabled Person Trusts and Special Needs Trusts

While disabled person trusts and special needs trusts share many similarities, there are some key differences to consider.

Legal Jurisdiction

• Disabled Person Trusts: These trusts are established under the legal framework of England and Wales. They are designed to comply with local laws and regulations, ensuring that the beneficiary remains eligible for means-tested benefits such as DLA and PIP.
• Special Needs Trusts: These trusts are more commonly used in the United States and are designed to comply with US laws and regulations. They ensure that the beneficiary remains eligible for government benefits such as SSI and Medicaid.

Terminology and Usage

• Disabled Person Trusts: The term “disabled person trust” is more commonly used in the UK. These trusts are specifically tailored to meet the needs of individuals with disabilities in England and Wales.
• Special Needs Trusts: The term “special needs trust” is more commonly used in the US. While the purpose is similar, the terminology reflects the legal and regulatory environment of the United States.

Establishment and Management

• Disabled Person Trusts: These trusts are established and managed in accordance with UK law. Trustees must ensure that the trust complies with local regulations and that the beneficiary’s eligibility for means-tested benefits is preserved.
• Special Needs Trusts: These trusts are established and managed in accordance with US law. Trustees must ensure that the trust complies with US regulations and that the beneficiary’s eligibility for government benefits is preserved.

Benefits of Establishing a Trust for Individuals with Disabilities

Both disabled person trusts and special needs trusts offer significant benefits for individuals with disabilities and their families.

1. Financial Security: Trusts provide a secure way to manage and protect assets for the benefit of individuals with disabilities. This ensures that the beneficiary’s financial needs are met over time.
2. Eligibility for Benefits: Trusts are designed to ensure that the beneficiary remains eligible for means-tested or government benefits. This is crucial for individuals who rely on these benefits for their daily living expenses and medical care.
3. Customised Support: Trusts can be tailored to meet the specific needs of the beneficiary. This includes provisions for medical care, education, housing, and other personal requirements.
4. Protection from Creditors: Assets held in a trust are generally protected from creditors, providing an additional layer of financial security for the beneficiary.

Establishing a Trust with Blackstone Solicitors

At Blackstone Solicitors, we understand the complexities involved in establishing trusts for individuals with disabilities. Our experienced team is here to guide you through the process, ensuring that the trust is set up correctly and in accordance with the beneficiary’s needs. Key steps include:

1. Identifying the Beneficiary’s Needs: Understanding the specific needs and circumstances of the beneficiary is crucial in designing a trust that provides the necessary support.
2. Selecting Trustees: Choosing the right trustees is essential for the effective management of the trust. Trustees should be individuals or entities that the settlor trusts to act in the best interests of the beneficiary.
3. Drafting the Trust Deed: The trust deed outlines the terms and conditions of the trust, including the powers and responsibilities of the trustees, and the rights of the beneficiary.
4. Funding the Trust: Determining the appropriate assets to place in the trust is an important consideration. This may include cash, investments, property, or other valuable assets.
5. Ongoing Management: Regular reviews and management of the trust are necessary to ensure that it continues to meet the beneficiary’s needs and complies with legal requirements.

Conclusion

Disabled person trusts and special needs trusts provide valuable solutions for individuals with disabilities, offering financial security and preserving eligibility for essential benefits. While the terminology and legal frameworks may differ between the UK and the US, the core purpose remains the same: to ensure that individuals with disabilities receive the support they need.

At Blackstone Solicitors, we are committed to helping our clients navigate the complexities of trust law and establish trusts that provide lasting benefits for their loved ones. If you have any questions or need assistance with setting up a trust, please do not hesitate to contact us. Our experienced team is here to provide the guidance and support you need.

How we can help

We have a proven track-record of helping clients create Trusts. We are a multidisciplinary firm and have all the expertise inhouse to satisfy the most exacting requirements of our clients. We will guide you through all the necessary legal due diligence in a comprehensive and timely manner. We firmly believe that with the right solicitors by your side, the entire process will seem more manageable and far less daunting.

How to Contact Our Wills and Probate Solicitors

It is important for you to be well informed about the issues and possible implications of creating a Trust. However, expert legal support is crucial in terms of ensuring your wishes are met as you would want them to be.

To speak to our Wills and Probate solicitors today, simply call us on 0345 901 0445, or click here to make a free enquiry. We are well known across the country and can assist wherever you are based. We also have offices based in Cheshire and London.

Authored by Ben Posted in Blog, News Tagged as

Comments are closed.