If you have a child or other loved one with a disability, you’re likely deeply concerned about their financial future. Disabled trusts can provide a valuable tool for ensuring their financial security. In this article, we’ll delve into what disabled trusts are, how they work, and the benefits they can offer.
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For a free initial discussion on how we can help you deal with the legal implications of creating a Disabled Person 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.
What is a Disabled Trust?
A disabled trust is a legal arrangement designed to manage the financial affairs of a person with a disability. It’s a flexible tool that can be tailored to meet the specific needs of the individual. By placing assets in a disabled trust, you can protect them from being used to disqualify your loved one from receiving government benefits, such as Disability Living Allowance (DLA) or Personal Independence Payment (PIP).
Types of Disabled Trusts
There are several types of disabled trusts available, each with its own advantages and disadvantages. Some common options include:
- Millennium Trust: This type of trust is designed to protect assets from being counted towards means-tested benefits. It can be used to provide income and capital for the beneficiary, while ensuring they remain eligible for government support.
- Discretionary Trust: A discretionary trust gives the trustees broad powers to decide how and when to distribute income and capital to the beneficiary. This can be helpful in situations where the beneficiary’s needs may change over time.
- Accumulation and Maintenance Trust: This trust allows income to accumulate until the beneficiary reaches a certain age or meets specific conditions. This can be useful for saving for future expenses, such as education or housing.
- Special Needs Trust: A special needs trust is designed to meet the specific needs of a person with a disability. It can be used to pay for expenses that are not covered by government benefits, such as assistive technology or specialized care.
How Does a Disabled Trust Work?
To set up a disabled trust, you’ll need to appoint trustees to manage the trust’s assets. The trustees can be individuals or professional organizations. Once the trust is established, assets can be transferred to it. The trustees will then use the trust’s income and capital to benefit the disabled individual.
Benefits of Using a Disabled Trust
There are several benefits to using a disabled trust to protect the financial interests of a person with a disability. These include:
- Preserving eligibility for government benefits: By placing assets in a disabled trust, you can help your loved one maintain eligibility for government benefits.
- Providing financial security: A disabled trust can provide a reliable source of income and capital for the beneficiary, even if their circumstances change.
- Protecting assets from creditors: Assets held in a disabled trust are generally protected from creditors, which can be important if the beneficiary faces financial difficulties.
- Ensuring proper management: Trustees can help manage the beneficiary’s finances, ensuring that their money is used wisely and efficiently.
Considerations When Setting Up a Disabled Trust
Before setting up a disabled trust, it’s important to consider several factors, including:
- The beneficiary’s needs: The type of trust you choose should be tailored to the specific needs of the beneficiary.
- The trust’s assets: You’ll need to decide what assets to place in the trust and how they will be managed.
- The trustees’ role: The trustees should be individuals or organizations that you trust to manage the trust’s assets responsibly.
- Tax implications: There may be tax implications associated with setting up and managing a disabled trust.
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.
Disclaimer: This article provides general information only and does not constitute legal advice on any individual circumstances.
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