Possibly. If a disabled person receives assets that push their estate over the Inheritance Tax threshold, tax may be payable. However, using a Disabled Person’s Trust can help avoid this, as the inheritance does not increase their personal estate and may qualify for more favourable tax treatment.

A vulnerable or disabled beneficiary is someone who, due to physical or mental illness, learning difficulties, or dependency on care, is at greater risk of exploitation or financial mismanagement. This may include individuals who lack the capacity to manage their own affairs or who rely on means-tested benefits.

No. A Trust is a legal arrangement, not a person or entity, and cannot be a beneficiary. The disabled or vulnerable individual is the beneficiary, and the Trust exists to manage assets on their behalf through appointed trustees.

A Disabled Person’s Trust is created to hold assets for the benefit of someone who meets the legal definition of disability. The trustees manage the Trust and ensure the assets are used in a way that benefits the individual without affecting their entitlement to means-tested benefits.

Trusts require careful legal and financial planning. You’ll need to consider the type of Trust, tax implications, choice of trustees, and the specific needs of the beneficiary. It’s essential to get advice from a solicitor experienced in vulnerable person and disability planning, as mistakes could affect benefit entitlement or lead to legal complications.

Trustees are responsible for managing the Trust and ensuring decisions are made in the best interests of the beneficiary. Trustees can be family members, professionals, or a combination of both, and it’s vital they understand the responsibilities involved.

Yes, that’s one of the main reasons these Trusts are used. A properly drafted Trust can ensure that an inheritance or gift does not count towards the beneficiary’s personal wealth and therefore will not affect their eligibility for means-tested benefits or support.

Yes. You can set up a lifetime Trust if you have the mental capacity to do so. Alternatively, a Trust can be written into your Will to take effect upon your death. Both options should be considered with legal advice to ensure the Trust is structured appropriately and meets HMRC requirements.