Planning how to provide for your children after you are gone can be an emotional and sometimes difficult process. Naturally, most parents want to treat their children fairly. But if a child is vulnerable or has additional learning needs, leaving them an inheritance outright may not always be the best option.
For example, a direct inheritance could:
- Affect their entitlement to means-tested benefits or support services
- Put them at risk of financial exploitation
- Be difficult to manage if they are unable to handle money independently
In these situations, placing money into a Trust is often the most appropriate solution.
Types of Trusts
There are two main types of Trusts commonly used to protect vulnerable children or those with additional needs.
1. Discretionary Trust
A Discretionary Trust is the most flexible option.
- Your child can be included as a potential beneficiary alongside others, such as siblings, family members, or even charities.
- Being named as a beneficiary does not give them automatic entitlement to the Trust funds. Instead, the Trustees decide how and when money should be used to support them.
- This allows the Trustees to make decisions in your child’s best interests, ensuring they are provided for in a way that meets their individual needs.
To guide the Trustees, the person making the Will (the testator) should write a Letter of Wishes. While not legally binding, this document sets out your hopes and intentions, giving Trustees valuable direction when managing the Trust.
2. Disabled Person’s Trust
A Disabled Person’s Trust is designed specifically for someone who meets the statutory definition of disability under the Mental Health Act 1983.
- It is less flexible than a Discretionary Trust. While you can name other beneficiaries, the Trustees’ ability to provide for them is restricted to the lower of £3,000 per year or 3% of the Trust’s assets.
- This can be helpful in ensuring the majority of the funds remain for the benefit of the vulnerable child.
- However, if your estate is substantial, the restrictions may mean that surplus funds cannot easily be distributed to others.
Choosing Your Trustees
Appointing the right Trustees is crucial. They will have wide-ranging powers and responsibilities, including the day-to-day administration of the Trust.
When deciding who to appoint, consider people who:
- Understand the needs of the beneficiaries
- Can work well together
- Are capable of managing the financial and legal responsibilities involved
Professional advice is strongly recommended before making your decision.
Letters of Wishes
A Letter of Wishes sits alongside your Will or Trust and provides practical guidance for your Trustees.
- It does not need to be in formal legal language
- It is not legally binding, but it helps Trustees understand your intentions and preferences
- It can give you peace of mind that your wishes will be taken into account
Why Professional Advice Matters
Every family situation is unique, and the most appropriate type of Trust will depend on your specific circumstances. Professional advice ensures that the right decisions are made for both you and your loved ones.
If you would like tailored advice on Estate Planning and creating a Trust, please contact our experienced Private Client team:
Disclaimer: The information provided on this blog is for general informational purposes only and is accurate as of the date of publication. It should not be construed as legal advice. Laws and regulations may change, and the content may not reflect the most current legal developments. We recommend consulting with a qualified solicitor for specific legal guidance tailored to your situation.
Written by Kathryn Thornewill TEP
Associate Partner, Wills Trusts and Estate Planning at Franklins Solicitors LLP
Specialises in estate administration, Wills, Lasting Powers of Attorney, Court of Protection, and inheritance tax planning. Kathryn is STEP-qualified and delivers tailored, client-focused advice.
With extensive experience across private client work, Kathryn supports individuals and families in planning for the future and protecting their assets. Her STEP qualification highlights her depth of knowledge in trusts and estates, and she is often praised for providing clear, practical guidance on complex matters.
Kathryn is known for her friendly and approachable manner, providing clients with professional and efficient support during difficult times. She advises a wide range of clients, from business owners managing estate and shareholdings to families preparing Wills for loved ones.
She works closely with accountants, financial advisors, and colleagues in Property and Corporate teams to ensure comprehensive, tailored advice.
Outside work, Kathryn enjoys walking and visiting family and friends.
