Claire Carberry, Private Client Associate Solicitor discusses how families with special considerations can provide for their loved ones by creating a trust fund.
It’s fair to say that many people find making a Will a challenge – and this can be particularly hard when you have a loved one with special or additional needs. What support will the state provide and what additional support will they need? Who will provide it and how will it be paid for? How can you provide for that person without causing them to lose benefits? Will leaving them money attract the wrong kinds of ‘friends’? In many cases families do nothing or simply ‘cut out’ the person needing special provision, relying on someone else to ‘do the right thing’.
Let’s take the Smith and Brown families by way of examples. The Smith family have a daughter and a son with autism and they aren’t sure how much support their son will need when he is older. If they choose to do nothing, legislation means that their estates will pass to both children in equal shares, leaving their son to receive his share with no safety net and to battle the complexity of means testing and other financial issues. If they choose to leave everything to their daughter, it will be hers to do with as she sees fit, however, if she dies, becomes unwell, is made bankrupt or marries and divorces, she may not be able to use the money to provide for her brother, even if she wants to.
Janet and John Brown are a married couple with no children. Janet is living with dementia. Neither have made Wills and John no longer wishes to leave his estate to Janet – he is worried that she won’t be able to manage it. John assumes that the state will provide for Janet and is intending to leave his estate to their nephews. This could leave Janet in a vulnerable position if she runs out of money – she may have to move to a care home and if this is funded by the state it may mean that she and the family have no choice as to where she goes.
For both families, it may be sensible to create a trust. This will allow them to formally appoint trustees who will manage the money going forwards. They can state who should benefit from the trust fund, in what circumstances and who should receive the balance of funds when the beneficiaries die. This can be done in a fixed, prescriptive manner or can be left to the discretion of the trustees from time to time, removing the need to second-guess what might happen in the future.
Careful management may mean that there are few (if any) tax or benefit implications. The monies in the pot can be both sheltered against unwelcome influences and used for the benefit of those named when needed – whether that be to fund sheltered accommodation, pay for additional care and support or simply allow the beneficiaries to enjoy life’s little luxuries from time to time.
Please get in touch if you would like advice on setting up a trust to provide for your loved ones.