How can I leave assets to my disabled child?

Many parents worry about how best to provide for their loved one when they are no longer around. A straightforward gift in a Will—whether left to another child to “look after” the vulnerable person, or to the vulnerable person directly—can create a number of unintended issues such as loss of means-tested benefits, exposure to financial abuse, or even the need for a Court of Protection order. Leaving a share to a sibling to ‘look after it for them’ is well meaning but fraught with all kinds of dangers. 

A Vulnerable Person’s Trust (VPT) can be an excellent solution, offering trustee oversight, continued access to benefits, and in certain cases favourable tax treatment. You decide how much of your state is to be left into the trust when you die. Your trustees (which are often other family members) can then use those assets to help improve the life of the disabled person but, importantly, the assets in the trust do not count as belonging to the person when it comes to means testing for benefits. 

Because of the significant tax benefits available, the rules of the trust are quite strict in that it must only be used to benefit the disabled person (there is an allowance of £3,000 each year which could pass to other people).  

A more flexible option

However, it’s also true that a standard discretionary trust may sometimes be more suitable, depending on your family’s objectives, the nature of the beneficiary’s needs, and whether the special tax rules for vulnerable beneficiaries will apply. This kind of trust can allow for a lot more flexibility – for example if it becomes clear that the disabled beneficiary will no longer need the assets, they can pass to other beneficiaries. The standard discretionary trust still protects against any means test, but the tax benefits are not as good as with a VPT. 

What matters most is choosing the right structure—and this is where we can really support our clients. We take the time to understand the family dynamic, discuss how each trust type works in practice, explain trustee responsibilities, and guide them toward the option that offers the greatest protection and flexibility.

Click here to see full details of how HMRC view VPTs. Or, maybe you can just have a browse around our information centre here, and then get in touch with us to find out how it all relates to your individual situation.