Even if we read the news with a pinch of salt, it appears difficult to deny an increase in additional needs, autism, or other vulnerabilities amongst our society and younger generations.  Partly it is simply that we recognise such needs now, and arguably this is positive.

Common estate planning mistakes for vulnerable beneficiaries

For those without advice (or poorly advised), I tend to see three main trends:

  1. Leaving a greater percentage of the estate or larger fixed sums to vulnerable beneficiaries, on the basis that they may require additional support; alternatively
  2. Excluding them entirely, because there are concerns about loss of benefits or the beneficiary’s ability to manage such funds.  Often this option will come with an ‘understanding’ that other beneficiaries will provide for the vulnerable relative, but of course this is not legally binding.
  3. A failure to consider wider estate planning e.g. a parent’s Will may state that if their child dies before them, it will automatically pass down the generation. This may be unsuitable if there is a grandchild with disabilities / vulnerabilities.

Neither options 1 or 2 above may be appropriate and certainly in the latter case hoping that others “will do the right thing” may be naïve and/or fail to appreciate any tax implications this may have for others being asked to gift on assets.

Legal solutions: Disabled person trusts and estate planning

Fortunately, there are several legal mechanisms, together with practical steps which can be taken to prepare for how ongoing care and financial support can continue safely even after you are long gone.

One of these is a vulnerable or disabled person trust being set up. If the trust qualifies under HMRC criteria, it also has tax advantages. Such trusts can be set up during your lifetime or within your Will. There are pros and cons to each option and it will usually depend on family and financial circumstances to determine which is appropriate for a specific client.

As ever, good advice should never be a “one-size-fits-all” approach. At FJG we take a tailored approach and it always feels like a privilege working with families to advise and set up structures in place to provide peace of mind.

How can we help?

Pippa Bavington is a Partner and Wills, Life Planning and Probate Team, based in our Sudbury Office.

Pippa aims to approach all her work with compassion and to ensure clients understand any complex aspects sufficiently to allow them to make an informed decision for their own circumstances and wishes.

For further advice on the above subject please contact us on 08081 891 596, or via our online enquiry form.