Special Wills for Special Needs Beneficiaries
3 October 2018 by Anastasia Packman
Almost everybody has assets of some sort whether this is a house or simply money in a bank or both. For anyone with assets, it is very sensible to make a Will but this is especially important if there are people with special needs to consider.
There are broadly two types of gifts you can leave in a Will. The first is called an absolute gift which means that the beneficiary receives all of the gift immediately and can do what they like with it. One spouse leaving assets to another is one example. The second is to set up some type of trust meaning that the Executors of the Will can delay the handing over of the assets. One example would be a parent with young children saying that those children should receive assets when they reached a specific birthday such as say twenty-one. Often in these cases, there is the option to give money earlier if the Executors think this is a good idea perhaps to help with a child’s education. In the meantime, the Executors are entrusted with the child’s inheritance.
A less common type of trust is called a discretionary trust. The person making the Will would nominate a group of beneficiaries who would have no absolute right to anything but the Executors could choose them to benefit if they so wished by exercising their discretion (i.e. making a choice). This type of trust is sometimes used for tax planning but is arguably more used if beneficiaries have special needs.
The person with special needs may not be able to deal with an inheritance and so a trust is often a way for the Executors to manage the inheritance so that a beneficiary is not overwhelmed but does receive what they need when they need it. If a special needs beneficiary does receive an inheritance absolutely but cannot deal with it often a Court Order has to be obtained to nominate a third party to look after it. If the inheritance is given absolutely this could also decrease or stop benefits received which are means tested.
Some people prefer not to set up trusts but instead leave a special needs beneficiary’s inheritance to a third party such as a brother or sister but this can create practical problems. For example, the brother or sister may, in turn, die leaving the inheritance to the person who is not so concerned about the welfare of the special needs beneficiary. Also, the brother or sister could have the best of intentions but later may be involved in a messy divorce and the inheritance might have to be included in any divorce settlement. Hopefully, of course, the brother or sister would not refuse to help the special needs beneficiary but this could happen.
Many people do not realise that making a Will is not always watertight for various reasons and if a special needs person is excluded say from the Will of a parent, Social Services could challenge the Will saying it is unfair.
Although some people prepare Wills themselves this can be dangerous for even the most simple Wills but where there are complex issues involved such as ensuring special needs beneficiaries are protected in the long term as well as the short term good legal advice is strongly recommended.
If you would like to book an appointment to speak to one of our team, call 01277 420223 or email [email protected].