Leaving an inheritance to a vulnerable family member

In today’s blog, private client solicitor, Ann-Marie Matthews answers a question about leaving an inheritance to someone with special needs:

“My son has learning difficulties and is on benefits but I want him to inherit from me – what do I need to know?”

Good question!

We’ve had a chat and you’ve told me your son, Paul, has learning difficulties and isn’t able to manage his own money apart from fairly small amounts with support. He lived with you until he was 18 and has now moved into a shared house with two other adults with care needs and staff who live in on a rota basis.

Paul loves boats and often visits the local dockyard with support workers in order to watch the ships coming in and out of the port. At the moment you still take Paul on trips away but know one day an arrangement may be needed where one of the care team is paid to look after him on holiday.

Paul’s expenses and care are funded by a combination of his benefits and the Local Authority. His Personal Independence Payment (PIP) isn’t means tested but his Employment and Support Allowance (ESA) is. This allows him to receive things like free prescriptions and eye tests. The Local Authority funding he receives is means tested as is his Council Tax help.

Often people don’t do any planning to help their relatives who get means tested benefits and this can leave quite a mess in the future. People often lose their benefits and care funding, at least for a while which can seriously impact their quality of life.

You want to make sure Paul can keep his benefits and care funding after he inherits from you. The money you’re leaving will make a huge difference to his life, but it won’t be enough to pay for all his needs for the rest of his life. You would particularly like to ensure he can continue to do the things he loves and that bring him joy, ie, the visits to the dockyard.

I advised you to set up a Trust in your will called a discretionary Trust. You’ve chosen trustees you can rely on and who know Paul well. As I’m independent, you have asked me to act as a trustee too. With Paul receiving PIP he qualifies for a special type of Trust called a disabled person’s Trust. Provided we set the Trust up properly and only Paul can benefit (apart from a very small amount which can be paid to someone else) then the tax payable will be the same as if the money was given to Paul directly which is a great help. That happens in a slightly roundabout way but that’s my job to sort out! So you don’t need to worry.

You’ve written a letter of wishes, with my help, saying you want the trustees to look after Paul, protect his benefits and use the money for items and experiences that his benefits won’t cover. It has also been made clear that if Paul’s care funding isn’t enough then the trustees can use money from the trust to challenge that.

By asking for help from a qualified person early enough, you have definitely made Paul’s future as secure as possible.

Ann-Marie Matthews is a solicitor in the private client team at Barker Gotelee, Ipswich Solicitors.

Suffolk Private Client Solicitors – for more information on our range of legal services, please call the team on 01473 611211 or email [email protected]