‘If you have a child with a disability, you may be concerned about what will happen to them when you are no longer around,’ says Emily Warner an associate solicitor in the Private Client team at Thackray Williams.
‘Ensuring a child with disabilities is provided for sufficiently in the long term can be tricky to navigate, and it is best to seek professional advice tailored to your circumstances and the needs of your child.’
Considerations when leaving money to a disabled child
If your child is in receipt of state benefits, leaving money to them outright could affect those benefits and cause your child’s income to drop. Rather than being able to spend their inheritance as they choose, it may end up being counted as their income until the funds are depleted.
Perhaps your child would not be able to manage a sudden receipt of significant funds and, if you left all your wealth to them outright, they would not know how or where to invest the sums. You might also be concerned about the potential for other people to take financial advantage of your child if you were not available to protect them.
If you have more than one child, it could be that a child with disabilities requires more financially than the others. A solicitor can help you to consider the fairness and appropriateness of leaving money to your children in unequal shares in light of all the current and likely future circumstances, as well as advising you on any potential claims that could arise.
Often a trust arrangement will be the most suitable approach in any of these circumstances. There are many different types of trusts, some of which can help to preserve access to state benefits. Others help ensure that all children ultimately benefit equally, whilst placing enough emphasis on your disabled child to provide for their lifetime needs. Leaving money to a disabled child under a trust also allows you to appoint trustees to manage the funds on your child's behalf, meaning that someone you trust will be able to decide how the money is spent and to ensure that this is in line with your child’s needs and best interests.
Dos and don’ts of financial provision
Everyone’s circumstances and needs are unique, and so before making any financial provisions it is important to seek legal advice specific to your family situation.
If a trust is your best option, it may be that a discretionary trust is most appropriate. Another commonly used trust for disabled children is a disabled person’s trust. However, each type of trust has a unique key purpose and specific tax implications so personalised advice is critical to ensure that you have opted for the trust most suited to you and your family.
When opting for a trust, deciding who the trustees should be is of utmost importance. Your trustees will be responsible for continuing to ensure your child is provided for, so it is imperative to choose people who you trust, who make good financial decisions, and who understand your child’s needs.
A common misconception is that a disabled child should simply be bypassed under the will so as to avoid adversely affecting their state benefits. Doing so is never a good idea, even if you anticipate that other family members will provide for them using their own share of inheritance. Not only does this run the risk that those family members may act differently, but circumstances outside of their control may mean that they cannot act as agreed.
For example, if you were to leave your entire estate to your sister on the assumption that she would ensure your disabled child is provided for, your sister could end up divorcing, becoming bankrupt, dying, or becoming mentally incapable. Any of these circumstances would redirect the inheritance away from your child, despite any contrary intention you and your sister may have.
Providing for disabled children in non-financial ways
As well as thinking about how to ensure your child is provided for financially, you should also consider who would look after them. A guardian should be appointed for any child who is under 18 to ensure that someone appropriate is available to care for them if you no longer can.
If your disabled child is over 18 you cannot appoint a guardian for them, even if they would not be able to look after themselves. However, you can leave detailed guidance with your will as to who you would like to unofficially look after your child and any specific care you would like them to provide. A solicitor can help you to understand the legality of such guidance and to ensure it is accurately drafted.
As well as considering what might happen to a disabled child after your death, it is important to consider the possibility that you may one day no longer have the capacity to continue providing for your child during your lifetime. In this instance, a lasting power of attorney can help. A lasting power of attorney allows you to decide who makes decisions on your behalf should you no longer be able to make those decisions yourself. If you have a disabled child, you will also need to factor in their position should your capacity change. A carefully drafted lasting power of attorney can allow for continued financial provision or other arrangements for your child.
Depending on the exact circumstances of your child’s disability, their age, and other factors, it could also be appropriate for them to make a lasting power of attorney or for someone to make an application to the Court of Protection on their behalf. Again, legal advice should be sought bearing in mind the situation as a whole.
How can we help?
Providing for a child with disabilities must be carefully navigated to ensure that everyone’s needs are met.
Our solicitors can help you to be sure you have taken the best option for you and your family and that you have made a fully informed decision.
For further information, please contact a member of the Private Client team on 020 8290 0440.