How Can A Client Provide For Their Vulnerable Relative?

As part of the Women in Wills group, that is run through Today’s Wills and Probate, where industry peers share their knowledge. We wanted to share with you, the thoughts of Lynne Bradey, a Partner at Wrigleys Solicitors.

One question that gets regularly posed to Lynne, is from family members – often parents – who want to provide for their children who are deemed vulnerable. Lynne explains the best way to provide provisions for the child after the parent has passed.

What makes someone vulnerable?

A vulnerable person can be classed as, someone who:

  • Isn’t mature
  • Isn’t financially sensible
  • Lacks capacity to deal with financial affairs
  • May be good with money but has their finances ‘means tested’ for benefit purposes.

Scenario

‘Sarah’ has learning disabilities. She used to live with her parents, but decided she wanted to live independently so moved into sheltered housing. This gave Sarah her independence, but provided her with support and supervision she needed as and when as required due to the fact support workers were available day and night.

To pay for her accommodation, Sarah received benefits, Local Authority funding and Personal Independence Payments (PIP).

Sarah’s has a huge passion for steam engines. She lives, breathes and dreams of steam engines, and will do all she can to go and see them. This passion has seen her travel across the country on various occasions to see famous engines.

Sarah’s parents are well aware of her passion, and upon their death would like to leave her some money so she can continue to enjoy the thrill steam trains give her. They also want to leave money to Sarah to help maintain her and ensure she is looked after, but don’t want this inheritance to impact on the means tested benefit Sarah receives.

What options do Sarah’s parents have?

It’s only right that Sarah’s parents go and see advice from a professional who could advise them of the best routes to take and why.

What shouldn’t they do?

Discussing this matter with other people who aren’t professionals or knowledgeable in this field may create some quick solutions for Sarah’s parents, but wouldn’t help to protect Sarah further down the line.

Some routes the parents shouldn’t consider include:

  • Leaving all of the money to Sarah’s brother. By not putting the money into a Trust for Sarah, and leaving the responsibility on her brother to ‘see her right’ can lead to problems for Sarah. Firstly, the parents are relying on the brother’s integrity to provide for his sister. Secondly, this leaves the inheritance they left their son at risk of any issues that could affect his wealth. These issues include: divorce, creditors, being spent etc.
  • Create a Deeds of Variation. This can have tax implications, but also be classed as ‘deprivation’ with regards to the care Sarah receives in sheltered housing. The Deeds of Variation would be included in the means tested benefit which could result in Sarah receiving a reduced payment, or losing this benefit altogether.

So, what should they do?

In this scenario, the best option for Sarah and her parents would be to place any inheritance into a Discretionary Trust. Ideally a Disabled Discretionary Trust, as this would protect Sarah’s means tested benefits. There are also tax advantages available to Sarah if this is the route chosen by her parents.

However, Sarah would need to be classed as ‘disabled’ for the Disabled Discretionary Trust to stand.

How can someone be classified as disabled?

Under the Mental Health Act, being disabled can be defined as someone who is unable to deal with their finances. It can also encompass and be defined by the types of benefits a person is on.

Summary

In conclusion, the best road for Sarah’s parents to take which would protect her benefits, provide for her and allow her to follow her passion are:

  • Set up a Trust for Sarah and a Trust for her brother in their Will or Lifetime
    • Appoint trustees that can be trusted, and who ideally know Sarah and will help her to pursue her passion. A minimum of two trustees are needed. It can also be advised that a professional body is a trustee as well as someone who knows Sarah.
  • Make the Trusts Discretionary
  • Get Sarah’s ‘disabled person’ status certified

This way Sarah’s interests are protected and she can still be guided and given support following the death of her parents.

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