Disabled Children's Trust

QuimbusFlestrim

My 14 son who is autistic inherited £75k from my Uncle in his will. The solicitor handling the probate said that as he was a minor, they would put the monies into a bare trust, although the will did not stipulate anything of this nature. I stated that as he was disabled, it would be good if this were placed into a disabled person's trust, however the probate solicitors suggested that they do not handle complex trusts and asked me to go to another solicitor.

I have tried several solicitors, one stated that they could not set up a trust without reviewing the will at £5000+vat to ensure that the will allowed for the trust to be set up.

The second solicitor said that they could create the trust but not transfer the monies left in the will into the trust as this was deliberate deprivation of assets as the monies were left to my son and not to the trust. They would charge £2750+vat to create the trust including two wills for us.

The third solicitor stated that we should leave this as a bare trust as my son could only get this when he was 24 and potentially handle the transfer of assets into a disabled person's trust. I had questions about how I could handle capacity to deprive him of monies which were rightfully his when he was 24 and the tax implications, but he said I needed to have a chargeable consultation to discuss.

The final solicitor stated that that they would review the will at £3000+vat to ensure a disabled person's trust could be created, then £1750+vat to set up the disabled person's trust if they could create it.

Although, this is a nice situation to have, we do not have this sort of money to be able to consult solicitors and nothing was set in the will to pay for consultation or advice. The administrators also stated that they cannot give us any cash or provide monies to consult a solicitor. The probate solicitors also stated that they do nor specialise in this area and they do not have capacity at the moment on advising on trusts at all.

What I want to know is:

1. How can I protect my son as he is severely disabled and may need to go into sheltered accommodation at 18? The inheritance will go to pay for this and he will not benefit in any way. This will also impact any benefits that he may be entitled to.
2. How can I set up a disabled person't trust if the will does not specifically allows this and can I argue that a bare trust will not protect him when he is 18.
3. Are the solicitors right about not gaining the money until he is 24? I cannot find anything about this. Even when he is 24, I do not think he will have the capacity to handle complex financial decisions.
4. Do I need to perform a capacity test if he turns 18 to deprive him of these monies and place them into a disabled person's trust and are there tax implications in order to transfer money from one trust to another?

Thanks

marcia_

no idea about the need to assess the will. I am using irwin Mitchell to set up a personal injury trust. They do other trusts so keep trying other solicitors, get an hour free advice if they offer it and their costs

you are right he needs a disabled persons trust to protect his benefits entitlement.

Keep_pedalling

If he has been left it absolutely then no you cannot put it in any type of discresionary trust.

poseidon1

In responding to your post I am assuming:

1. For whatever reason neither your uncle or his solicitor thought to establish a specific disable person's trust around a fixed legacy of £75k in favour of your son.
2. Your son's disability is of an order of magnitude that he would not have mental capacity to make his own financial decisions on attaining age 18.

If the above is a correct summation of the position, then as your son's parent and guardian you do have power to vary your Uncle's Will ( within two years of his death), to establish a qualifying disabled trust as defined by s89 Inheritance Tax Act 1984 on behalf of your son by way of a Deed of Variation. Such a DOV would deem your Uncle as the trust settlor for IHT purposes.

Clearly, this would be a highly specialised task requiring an appropriately qualified lawyer who is a member of the Society of Trust and Estate Practitioners ( STEP). You cannot do so by yourself, and if none of the lawyers you have obtained quotes from are not STEP qualified, I would question their ability to undertake this task effectively.

You mention you have no resources to pay for such a trust yourself, but this should be an allowable capital expense of the trust fund itself, since the trust properly structured will preserve state means tested benefits on your son's behalf for the forseeable future.

Your primary issue here is the size of the trust fund relative to costs not only to establish it, but also to deal with future tax compliance issues if the trust fund is invested in conventional income producing assets ( you may need an accountant for the complex trust tax returns needed).

Therefore as regards avoiding complex tax compliance, best to avoid conventional income producing assets and invest the trust funds in life company Investment bonds which whilst invested produce no taxable income or gains liable to capital gains tax. You will however require the services of an IFA to provide the investment advice.

One last point, worth noting if you do take the touble and expense to establish the trust, it can be a continuing repository for future inheritances, including whatever you might wish to eventually settle under the terms of your own will.

pinkdon

My daughter’s father passed intestate and as per the rules, everything was left to her. She also has autism and a few other conditions. I looked into trusts for her but didn’t have the money to pay independently. It’s an expensive minefield, I ended up putting her money into an account she couldn’t touch until 21, a bond that paid 4 years later and an isa combining her child trust fund. She’s now 18 with limited understanding although I have explained multiple times. She cannot work but also cannot get any UC or N.I credits as she has savings above £16,0000. I guess her inheritance will be used for her care at a later date once I’m gone. I understand your frustration completely but I fear there is no good outcome. All the best, fingers crossed you get a better outcome

QuimbusFlestrim

https://forums.moneysavingexpert.com/discussion/comment/81917846#Comment_81917846

Thanks, I was not very close to my Uncle and never really kept in touch after my son was born and life just moved on. He was unaware of my son's condition. He left a legacy of over £1.5m mostly around investments and his estate. He passed away without any heirs and he left most of his money to charity and gave my son the £75k without knowing much about him.

The solicitors have been winding up his estate and selling off the land, paying death duties for the past 3 years, so a deed of variation is too late.

We initially got £5k and thought this was the final amount but once they sorted out the sale of property etc, the solicitors stated that my son would get £75k in total.

We asked the solicitors about paying for the trust to be set up but they have advised me that the administrators will not allow this. They will register a bare trust which will allow me to open a trust account with a bank and then they will transfer the monies to me. My son is high functioning autistic and manages an account himself and travels quite independently, but at the moment does not make sensible financial decisions. When we got the initial cheque we paid £1000 into his account for day to day expenses and to treat himself and he bought a Lego Death Star with all the money. I am glad I paid the rest into a child ISA for him. I am concerned that he will spend all the cash at one on frivolities rather than help him to manage in the future.

poseidon1

https://forums.moneysavingexpert.com/discussion/comment/81920381#Comment_81920381

If your son is high functioning autistic, very doubtful he would have qualified for a tax beneficial disabled person's trust in any event.

Best you can do to try and save him from himself is to utilise your bare trustee status to invest in Junior Isas at £ 9k per year ( you can invest £18k over the next 30 days into the new tax year).

Also consider growth bonds with NSI for up to 5 years maturity, at interest rates around 4% on a bare trust basis. See application form below

https://www.nsandi.com/files/asset/pdf/guaranteed-growth-bonds-application-form-trustee.pdf

Please note you will need to fund the account by cheque so hopefully you can set up a bare trust current account on this basis.

KxMx

https://forums.moneysavingexpert.com/discussion/comment/81920381#Comment_81920381

Mistakes are often the best way we learn, rather than listening to parental advice (been there & done that!)

In fariness just because he's making financial decisions you as a parent disagree with, doesn't mean he is in the wrong.

It was his money to spend as he chose, not how you chose. Presumably the lego was something he wanted, and will get enjoyment from. What's wrong with buying something with an inheritance he otherwise wouldn't have been able to afford, and will enjoy? Plus I imagine there is a market to resell as secondhand if in the future he loses interest in.