I have disabled dependants
In short
Leaving money outright to a disabled or vulnerable person can jeopardise their means-tested benefits and may be hard for them to manage. A disabled person's trust lets trustees hold and use funds for their benefit while protecting their entitlements, often with favourable tax treatment. This needs specialist advice.
The situation
You provide for, or want to provide for, a disabled or vulnerable dependant.
What happens legally
Direct gifts and trusts have very different consequences for a vulnerable beneficiary:
- A direct inheritance can take a disabled person above the capital limits for means-tested benefits and care funding.
- A disabled person's trust allows trustees to manage money for their benefit without it counting as the beneficiary's own capital.
- Such trusts can qualify for special inheritance tax and income tax treatment when they meet the statutory conditions.
- You can leave a letter of wishes guiding trustees on how to support the beneficiary.
The risks
- An outright gift can disqualify a dependant from vital benefits or care funding.
- A vulnerable beneficiary may be unable to manage a lump sum, or be exposed to financial abuse.
- Poorly drafted trusts can fail to secure the intended tax or benefit protections.
Recommended actions
- Take specialist advice on a disabled or vulnerable person's trust.
- Choose reliable trustees who understand the beneficiary's needs.
- Write a detailed letter of wishes to guide the trustees.
- Coordinate with any deputy or attorney already acting for the person.
Sources
- Inheritance Tax Act 1984 (trusts for disabled persons) — legislation.gov.uk
- Trustee Act 2000 — legislation.gov.uk
- GOV.UK — Trusts and taxes
- Reviewed by
- ClearLegacy editorial team
- Last reviewed
- June 2026
- Next review
- December 2026
- Jurisdiction
- England & Wales
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