SET UP A VULNERABLE PERSON’S TRUST
To set up a vulnerable person’s trust, book an appointment with Hampshire based Hunter & Cole Associates.
PROTECTING DISABLED CHILDREN AND ADULTS IN YOUR WILL
A vulnerable person’s trust is designed to protect disabled children and adults in your Will. For example, if you are a parent called John with a son with Down’s Syndrome and want to protect his interests after your death, then you will likely be unsure how best to achieve this.
Here at Hunter & Cole Associates in Waterlooville, we have a great deal of experience setting these up for parents, so just get in touch to book an appointment and we’ll guide you through the process. Below we have a chart showing the options that John in our example has.
WHAT ARE THE TAX ADVANTAGES OF A VULNERABLE PERSON’S TRUST?
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Inheritance Tax: No ten-year anniversary or exit charges during the lifetime of the vulnerable person.
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Income Tax and Capital Gains Tax: Trustees can claim a reduction in the tax paid by the Trust.
WHO CAN BENEFIT FROM A VULNERABLE PERSON’S TRUST?
To qualify for special tax treatment, the main beneficiary must be:
1. Incapable of managing property or finances due to mental disorder (Mental Health Act 1983)
or
2. In receipt of any of the following benefits:
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• Attendance Allowance,
• Disability Living Allowance (higher or middle rate of care component)
• Personal Independence Payment (standard or enhanced rate for ‘daily living activities’)
• Constant Attendance Allowance
• Armed Forces Independence Payment or
• Increased Disablement Pension.
HMRC includes people with Autistic Spectrum Disorders, learning disabilities (such as Down's Syndrome), Schizophrenia, Bi-Polar Disorder and Dementia.
WHO CAN I CHOOSE TO ACT AS TRUSTEES?
Your trustees can be family or friends who are willing to take on this responsibility and act together. Alternatively, you may prefer to appoint a professional trustee for their neutrality and expertise.
WHAT CAN THE TRUST FUND BE USED TO PAY FOR?
Your Trustees have flexibility to make decisions at the time about how the trust funds are used and invested. Examples include paying for additional support, home improvements, holidays, and hobbies as well as expenses for professional advice that may arise when managing the trust.
You can guide your trustees by providing a letter of wishes to express any views you may have.
CAN ANYONE ELSE BENEFIT FROM THE TRUST?
The primary beneficiary of the trust will be the Vulnerable Person, but you will also need to name at least one other person or group of people (e.g. my grandchildren) or charity who can potentially benefit from the trust. The trustees will use their discretion based on needs at the time.
For the special tax treatment to apply, there are limits on how much others can benefit annually.
If you are looking to set up a vulnerable person’s trust,
get in touch with the team at Hunter & Cole Associates in Hampshire on