Those who have disabled or vulnerable children have particular worries. Vulnerable children are perhaps those that may have drink, drug or gambling addictions or perhaps they have learning difficulties which may mean that they may have difficulties in understanding money.
Many clients are very reluctant to leave legacies to vulnerable children because they are naturally concerned that they will waste the money on alcohol, drugs or gambling.
For those with disabled children, there is another concern. If, on the death of the parents the child needs to go into care, whatever legacy they inherit would be taken by the care home to fund the child’s care costs. For many this is not what parents want to happen with their estate.
Thus, to avoid the above two scenarios many clients choose not to leave their disabled or vulnerable children anything at all, so as to prevent that legacy being “wasted” either on the particular dependency they may have or in care costs. That, however, is not possible. In this country, we are fortunate in that the law allows individuals to leave their estates to whomever they wish – no-one has an automatic right to inherit – provided, importantly, that they do not fall foul of the Inheritance (Provision for Family and Dependents) Act 1975. This piece of legislation says that it is unlawful not to make adequate provision for someone who is dependent on you. Clearly, therefore, if you have disabled children ghey are dependent on you. Even vulnerable children could be deemed to be dependents, in the eyes of the law. So, in such cases, clients are stuck. They have good reasons for not leaving money to their children, yet the law says that they must. So it’s rather a case of, damned if you do and damned if you don’t.
There is an answer, however. What Prior Knowledge recommends to their clients in such circumstances is to leave the legacy for such children into a Discretionary Trust. In this way the legacy is put in Trust which means that the money can be accessed for the beneficiary via the Trustees. But because the money is in Trust, it does not officially belong to them so, cannot be included in any means testing. Also, they have no access to it directly themselves for them to squander on drugs or drink or whatever. But the Trustees have the discretion to give the legacy to the disabled or vulnerable beneficiary as they see fit. So the parents do not fall foul of the law because they have made adequate provision for their dependents – it’s just that someone else has control over how and when it is spent.
We would be happy to offer advice to any clients who have vulnerable or disabled children. Importantly, the correct choice of Trustees is crucial and so professional advice must be taken to make sure the Trust in the Will works properly.
Please feel free to contact Prior Knowledge for advice on this matter.