Thinking about a time when you may not be here to support your children can be frightening for parents. If you have a child with autism, their future can be especially difficult to think about as they may have varying needs throughout their lifetime. It is natural to worry about how your child will manage without you and what effect any changes will have on them.
Leaving an inheritance to your child with autism
Most of us are aware that we should make a Will to set out how we want to provide for our family. Unfortunately, dying without having a Will in place means that you have no control over how your assets are distributed to family members. For families with an autistic child, not putting in place the right plans to reflect the family’s individual circumstances can cause huge problems.
A person with autism can be extremely vulnerable, especially when it comes to managing financial matters and making important decisions. It is important to consider that leaving money directly to a child with autism may increase their vulnerability and leave them open to financial abuse. Your child may have the required mental capacity to make financial decisions, however, they may make unwise decisions or they could be vulnerable to influence from others to spend any inheritance money inappropriately or even give it away.
Leaving money directly to a child with autism in a Will can also have a detrimental effect on their benefits. When receiving financial support in the form of benefits and/or local authority funding, a financial assessment will be carried out to determine the person’s eligibility. This assessment will take into account any income and capital that they have and, depending on the amounts, this may affect their entitlement to any benefits or funding.
Careful planning should be specific to each family and by including flexible arrangements, you can prevent the above problems arising and ensure that your child’s individual needs can be provided for at different points in their life.
Why use a Trust?
A Trust can be a useful tool to provide financial stability for a child with autism throughout their lifetime and when you’re no longer here. It allows you to provide for your autistic child without making an outright gift directly to them by placing your assets under the control of Trustees.
The type of Trust required should depend on the individual, the flexibility needed and the value and type of assets involved. The most appropriate type of Trust to consider is a Discretionary Trust.
A Discretionary Trust is one where more than one person may benefit, and it’s for the Trustees to decide how and when any of these beneficiaries, but particularly your child, will benefit from it. In a Discretionary Trust, the Trustees have complete flexibility in deciding how they use the income and capital in the Trust fund for your child’s benefit. This provides the flexibility required for a child with autism as the support they need will vary throughout their lifetime, and the Trustees can change the provision they give whenever needed.
There is a very specific type of Discretionary Trust that can be suitable for protecting vulnerable beneficiaries. It is known as a Vulnerable or Disabled Person’s Trust. This type of Trust can be used where the main person to benefit from it qualifies as a ‘vulnerable or disabled beneficiary’. The definition is based on a person’s level of entitlement to Disability Living Allowance (DLA), Personal Independence Payments (PIP) or Attendance Allowance (AA) or by reference to conditions covered under the Mental Health Act 1983.
A Disabled Person’s Trust is given favourable tax treatment for Inheritance Tax, Income Tax and Capital Gains Tax; as the main purpose of the Trust is to provide for a person who is disabled or vulnerable.
Benefits of a Trust
The advantages of using one of these types of Trust is that they avoid the need to leave money directly to the child with autism.
As mentioned, the Trustees are in control of how the Trust is used to benefit the child with autism and they will make decisions about how to use any money held. This protects the child against having to make difficult decisions for themselves and from any negative influence from others.
Also, the beneficiaries of these Trusts do not have any fixed entitlement to receive money from the Trust, so any money held in the Trust will not affect their entitlement to means-tested benefits or local authority funding.
When you are putting plans in place to use a Trust to provide for your child, you can write a Letter of Wishes to provide guidance to the Trustees you choose as to how you would like the Trust to benefit your child. This can be extremely useful for you to say what you wish to happen when you are no longer around and how the Trustees could manage the Trust to benefit your child with autism, now and in the future.
Our team specialise in planning for the future for families with an autistic child. To discuss your family’s individual circumstances and the options available to you, please do get in touch.