Real Families, Real Stories – providing for your disabled children
About the Family
Ian and Debbie have three children; Ella who is 21 and works full time and no longer lives at home. Lucy who is 19, she has autism and learning difficulties. Lucy is at college and lives at home with her parents, she has fairly high care needs and receives Disability Living Allowance at the highest rate for care and the middle rate for mobility. Ian and Debbie are considering Lucy’s future and, in particular, what her living arrangements may be in the future. It is very likely that Lucy will claim means tested benefits or funding in the future.
Jake, their son, is 13 and has Asperger Syndrome. He has mild learning difficulties. Although Jake is very capable in his studies and taking care of himself, he can be anxious about certain situations and often finds it difficult to take part in activities without his parents’ support.
What is the situation?
Ian and Debbie knew they needed to make Wills to provide for their children in the future and have thought about it many times over recent years. They were aware that a Trust might be appropriate to provide for Lucy but they weren’t sure how this could work and what they needed to put in place to help both of their children with additional needs. They are also unsure what Jake’s future might hold and were worried about putting the wrong plans in place for him.
Their main asset is their property, worth around £500,000 and savings/investments of around £200,000. They also have pensions and a couple of life insurance policies.
What did the family have to consider?
Ian and Debbie’s main consideration was to ensure that their children were provided for when they were no longer around.
However, there were a number of other factors that we needed to consider too i.e. Inheritance Tax implications, planning with the pensions and life insurance policies and dealing with possible gifts and inheritances from other family members.
For Ella they were comfortable that she was financially responsible and able to provide for herself.
Lucy would need support throughout her life and would not be mental capable of managing her own affairs.
It was more difficult to decide what Jake might need in future. It is possible that he could live independently and work to support himself but there is also a chance that he may need financial support and care in the future. Due to this uncertainty, Ian and Debbie didn’t want to be too specific about providing for Jake and wanted there to be some flexibility.
What was the solution?
Ian and Debbie decided that they wanted to distribute their estates equally between their children although they did consider providing for their children in different amounts due to Lucy and Jake’s higher needs. This can be changed in future so they will review this every few years. Ian and Debbie firstly set up two separate lifetime trusts to provide for Lucy and Jake. As each of their children have very different needs it was important to ensure that they could both receive the support they required. The provisions of each trust are slightly different and the trustees that Ian and Debbie have chosen to manage the trusts in future will have full flexibility in how they can meet the needs of the children. They have also put Wills in place to distribute their assets when they both die. An outright gift to Ella of one third was appropriate for her.
One third will pass to each of the trusts that have been set up to provide for Lucy and Jake.
Their pensions and life policies have also been nominated to ensure that Ella and the two trusts benefit from the proceeds of each of these.
After many years of having this on their ‘to do’ list, Ian and Debbie now feel relieved that plans are in place to provide and support their children when they are no longer around to do so.
Although there have been no serious decision making issues with Lucy to date, Ian and Debbie were not sure how they would deal with making decisions on her behalf when needed. For example, when the time came to look at options for her living arrangements. It is not necessary for Ian and Debbie to apply to the Court of Protection on Lucy’s behalf at this time but they now have a fuller understanding of their role in decision making and the principles of the Mental Capacity Act 2005 that can assist them, click here for more information.
Jake is only 13 but it is possible that he could make a Lasting Powers of Attorney when he is 18 if he wanted to appoint people, possibly his parents, to help him with financial decisions or to make health and welfare decisions on his behalf if he was unable to do so.
Ian and Debbie also spoke to their families about their intentions regarding gifts to the children. The family members that wish to benefit the children are now able to make gifts directly to the trusts for Lucy and Jake rather than outright gifts to them. They can also amend their own Wills to include gifts to the trusts as well as directly to Ella.
Please do not hesitate to contact us if you would like to discuss your unique situation.