How a vulnerable person’s trust can protect your disabled child’s financial future

When you have a child with a disability, one of your biggest worries is likely what happens to them when you're no longer around. How will they manage financially? Will they lose vital benefits if you leave them money? Can you ensure they get the specialist care and support they need?

A vulnerable person's trust offers a solution – a way to provide financial security for your child without putting their essential benefits at risk.

What is a vulnerable person's trust?

A vulnerable person's trust is specifically designed to benefit someone who has a disability or cannot manage their own affairs due to a condition affecting their mind or memory. Assets held in the trust don't count as belonging to your child, so their entitlement to means-tested benefits and local authority care funding remains protected.

Imagine you want to leave a sum to your disabled son. If you left this directly to him, he could lose his disability benefits and be expected to fund his own care until the money runs out. But if you place the same amount in a vulnerable person's trust, he keeps his benefits while trustees can use the money to enhance his quality of life – funding things like specialist equipment, therapy sessions, adapted holidays or respite care that benefits wouldn't cover.

Who can benefit from a vulnerable person's trust?

Your child needs to meet specific criteria for the trust to qualify for its favourable tax treatment. They must either:

• Be unable to manage their own affairs due to a mental health condition recognised under the Mental Health Act 1983, or
• Be receiving (or entitled to receive) certain qualifying benefits such as disability living allowance or personal independence payments. For further details, see: Trusts and taxes: Trusts for vulnerable people.

The full list of qualifying conditions and benefits can be complex, which is why it's worth getting professional advice about whether your situation qualifies.

How the trust protects your child's future

The money and assets you place in the trust are managed by trustees – people you choose and trust to make decisions about how the funds are used. This might include family members, close friends or professional trustees who understand the legal requirements.

Your child becomes the main beneficiary, but they don't own the assets directly – this is what protects their benefit entitlement. The trustees can distribute money for a wide range of needs:

• Specialist care and support services
• Mobility aids and adapted equipment
• Educational opportunities and training
• Therapeutic treatments and respite care
• Enhanced living arrangements
• Social activities and holidays

A detailed letter of wishes accompanies the trust, giving trustees personal guidance about your hopes for your child and how you'd like the money to be used. This ensures they understand your values and priorities when making decisions.

Setting up during your lifetime or through your will

You can establish a vulnerable person's trust while you're alive or create one through your will that takes effect after your death. Each approach has different advantages depending on your family's circumstances and your child's current needs.

The trust requires a formal trust deed that clearly identifies your child, names alternative beneficiaries (perhaps other family members) and gives trustees the powers they need to manage the funds effectively.

Getting the structure right 

Many families choose to appoint both personal trustees (family or friends who know and care about the beneficiary) alongside professional trustees who understand the legal and tax requirements. This combination provides both personal insight and technical expertise.

Trustees have ongoing responsibilities including keeping proper records, filing trust tax returns where required and making investment decisions. They must always act in your child's best interests and be careful not to make payments that could inadvertently affect benefit entitlement.

Planning ahead with confidence

Setting up a vulnerable person's trust isn't just about money – it's about peace of mind. It means you can plan for your child's long-term care and enhanced quality of life without compromising the government support they rely on.

Whether you're considering lifetime planning or including provisions in your will, the key is getting the structure right from the start. Every family's situation is different, and the trust needs to be tailored to your child's specific needs and circumstances.

How we can help

At LCF Law, we understand the emotional complexity of planning for a vulnerable child's future. Our personal law team can review your circumstances and recommend the trust structure that best protects your child's interests. We can also connect you with experienced professional trustees if that would benefit your situation.

If you're wondering whether a vulnerable person's trust could help your family, we're here to discuss your options and guide you through the process. Contact Nicole Narey, Personal Law Solicitor on 01274 386 571 or ku.oc1780327968.fcl@1780327968yeran1780327968n1780327968

Thank you to Trainee Solicitor Matthew Robinson-Storey for drafting this article.

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