Wills and inheritance

Providing for the future of your child is one of the most important considerations for a parent. Writing a will gives some control over how they will get the financial support they need, through any money or assets left as an inheritance.

This information is intended as an outline of the different schemes that can be implemented in your will.  It is not intended to be exhaustive. It is not a substitute for you seeking more detailed professional advice in light of your own personal circumstance.

Schemes that could be included in your will:

The absolute gift

Provision for your child is made without any further directions or restrictions in the will.  Things to consider:

• Does your child have the capacity to make decisions as to the use of the money?
• As this will form part of their estate, will they be able to make a will?
• The capital and any income will be taken into account in assessing a person's entitlement to means-tested benefits

Absolute gift operated by appointed trustees

This is the same as the absolute gift scheme, except that day-to-day use of the inheritance would be in the hands of trustees whom you have appointed.  This scheme may be appropriate in cases where the value of the inheritance is relatively small.  Things to consider:

• Trustees are governed by trust law which places certain obligations upon them. They must prepare accounts for the money and property they look after and pay the tax that is due.  Trustees may charge for this service

Life interest trust with the estate in the hands of trustees to provide a guaranteed income 

The share of the inheritance (capital) allocated to your child with disabilities is invested by the trustees so that the income from the investment belongs to your child with disabilities.  The capital is ultimately for others, for example, your other children or grandchildren.  This scheme runs for the lifetime of your child with disabilities. On their death, the capital is allocated in accordance with the terms of your will.  Things to consider:

• Income is taken into account in assessing a person's entitlement to means-tested benefits, but the capital is not
• Your child may be better off from an income point of view if the income from the investment exceeds any projected means-tested income

Life interest trust with the power for the trustees to invest capital for the child's benefit 

This is the same as the life interest trust scheme but some of the investment capital,  that is due to go to other beneficiaries, may be used for a one-off payment if your child with disabilities has a particular need.  The terms in your will can place restrictions on how much capital can be used in this way and for what purposes

Discretionary trust

The share of the inheritance (capital) allocated to your child with disabilities is placed into the hands of the trustees. They have total discretion on how to allocate the income and capital for the benefit of your child.  During the lifetime of your child with disabilities, the trustees decide how the income and capital are spent. On the death of the child, any remaining capital and unused income is distributed in accordance with the terms of your will or left to the discretion of the trustees.  Things to consider:

• None of the capital or income is taken into account in assessing a person's entitlement to means-tested benefits
• You are placing total reliance on your chosen trustees to manage the trust as you would have wanted it
• There are likely to be income tax and capital gains tax consequences, depending upon how the capital is invested and used
• A letter that guides the trustees as to your wishes may be beneficial

Leaving it to the goodwill of other members of the family

You could leave all of your inheritance to other family members on the basis that they will give money or provide a gift to your child with disabilities from time to time, as they feel it is appropriate.  Things to consider:

• There are no constraints on the decisions made by the people you have left the inheritance to. Ultimately you are trusting them to act in the best interest of your child with disabilities.  This may not always be possible, for example, they may have financial difficulties or go through a divorce, resulting in the inheritance being 'lost' through bankruptcy or in a divorce settlement
• If you leave your child with disabilities entirely out of your will a potential claim against your will could be made by your child or on their behalf under the Inheritance (Provision for Family and Dependants) Act 1975

Organisations that can provide additional information

• Scope - provides information and an advice line
• Mencap - provides a will and trust service for parents who have a child with a learning disability
• The Society of Trust and Estate Practitioners (opens new window) - Professional body for trust and estate practitioners