Specialist solicitor Aalia Ijaz looks at providing for a vulnerable dependant after you die.
As a parent or grandparent of someone with autism, it can be worrisome to think about ensuring their care after your passing. It’s crucial to have a plan in place so that a trusted individual can look after their needs in the future. By creating a will, you can appoint a reliable person to care for your loved ones so they can continue receiving the support they require. You should consider who is best suited to understand and manage your loved one’s specific needs.
A person with autism may have complex requirements, raising several concerns such as; can you leave gifts in your will to autistic relatives if they cannot manage their finances? Is it better to leave money to another relative, hoping they will care for your autistic relative. How will an inheritance affect any means-tested benefits they receive, and will it impact their community care?
If you have a child with autism, you can designate a guardian in your will to care for them if they are under 18 at the time of your death. You can also include a letter of wishes to provide guidance on their care. Setting up a trust, either during your lifetime or in your will, is a primary way to ensure ongoing care for your autistic relative. Different types of trusts are available, and seeking professional advice can help determine the best option for your loved one’s needs. Leaving a gift to someone with the hope they will care for your loved one is risky, as there is no obligation for them to do so, and their circumstances might change (eg, death, loss of capacity, divorce, or bankruptcy). Under a trust, the trustee would manage your assets for the benefit of your autistic relative and possibly others. You can appoint the trustee and leave them guidance through a letter of wishes to help them manage the trust assets. Several factors will influence your decision on the type of trust, such as whether your autistic relative receives means-tested benefits and the value of your estate. Here are some trusts to consider:
A discretionary trust is flexible and allows trustees to decide how much and when to distribute capital and income. You can select a pool of beneficiaries, including your autistic relative, and trustees will have discretion over the distributions. This flexibility helps trustees assess and respond to your loved one’s circumstances. This type of trust can be helpful if your autistic relative cannot manage their finances and is likely to be on means-tested benefits or in long-term residential care.
A disabled person’s trust, like a discretionary trust, provides flexibility for the trustees to decide how much a beneficiary receives from the trust and when. However, this trust focuses on a beneficiary who meets the government’s definition of disabled. Trustees must primarily benefit the disabled personas there is a limit on the amount which can be distributed to other beneficiaries. It offers favourable tax treatment for inheritance, capital gains, and income taxes. The assets in this trust do not count towards means-tested benefits, as the trustees make the decisions about the distributions from the trust.
A life interest trust separates the right to income from the right to capital. Income can come from interest, dividends, or rental property income, and if the trust includes a house, it might provide the right to reside there. This trust can provide lifelong income for your autistic loved one, with the capital passing to other beneficiaries upon their death. However, the income generated will be considered for means-tested benefits, which might not be advantageous if your loved one relies on such benefits. The trust’s value will also be included in their estate for inheritance tax purposes, potentially leading to an inheritance tax liability on their passing.