If you plan on leaving an inheritance to a vulnerable or disabled beneficiary a trust can provide financial stability whilst also protecting them and their inheritance. The type of trust employed will depend on the individual who needs to be protected, the flexibility required, and the value of assets involved. In many situations a specific form of discretionary trust, often called a ‘Disabled Persons Trust’ is chosen as it has a more favourable tax treatment than a simple discretionary trust (provided certain conditions are met).
Although trusts have many benefits, this particular trust ensures that where the beneficiary is entitled to means-tested benefits, the entitlement is maintained. Additionally, control of the trust fund can be handed to trustees who then act in the best interests of the disabled / vulnerable beneficiary, this is essential where the beneficiary is incapable of managing the trust assets themselves.