My daughter is on benefits, but I want her to inherit from me – what do I need to know?

 

Lynne Bradey is an accredited member of SFE and a partner in Wrigleys Solicitors LLP, with a particular interest in looking after the finances of vulnerable and disabled people. She’s passionate about working with clients to ensure the right decisions for them and their loved ones. She also acts as a trustee of Trusts for vulnerable people and regularly contributes to several publications on the subject. 
In this blog she answers a common question she is asked, basing her answer on a fictional case study.
 
My daughter is on benefits, but I want her to inherit from me – what do I need to know?
 
Good question!
 
We’ve had a chat and you’ve told me your daughter, Angela, has learning difficulties and isn’t able to manage her own money apart from fairly small amounts with support. She lived with you until she was 18 and has now moved into a shared house with two other adults with care needs and staff who live-in on a rota basis.  

Angela loves animals and visiting RSPB Bempton near Flamborough for a few days to see the puffins is a highlight of her year. At the moment you take Angela on trips away but know one day an arrangement may be needed where one of the care team is paid to look after your daughter on holiday. 
 
Angela’s expenses and care are funded by a combination of her benefits and the Local Authority. Her Personal Independence Payment (PIP) isn’t means tested but her Employment and Support Allowance (ESA) is. This allows her to receive things like free prescriptions and eye tests. The Local Authority funding she receives is means tested as is her Council Tax help.  
 
Often people don’t do any planning to help their relatives who get means tested benefits and it leaves quite a mess. They usually lose their benefits and care funding, at least for a while which can seriously impact their quality of life.
 
You want to make sure Angela can keep her benefits and care funding after she inherits. The money you’re leaving her will make a huge difference to her life, but it won’t be enough to pay for all her needs. Particularly to ensure she can continue to do the things she loves and that bring her joy – like visits to see the puffins.  
 
I advised you to set up a Trust in your will called a discretionary Trust. You’ve chosen trustees you can rely on and who know Angela well. As I’m independent, you’ve asked me to act as a trustee too. With Angela receiving PIP she qualifies for a special type of Trust called a disabled person’s Trust. Provided we set the Trust up properly and only Angela can benefit (apart from a very small amount which can be paid to someone else) then the tax payable will be the same as if the money was given to Angela directly. That happens in a slightly roundabout way but that’s my job to sort out!
 
You’ve written a letter of wishes, with my help, saying you want the trustees to look after Angela, protect her benefits and use the money for items and experiences her benefits won’t cover. It’s also been made clear that if Angela’s care funding isn’t enough then the trustees can use money from the trust to challenge that.
 
By asking for help, you’ve made Angela’s future as secure as possible.

 

 

Lynne Bradey

Partner in Wrigleys Solicitors LLP

Lynne Bradey is a Partner in Wrigleys Solicitors LLP with a particular interest in looking after the finances of vulnerable and disabled people.  

Lynne regularly acts as Trustee of Trusts for the vulnerable and is passionate about working with clients to make the right decisions about how to provide for their loved ones and then putting those decisions into practice.

Lynne contributes to a number of publications on the subject of Trusts for vulnerable and disabled people.