Disabled Person's Trust

For the general law, see Understanding trusts.

What it is#

An addition that holds a fund mainly for one disabled person during their lifetime, set up to meet the special inheritance-tax rules for disabled beneficiaries. Meeting those rules means the fund is taxed on the more favourable footing (as if the disabled person had an interest in it) rather than as an ordinary discretionary trust.

The trust is designed to protect means-tested benefits: the trustees weigh the effect any payment would have on state benefits or state-funded care, aren't obliged to spend the fund in place of what the state would provide, and can hold money back for the disabled person's long-term welfare. Other beneficiaries can benefit too, but always after and below the disabled person, and never in a way that breaks the special tax treatment.

Who it suits#

• Any client providing for a disabled or vulnerable person who receives, or may come to receive, means-tested benefits or state-funded care.

Which will it goes in#

• Single wills - any number.
• Mirror wills - any number, each set to one spouse or both.

Add it as an order line ("DPT Addition").

What you'll set on the form#

Trustees and beneficiaries#

The standard trustee settings apply - see the shared settings.

Note the beneficiaries list here is the secondary group - the people who may benefit alongside and after the disabled person, always behind the disabled person's primary interest.

The disabled person#

Setting	Type	Default	What it does
Disabled primary beneficiary	one person	-	Required. The main (disabled) beneficiary the trust is for. Must be a person (not a charity or company).
(Mirror only) Which spouse	Testator A · Testator B · Both	-	Which will(s) this addition applies to.

Good to know#

• The single "disabled primary beneficiary" is the main beneficiary; the beneficiaries list is only the secondary group who may benefit later.
• The clause repeatedly directs the trustees not to do anything that would break the special tax treatment or prejudice the disabled person's benefits - that's the whole point of the trust.