Lasting powers of attorney
You may wish to make a lasting power of attorney to appoint a person or persons to help you, or to make, decisions on your behalf. You can find out more about making a lasting power of attorney here.
A discretionary trust is a legal arrangement which allows you to set aside assets, such as property and money, for the benefit of people you choose as ‘beneficiaries’ and the trust is controlled by trustees whom you appoint. In the event of your death, the trustees have a legal responsibility to use the trust fund to benefit the chosen beneficiaries.
Why discretionary trusts are important
If you are caring for someone with autism who can’t lead a fully independent life you might be worried about how they are cared for after you die. By setting up a discretionary trust, the money from this will be used to care for your child as your appointed trustees will act in your child’s best interests and benefits. Importantly, having money in a trust fund allows the trustees to have quick access to the funds and they can start paying for care immediately after your death. As leaving money directly to your autistic child in the form of a gift in your will can affect any benefits they are entitled to from the State, a discretionary trust ensures that your child’s mean tested benefits are not affected as they do not have a defined share in the trust and cannot be said to own any part of it.
Depending on the type of trust you use, there may also be tax implications after your death. You should discuss this with your solicitor.
Choosing your trustees
Trustees can be professionals, such as solicitors or accountants who will charge for their services, or they could be friends of family members. It is advisable to have more than one trustee, but not more than four as trustees will need to meet and agree on all decisions.
Making a discretionary trust
A discretionary trust is a legal arrangement and you should ask your solicitor to produce it for you. The rates charged by different solicitors for this type of service may vary, although it usually costs between £250-500. The Law Society has a list of all solicitors in the UK and the areas they specialise in.
Disabled person’s trust
You may also consider setting up a disabled person’s trust if your child meets the conditions to qualify for this type of trust, for example, if they receive the disability living allowance care component at the middle or higher rate.
Your child will be entitled to all of the income from the trust and will not affect means-tested benefits, unless the trust fund produces a lot of income and your child has more money than they can use.
Which type of trust is right for me?
Your solicitor will be able to explain both types of trusts and to guide you to make the right choice for your circumstances and for those of your loved one.
Can I have a sole beneficiary of a discretionary trust?
You need to have a group of beneficiaries for a discretionary trust but if your child qualifies for a disabled person’s trust they can be the sole beneficiary.
For your discretionary trust, you could include other family members, such as nieces or nephews, or your favourite charities such as Autistica to make sure you have a large enough group of potential beneficiaries. You can leave instructions in your letter of wishes to state, for example, that during the lifetime of your autistic child, the trustees put the child’s needs first and benefit the other beneficiaries later.
Can I include Autistica as one of the discretionary beneficiaries?
Yes, and we are always grateful to be considered in this way. We would not normally expect to receive any benefit until after the death of the autistic beneficiary.
What happens to the trust after the death of the autistic beneficiary?
You get to decide what happens. You can, for example, direct that your trustees split any money left over equally between the other beneficiaries that are still alive. Or you can give any balance to charity it is completely up to you.
This information is guidance, not legal advice. Always contact a solicitor or legal professional before including a trust in your will.