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Vulnerable Beneficiary Planning

Addressing the concerns of parents who have vulnerable children is one of our most rewarding aspects of our work. Over the years we have provided guidance and advice and have helped parents of vulnerable people to set up their legacy planning in a way which creates the best possible chance of making legal and financial provisions for their vulnerable people.


For many parents of vulnerable children, the prospect of parents no longer being in their children's life can be immensely anxiety provoking. we specialise in dealing with our clients on a case-by-case basis and we do so with high levels of patience, compassion, and professionalism. this area of work can only be done with the cooperation of all concerned and we offer a discussion forum in which anyone involved in future care of such vulnerable children can voice their concerns, ask questions, and have financial and legal guidance where needed.


This is particularly true of siblings of vulnerable children as they often have a heightened sense of responsibility for their vulnerable siblings. We do everything we can to lessen the anxiety around this challenging area and provide legal and financial structure to provide for the vulnerable person for the rest of their lives.


How Your Legacy Solutions
Can Help

The vulnerable beneficiary

To be treated as a vulnerable beneficiary for tax purposes, the principal beneficiary of the trust must fall into one of these following categories:

They aged under the age of 18 and at least one of their parents has died

They are an adult and are in receipt of one of the following benefits. personal independence allowance, daily living component or mobility component

Disablement pension where they have declared a disabled status disability living allowance

Attendance allowance armed forces independence payment

They would be entitled to one of the above benefits if they were not in a state funded institution

They are incapable of administering their property or managing their affairs because of a mental disorder covered by the Mental Health Act 1983


The special tax treatment of a vulnerable beneficiary trust aims to tax the income and gains arising from the trust fund as if the beneficiaries own allowance, reliefs and tax rates are applied, and to ensure that, for inheritance tax purposes, the 10 year challenge and exit charges, that affect most other trusts, do not apply.

What are the tax implications?


How to obtain the special tax treatment and protect the vulnerable beneficiary

If the beneficiary qualifies for a vulnerable beneficiary, then the special tax treatment for the trust can usually be obtained if the trust deed is drafted as a unique mixture of an interest of possession trust and a discretionary trust.


In a standard variable beneficiary trust the beneficiary would usually be named as the principal beneficiary and during their lifetime they would be the only person who would be entitled to either the income or the capital of the trust


However, the trustee would normally retain a discretion over whether any income or capital is distributed to the beneficiary thus avoiding any problems should the beneficiary be in receipt of means tested benefits or unable to manage cash. the trustee to who also has power to make payments on the beneficiary’s behalf without any cash passing directly to the beneficiary. following the death of the beneficiary the remaining assets would be divided between the other beneficiaries named in the trust deed

Planning your Wills and making provision for your loved ones doesn't need to be difficult
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