Over two-thirds of disabled children in the UK are unintentionally being put in financial jeopardy due to an error in their parent’s will. The report indicates that a common mistake can also lead to a loss of financial benefits in the future.
Collating and examining 1,000 wills belonging to parents of children with disabilities in the UK, the research showed that 66 percent had no trustee or trust in position, leaving the future inheritance of their child without protection and defenceless against loss, as well as running the risk of negatively impacting their child’s benefits in the future.
Part of a will, trusts are financial arrangements to ensure a beneficiary’s apportioned inheritance is managed and protected on their behalf by a person of trust – the trustee. Importantly, the inheritance is not part of assessments when means testing for benefits is decided.
The study shows that 47 percent of such parents are establishing no trust and leaving the inheritance to a friend or family member instead, making them responsible for protecting and managing the child’s interests.
However, without official provision places in a will, such as a trust, the child’s inheritance is put at unintentional risk. For example, should the person of trust go through a divorce, the child’s inheritance could become part of a financial settlement. It could also be impacted if the entrusted person became incapacitated or died. Any assets that have been inherited can also impact entitlement to state benefits that are means-tested.
Establishing a trust, however, will ensure no financial loss or loss of benefits for the child.