This is a relatively new trust which was created under the Finance Act 2013. It is aimed at protecting individuals classed as having a severe disability from directly receiving an inheritance and the subsequent negative impact on their benefits.

It is a discretionary trust so there must be two or more beneficiaries as a starter. However, there is a main beneficiary – the disabled person and then the others.

What’s its benefits?

  • It doesn’t affect the disabled person’s benefits.
  • Most of the assets have to be for the use of the disabled person
  • Unlike other trusts it isn’t taxed every year nor when you withdraw assets unlike other types of trusts
  • It only lasts for the duration of the disabled persons life and it’s then distributed to others as your Will dictates e.g. other children or grandchildren
  • You have five years from the disabled person’s death to sort out distributing the trust’s assets before the HMRC look to hit you with taxes.
  • Only £3000 or 3% per year, whichever is the lower, can be given to the other beneficiaries.

Limitations?

  • Subject to Inheritance Tax of 40% on anything over £325k.

To be fair, that’s not much of a downside. This still means that the disabled person can be left a significant amount or a home to live in without getting the HMRC interested.

This is a really useful way of leaving a disabled person a significant amount of assets without causing them any problems with their benefits.

How do I do it?

Simples! Get in touch and we can write your Will to take care of you disabled relative with all the above benefits and possibly a few more.

 

 

By | 2017-05-19T16:12:58+00:00 August 10th, 2015|Money Stuff, Wills|0 Comments

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