There are also potential tax benefits for gifting into trust, including mitigating inheritance tax in your estate. By gifting into trust instead of an outright gift, you retain the control and flexibility as to when the beneficiaries can benefit.
Who qualifies for a Disabled Person’s Trust?
To benefit from a disabled person’s trust, a beneficiary must be in receipt of certain state benefits such as:
- Personal Independence Payment (PIP)
- Disability Living Allowance (DLA)
- Attendance Allowance
Alternatively, a disabled person’s trust can be used in certain circumstances where a person is incapable of managing their own affairs.
Key advantages of a Disabled Person’s Trust
Means-tested benefits
If the beneficiary receives means-tested state benefits, an outright gift to them would affect how much benefits they will receive. However, by gifting into a disabled person’s trust, you can strategically provide for the beneficiary whilst making sure their benefits are not reduced and any related care package is unaffected.
Asset protection
If the beneficiary does not have capacity to manage their own affairs or are vulnerable to be taken advantage of, then a trust provides protection, as the trustees will have the control over the trust assets and decide how and when the beneficiary benefits.
As part of your inheritance tax planning, if you survive 7 years from making the gift into a Disabled person Trust, then this will be outside of your estate for inheritance tax purposes. Disabled person’s trusts have special tax treatment where they avoid the standard inheritance tax charges which apply to most trusts, including the 10 year anniversary of the trust and exit charge.
Why Ludlow?
As a professional corporate trustee, we can offer you a dedicated Trust Manager who has the expertise to take you through the process of setting the trust up in accordance with the necessary legal and tax requirements. Once established, your Trust Manager will manage the day-to-day administration of the trust and with your guidance, will ensure that your loved ones are provided for when they need financial support.
Ludlow do not charge based on hourly rates therefore, you do not need to worry about fluctuating costs and charges whenever you need to speak with us.