How can I ensure financial security for my vulnerable child?

Published by Jenn Trussler on 4 October 2023

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In this article Jenn Trussler, Solicitor at Kreston Reeves, answers a question in regards to how to provide financial security for a vulnerable child…

Q: Our 15-year-old daughter is severely autistic and will never be financially independent. What sort of things do we need to think about as she approaches adulthood?”

A: The first step should be to write a life plan for your daughter. This life plan will include your hopes and wishes for her future, the care and support she may need, and will identify professionals and others who can help her through her teenage and adult life. Do involve your family and, where possible, your daughter when creating this life plan.

Next, make applications on her behalf for state benefits. These will include, where eligible, the Disability Living Allowance, Personal Independence Payments, Attendance or Constant Attendance Allowance, and Universal Credit.

Once she has turned 18 and if she has the mental capacity to make decisions your daughter should sign Lasting Powers of Attorney (LPA). There are two types – one for property and financial affairs and another for health and welfare. Undoubtedly having both is best. A property and financial affairs LPA will cover her banking, paying bills, dealing with tax and claiming state benefits – anything to do with managing finances. A health and welfare LPA means decisions your daughter isn’t able to make, for example where she lives, her care, medical treatment and day to day issues are planned for. If she lacks the capacity to sign LPAs, consider making a deputyship application in the Court of Protection. The Government has published a series of helpful guides, which can be found at here.

I would also recommend setting up a Vulnerable Person’s Trust while you’re alive or in your Wills to hold capital set aside for her and so that she can benefit from a range of special tax breaks. These include deductions from income tax on the income received from the trust, exemptions on capital gains tax and inheritance tax. The charge made on trusts every 10 years is also exempt on Vulnerable Person’s Trusts.

Your choice of trustees for Vulnerable Person’s Trust is crucial. First and foremost, they should empathise and are supportive of your daughter. In addition, a clear understanding of the law relating to trusts is essential. It is also crucial that you and your partner/spouse have carefully drafted trust wills that provide for her in the most appropriate way commensurate with her needs, backed up by an Expression of Wishes.

If you would like further information, please get in touch.  

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