Protecting Vulnerable Loved Ones with Trusts

How Vulnerable Person’s Trusts provide care, support, and long-term security

When planning your estate, one of the most important decisions is how to support loved ones who may need extra care — whether due to disability, illness, or lifelong dependency. A Vulnerable Person’s Trust (also known as a Disabled Person’s Trust) offers a powerful way to provide financial support while protecting benefits and ensuring long-term stability.

What Is a Vulnerable Person’s Trust?

A Vulnerable Person’s Trust is designed to hold assets on behalf of someone who is either:
Disabled, as defined by legislation, or Unable to manage their own affairs due to illness, injury, or learning difficulty

Rather than giving money or property outright — which could put benefits or care funding at risk — this Trust allows assets to be managed and used for the individual, without affecting their eligibility for means-tested support.

Why Not Leave Assets Directly?

Giving assets directly to a vulnerable loved one can have unintended consequences:

They may lose means-tested benefits or care funding

They may struggle to manage money independently

The inheritance may become vulnerable to financial abuse or exploitation

A Vulnerable Person’s Trust avoids these issues by putting responsibility in the hands of trusted people — the Trustees — who can manage funds and act in the person’s best interests.

Example: Supporting a Dependant with Autism

Selina has a son, Jordan, who has autism and receives support through disability benefits. She wants to make sure he is looked after when she’s no longer around — without disrupting the support he currently receives.

Selina creates a Vulnerable Person’s Trust in her Will. After her death, funds from her estate are placed into the Trust. The Trustees — family members and a professional advisor — use those funds to pay for Jordan’s therapy, specialist equipment, and supported living costs. Because Jordan doesn’t legally own the money, his benefits remain unaffected.

Key Benefits

Protects benefits: Assets held in Trust usually don’t count against means-tested assessments;
Flexible use of funds: Trustees can use money for anything that improves the person’s quality of life;
Ongoing management: Ensures care and support continue without disruption;
Added legal protections: The Trust helps safeguard against financial misuse or pressure.

Who Can Be a Beneficiary?

To qualify for special tax treatment, the main beneficiary must be a vulnerable person, such as:
Someone entitled to Disability Living Allowance (DLA) or Personal Independence Payment (PIP)
An individual unable to manage their affairs due to a mental disorder
A child whose parent has died and who meets qualifying conditions

How Is It Taxed?

Vulnerable Person’s Trusts often qualify for special tax treatment if set up correctly:

• Income Tax: Usually taxed at the beneficiary’s lower rate rather than higher Trust rates.
• Capital Gains Tax: Gains may be taxed at a reduced rate.
  Inheritance Tax: Often exempt from 10-year charges that apply to other Trusts.
• These tax advantages depend on meeting strict conditions and require careful setup with professional advice.

How to Set One Up

You can create a Vulnerable Person’s Trust:
In your Will, to take effect after you die or during your lifetime, if you want to start supporting the individual now In both cases, it’s important to choose reliable Trustees and ensure the Trust is drafted to meet legal and tax criteria.

Plan with Confidence

Providing for a vulnerable loved one doesn’t have to mean risking their financial stability. A properly set up Vulnerable Person’s Trust gives you peace of mind and ensures they receive the care and support they deserve.

Speak to a specialist today to make sure your wishes — and their future — are fully protected.