As parents of children with special needs you provide care for a child who may sometimes need additional assistance because of a disability or the inability to do some tasks on their own. You provide a significant and important role that may sometimes feel as though it is overlooked.
Some carers don’t consider themselves to be carers because they see themselves as simply playing their part as a supportive mother, father, sibling or friend. In some cases, being a carer can mean giving up other activities or responsibilities, including other work opportunities, which could have a significant impact on household finances.
Some carers may have concerns as to how they can support their child when they can no longer provide the care themselves due to age or ill-health, or after they have passed away. How can you best support your child’s independence, health and wellbeing after you have gone? Your child’s capabilities and interests may change over time but maintaining their independence, health and wellbeing will always be important.
You might be the main financial provider for your child. You may be considering how best to provide and care for your child after you pass away. If you pass away without making specific arrangements, what will happen to your child? They might inherit from you under your Will – if they did, would they have the capacity to manage it, and their daily life, without assistance?
If the answer is no, consideration should be given to setting up a discretionary trust for your child’s benefit. Many people when they hear of ‘trusts’ think that they are only available to, or used by wealthy people. That in fact is not true. Trusts are commonly written into the Wills of parents of young children to make provision for the children in the event of the parent’s common sudden deaths, such as a car accident. They are also commonly set up by parents of children with special needs to maintain their child’s future quality of life when they are no longer around.
- 6 Main Duties of a Trustee
- Understanding Trustee Duties
- Factors to Consider Before Accepting a Trusteeship
- Irish Discretionary Trusts - A Good Fit For Your Family?
So What Exactly Is A Trust?
At its simplest, a trust is a legal agreement where one person (the ‘Settlor’) gives property to another person (the ‘Trustee’) to hold and manage for the benefit of a third person (the ‘Beneficiary’). In other words, instead of giving assets, cash or property directly to your child, you would instead give it to a trusted individual (the Trustee) to mind and manage on your child’s behalf.
Why Set Up a Discretionary Trust For A Child With Special Needs?
Setting up a discretionary trust puts plans in place today for your child’s care and support for a time when you will not be there to provide the care and support yourself. A trust provides flexibility – the trustees can respond to changing circumstances of your child over time – for example – improved treatments or medications may become available in the future. The trustee, having consulted with your child’s medical team, could approve the cost of the new treatment from the trust.
One of the key benefits of a trust is that it would protect your child’s social welfare and disability benefits, which are means tested. The reason is that your child does not legally own the trust assets – they have the right to be considered for payments out of the trust. Therefore, because they do not own the trust assets (which are held in the name of the trustee for the benefit of your child), those assets are not factored into any means test carried out in determining the receipt of, or continuation of, social welfare and/or disability benefits.
A trust set up for a child with special needs can benefit from certain discretionary trust tax exemptions that are not available to those without special needs.
A trust can provide you with peace of mind that your child is provided for after your passing. Money or other assets left in trust will maintain your child’s future quality of life. If you do not set up a trust, your child will receive their inheritance outright. Your child may be incapable of managing such an inheritance and could be influenced by bad actors to part with the inheritance.
A Matter Of Trust
You might have a concern about passing assets to a trustee to hold and manage on behalf of your child. You may be transferring considerable assets to the trustee and trusting that they will manage those assets appropriately. There are however a few things that can give you peace of mind in this regard.
There are laws to protect beneficiaries and ensure that the trustee deals properly and fairly with the trust assets and holds them exclusively for your child’s benefit. Trustees have a ‘fiduciary duty’ (a position of trust and responsibility) imposed on them by law and are held to a high standard of care in dealing with trust assets.
You can provide the trustee with a detailed ‘Letter of Wishes’, outlining how you would like the assets managed and your preferences for your child’s care. You can change your Letter of Wishes over time as your wishes, and your child’s requirements change. The letter is not legally binding on the trustee but serves as a useful guide for the trustee, providing them with insight into what you would do if your were still making decisions on your child’s behalf.
You can also appoint a ‘Protector’ who could be a family member, trusted adviser or friend. Their function is to observe the actions/decisions/management of the trust by the trustee to ensure they are managing the trust with care and diligence. You could stipulate that any expenditure over a certain amount from the trust by the trustee would have to first be approved by the Protector, thereby facilitating a system of checks and balances.
Peace Of Mind
Setting up a discretionary trust for a child with special needs puts plans in place today for a future time when you may not be able to provide the care yourself, or after you have passed away. If you would like further information on establishing a trust for a person with special needs, please contact us.