Making a Will When You Have a Disabled Child
If your disabled child receives means-tested benefits, leaving money directly to them in your will could cut off their benefits and their funded care. A disabled person’s trust solves this — here is how to structure your will to protect both your child’s inheritance and their ongoing entitlements.
The Core Problem: Direct Inheritance Triggers Means-Testing
What happens if you leave money directly to a disabled child
→ Universal Credit stops above £16,000 in capital. Any inheritance above this threshold ends UC entirely until the money is spent.
→ Care home means-testing: local authorities charge for care if capital exceeds £23,250 (England). An inheritance wipes out free care until the money is gone.
→ Deliberate deprivation rules prevent the disabled person from giving away the inheritance to restore benefit entitlement.
→ Court of Protection involvement may be needed to manage the funds if the person lacks capacity — expensive and bureaucratic.
The solution: a disabled person’s trust in your will
→ Trust assets are held by trustees — not personally owned by the disabled person
→ Not counted as the disabled person’s capital for Universal Credit, care means-testing, or other means-tested benefits
→ Trustees can advance funds for the disabled person’s benefit: care, equipment, holidays, housing
→ Favourable IHT treatment: no entry charge, no 10-year periodic charge, no exit charge
How a Disabled Person’s Trust Works in a Will
A disabled person’s trust (DPT) is a discretionary trust included in your will where the primary beneficiary is your disabled child. The key features:
Discretionary structure
Trustees have discretion over when and how to apply trust funds. They can advance income or capital for the disabled person's benefit — but they are not required to distribute to them on a fixed schedule. This discretion is what prevents the trust assets from being counted as the disabled person's own capital.
Primary beneficiary requirement
For the DPT to qualify under IHTA 1984, at least half of the trust property applied during the disabled person's lifetime must be applied for their benefit. The trust can include other beneficiaries (e.g., other family members) who can receive any residual fund after the disabled beneficiary's death.
Qualifying conditions
The disabled beneficiary must be a 'disabled person' under the IHTA 1984 definition: incapable of managing their affairs due to a mental disorder under MHA 1983; or receiving DLA/PIP at the middle or higher rate of the care component (or Attendance Allowance). Most adults with significant learning disabilities, autism, cerebral palsy, or acquired brain injury will qualify.
IHT treatment
A qualifying DPT has no inheritance tax entry charge, no periodic 10-year charge, and no exit charge on distributions. The trust assets are simply aggregated with the disabled beneficiary's own estate and taxed as part of their estate on their death — under their own nil-rate band.
What to Include in Your Will
A will that includes a disabled person’s trust should typically address:
Clear trust clause
The will must establish the DPT explicitly, naming the disabled beneficiary as the primary beneficiary and meeting the IHTA 1984 conditions. The trust clause must be carefully drafted — generic discretionary trust clauses will not qualify as a DPT for IHT purposes. This is one area where professional will-writing or legal advice is strongly recommended.
Trustees
Appoint at least two trustees (one individual who knows the disabled person well, plus a professional or corporate trustee for larger funds). Consider whether you want to appoint substitute trustees in case a trustee dies or is unable to act. The trustees will be responsible for applying the fund for the disabled person's benefit over potentially many decades.
Trust powers
The trustees need express powers: to advance capital and income, to invest, to apply funds for the disabled person's accommodation and care, and to accumulate income for future use. Standard trustee powers under the Trustee Act 2000 are a starting point but DPT trustees typically need wider express powers.
Residual beneficiaries
What happens to any remaining funds when the disabled beneficiary dies? Typically these pass to other children or grandchildren. The will (or a separate letter of wishes) should make this clear.
Letter of wishes
Not legally binding, but a detailed letter of wishes is essential — explaining how trustees should exercise their discretion, the disabled person's needs and preferences, and the relationship between trust distributions and benefit entitlements.
Direct Inheritance vs Disabled Person’s Trust
| Factor | Direct inheritance | Disabled person’s trust |
|---|---|---|
| Universal Credit capital limit | Inheritance counted — UC stops above £16,000 | Trust assets not counted as beneficiary's capital |
| Care home means-test | Inheritance counted — free care stops above £23,250 | Trust assets not counted as personal capital |
| IHT entry charge | No entry charge on inheritance | No entry charge (qualifying DPT) |
| IHT periodic/exit charges | N/A | None for qualifying DPT (unlike standard discretionary trust) |
| Court of Protection | May be needed to manage funds if beneficiary lacks capacity | Trustees manage — no court involvement needed |
| Flexibility for beneficiary's needs | Beneficiary (or deputy) controls funds | Trustees apply funds for beneficiary's benefit according to letter of wishes |
Frequently Asked Questions
What is a disabled person's trust and how does it work in a will?
A disabled person's trust (DPT) is a discretionary trust established in a will (or during lifetime) where at least half of the trust income and capital must be applied for the benefit of a disabled beneficiary. The trust assets are held by trustees — they are not directly owned by the disabled person. This means the assets are not counted as the disabled person's capital for means-tested benefits (Universal Credit, care home means-testing) as long as the trust qualifies. The trustees have discretion to advance income and capital for the disabled person's benefit — for care, housing, education, equipment, holidays, and other quality-of-life expenditure. For IHT purposes, a DPT meeting the conditions in schedule 1A IHTA 1984 is treated as if the disabled beneficiary owns the assets, meaning: no entry charge on transfer into trust; no periodic (10-year anniversary) charges; no exit charges on distribution — the entire value is simply aggregated with the beneficiary's personal estate for IHT calculations.
Who qualifies as 'disabled' for a disabled person's trust?
For a trust to qualify as a DPT under IHTA 1984 schedule 1A, the disabled beneficiary must be a 'disabled person' at the time the trust is set up. Under s89(4) IHTA 1984 a disabled person is someone who: (1) is incapable of administering their property or managing their affairs because of a mental disorder within the meaning of the Mental Health Act 1983; or (2) is receiving or entitled to receive Disability Living Allowance (DLA) or Personal Independence Payment (PIP) at the middle or higher rate of the care component (or equivalent benefit). There is a separate HMRC definition for income tax purposes (s38 FA 2005) which includes people in receipt of Attendance Allowance. In practice, the vast majority of parents using DPTs for children with learning disabilities, autism, cerebral palsy, Down syndrome, or similar conditions will find their child qualifies — but you should confirm which benefits the child receives.
What happens if I leave money directly to my disabled child?
If a disabled person receives an inheritance directly — for example, a £100,000 bequest in your will — they own that money personally. This has immediate consequences: (1) Means-tested benefits: Universal Credit has a capital limit of £16,000 — any amount above this results in the benefit stopping entirely. Between £6,000 and £16,000, a tariff income is applied reducing the benefit amount. A significant inheritance can therefore eliminate Universal Credit. (2) Care funding means-testing: local authorities assess capital when determining who funds care. Capital above £23,250 (England) means the person funds their own care entirely. A direct inheritance above this threshold means they will pay for care until the money is spent. (3) An inheritance that is spent (or given away) immediately to qualify for benefits again may be treated as deliberate deprivation. A disabled person's trust avoids all of this — the money is protected for the disabled person's benefit without being counted as their personal capital.
Do I need a letter of wishes with a disabled person's trust?
Yes — a detailed letter of wishes is strongly recommended alongside a DPT. The letter of wishes is separate from the will and is addressed to the trustees. Because a DPT is discretionary (meaning the trustees decide how to apply the funds), a well-drafted letter of wishes guides them on: (1) the disabled person's likes, dislikes, and quality-of-life priorities; (2) how much discretion trustees should exercise vs following family guidance; (3) the relationship between the trust fund and the beneficiary's existing benefits (e.g., 'do not advance capital that would trigger means-testing, except for one-off specific purposes'); (4) what should happen to any residual fund if the disabled beneficiary dies (typically to other family members); (5) specific expenditure priorities — a particular carer, a holiday programme, a piece of equipment. Unlike the will itself, a letter of wishes can be updated without formality. Review it every 2–3 years or when the disabled person's circumstances change.
What if my disabled child lacks capacity to manage their own affairs?
If your disabled child lacks mental capacity entirely — for example due to severe learning disability or profound and multiple learning disabilities (PMLD) — they cannot manage any assets or enter into legal relationships. A DPT in your will is even more important in this case, because there is no realistic prospect of the disabled child managing an inheritance directly. You may also want to consider: (1) A lasting power of attorney is not relevant — LPAs can only be made by a person with capacity. If your child has always lacked capacity, they can never have made an LPA. (2) Court of Protection deputyship — if your child inherits outside a trust and needs someone to manage the funds, a deputy appointed by the Court of Protection can do this. However, this is expensive, bureaucratic, and involves ongoing court oversight. A DPT avoids this entirely by keeping assets in trust. (3) Statutory will — if the disabled adult lacks capacity and needs a will of their own (unusual but possible if they have their own estate), the Court of Protection can authorise a statutory will on their behalf. (4) Appointing the right trustees is critical — one family member who knows the disabled person well, plus a professional trustee (solicitor or trust corporation) for larger funds, ensures continuity and independent oversight.
Protect Your Disabled Child’s Future — Start With a Proper Will
A WillSafe kit gives you the framework for a properly structured will — including trust provisions for disabled beneficiaries. For complex DPT requirements, we recommend supplementing with specialist legal advice on the trust drafting.