Solicitor Matthew Billingsley on using trusts to secure the future for your disabled child.
When you’re caring for a disabled child or adult, planning for the future feels different. It’s not just about money, it’s about protection, stability and peace of mind. It’s about knowing that they will be safe, supported and provided for, even when you’re no longer around to do that yourself. For many families, this becomes especially important when thinking about benefits and support. A well-meaning gift, inheritance or payout can unintentionally cause real problems if it means a disabled person loses access to means-tested benefits or local authority funding. There is also the risk of vulnerable people being taken advantage of by others, simply because they are unable to manage their own finances or fully understand the consequences.
This is where trusts can play a vital role. In simple terms, a trust is a way of holding money or assets (such as property, savings or investments) for someone else’s benefit. Instead of the assets being owned directly by the disabled or vulnerable person, they are held by trusted individuals (called trustees) who are legally responsible for managing those assets and using them in the person’s best interests. This separation is crucial. It can protect the assets from misuse, help preserve entitlement to benefits, and allow funds to be used flexibly as needs change over time. In my experience of working with disabled people and their families, two two types of trust come up time and again: discretionary trusts and trusts for disabled persons. There is no one-size-fits-all trust. Much depends on your family circumstances, the size of the assets involved, and whether flexibility or tax efficiency is the priority. Broadly speaking, discretionary trusts are often suitable where flexibility is key and there are several family members whose needs may change over time, and trusts for disabled persons are particularly helpful where tax efficiency is important, and the focus is firmly on one vulnerable individual.
Discretionary trusts A discretionary trust offers a great deal of flexibility. The trustees decide if, when and how money is used, based on what the beneficiary needs at that time. No one has an automatic right to the money, which is often exactly what makes this type of trust so helpful. Typically, a discretionary trust will name more than one possible beneficiary. This might include the disabled person, siblings, other family members, or even a charity. The trustees can adapt how the trust is used over time, allowing funds to be held back when they’re not needed, or applied quickly when circumstances change. Importantly, because the disabled person doesn’t own the assets outright, money held in a discretionary trust is usually not considered when assessing eligibility for means-tested benefits or local authority care funding. The trade-off is that discretionary trusts can involve more complex tax rules and ongoing administration. They can be subject to Inheritance Tax reviews every ten years, and sometimes higher rates of Income Tax or Capital Gains Tax apply. This doesn’t make them unsuitable, it simply means they need to be set up carefully and reviewed regularly.
Trusts for disabled persons A trust for a disabled person is designed specifically to support someone who meets certain legal criteria relating to disability or vulnerability. These trusts work in a similar way to discretionary trusts, but with some important differences, particularly around tax. To qualify, the disabled person must meet specific conditions, such as being unable to manage their own affairs due to a mental disorder or being entitled to certain disability benefits (for example, Personal Independence Payment or Attendance Allowance). What matters is that the person meets the criteria at the time the trust receives the assets. During their lifetime, the disabled person does not have an automatic right to the money. Instead, the trustees decide how funds are used, always for their benefit. This might include paying for care, equipment, therapies, transport, holidays or other quality-of-life expenses. One of the key advantages of this type of trust is that more favourable tax rules usually apply. There are no punitive ten-year Inheritance Tax charges, and Capital Gains Tax allowances are more generous. In some cases, tax can even be aligned with the disabled person’s own (often lower) tax rates (although this needs careful consideration as it can affect benefit assessments). A useful feature is that trustees can also make small payments that indirectly benefit the disabled person, for example, helping with a carer’s travel costs or funding respite breaks. These might seem like small things, but they can make a huge difference to day-to-day life.
Another important decision is whether to set up a trust during your lifetime or only through your Will. To explain why this matters, I’ll share a personal example. I have two daughters, Ada and Edith. Edith has Rett Syndrome and is profoundly disabled. We chose to set up a lifetime trust for Edith, rather than waiting to include it in our Wills. This is because we have family members who want to leave money to the children. With the trust already in place, those gifts can be directed into the trust rather than being left directly to Edith. However, what suits my family does not necessarily suit yours, as every situation is completely different.
The general information contained in this article is intended to stimulate discussion for you as a family. Legal and taxation principles change over time and as such neither Matthew James Billingsley nor his employer (South West Wills & Probate Ltd) can accept any responsibility or liability for any action or omission taken by you based on the information contained in this article, both now and if relied upon in the future, as this article does not constitute legal advice. We recommend that if you have specific needs or require legal help you seek expert legal assistance. Copyright 2026 Matthew James Billingsley (for and on behalf of South West Wills & Probate Ltd, Inc, all rights reserved)
Author: Matthew Billingsley
Matthew Billingsley
Matthew Billingsley is dad to Edith, and solicitor at South West Wills & Probate.
Website: southwestwillsandprobate.co.uk
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