Neurodiversity and Discretionary Trusts.

With Neurodiversity Week being this week, it seems a good time to reflect upon estate planning considerations for families with vulnerable children, or other vulnerable beneficiaries..

What is Neurodiversity?

Neurodiversity is an umbrella term for series of conditions whose hallmark is a difference in brain function than what is considered typical. The term was coined by sociologist Judy Singer in 1997 and was designed to recognise neurodiversity as a natural variation of human development and experience, with its own strengths and challenges. One in seven people in the UK are considered to be neurodivergent.

Whilst Autism Spectrum Disorder, ADHD, dyslexia and dyspraxia are some of the more commonly known forms of neurodivergence, the term also encompasses conditions such as foetal alcohol syndrome, OCD, Tourette’s and Down Syndrome.

Disclaimer: It is important to note that there are many people who are considered to be neurodivergent who do not have any vulnerabilities, as well as many who are not considered to be neurodivergent who do have vulnerabilities, for a variety of reasons. The below advice takes this into account when talking about vulnerable children and / or beneficiaries.

Discretionary Will Trusts

When considering the preparation of a will, particularly in a family context, the classic structure is one of the estate passing outright to a surviving spouse on first death, with any children receiving the estate on second death in equal shares.

Where a child (whether minor or adult) or beneficiary is vulnerable, however, it may not be appropriate for them to receive an inheritance outright from an estate. In these circumstances, it may be more sensible for that child / beneficiary’s share to be diverted into a discretionary trust for their benefit.

This trust would be managed on behalf of the vulnerable child or beneficiary by trustees, chosen by the testator of the will, and these trustees would have the discretion to use the trust fund for the benefit of that child or beneficiary, under the guidance of a letter of wishes prepared by the testator. The letter of wishes (while not legally binding) can be tailored to the particular needs and circumstances of each individual family member and / or beneficiary.

In this way, the vulnerable child or beneficiary is safeguarded from the influence of those third parties who may not have their best interests at heart, or from the impact of their own actions, but in a way that does not keep their inheritance from them. This structure can also assist with ensuring that the vulnerable beneficiary in question does not lose any means tested benefits to which they are entitled, given that the inheritance would not form part of their own estate.

Also worth considering is the appointment of guardians under the terms of a will. Whilst many people may not think that they ‘need’ a will for the purpose of disposing of their assets, the weighty matter of who would be responsible for raising their children, in the event that both parents died, may be reason enough to prepare a will, to safeguard any minor children.

Vulnerable Person Trusts

A vulnerable person trust is an arrangement under which assets can be held for certain classes of vulnerable beneficiaries, including (but not limited to) those in receipt of Disability Living Allowance or PIP and / or those diagnosed with a mental health condition under the Mental Health Act 1983. These trusts can be set up during lifetime, as well as under the terms of a will..

In addition to affording the benefits set out above in the context of discretionary will trusts, these trusts can potentially receive advantageous tax treatment for inheritance tax, capital gains tax and / or income tax purposes.

If you would like to discuss your family circumstances and discuss whether the above options may be right for you, please contact our friendly Private Client Team via the button below or on 0800 652 3371.