💡 The Importance of Setting Up a Trust for a Child with Additional Needs

By Lisa Chauhan, Co-Founder of SEND Protect.

Raising a child with additional needs comes with daily responsibilities — but one of the most important long-term actions a parent or carer can take is putting the right financial protection in place.

A trust is one of the most powerful tools available to safeguard your child’s future, while ensuring their eligibility for vital means-tested benefits is not compromised.

In this blog, we explain why a trust — not just a will — is essential for families of children with disabilities or neurodivergent needs, and how the right structure can make all the difference.

Why a Will Alone Isn’t Enough:

Many parents believe writing a will is the key to securing their child’s future — and while a will is crucial, leaving money or property directly to a child with additional needs can create serious problems.

Why? Because:

• Inheriting assets over £6,000 can affect entitlement to means-tested benefits like Universal Credit or Employment and Support Allowance (ESA).

• It could also jeopardise access to Local Authority-funded care packages.

• Your child may not have the mental capacity to manage large sums of money or property.

• Without a trust, there’s a greater risk of the funds being mismanaged or used in ways that don’t support your child’s long-term well-being.

What Is a Trust?

A trust is a legal arrangement that allows you to set aside money, property, or other assets for someone else (your beneficiary), to be managed by people you choose (your trustees). This means your child’s inheritance can be protected, controlled, and used in their best interest — without giving them direct ownership, which could affect benefits or financial safety.

Discretionary Trusts: A Flexible, Protective Option:

A Discretionary Trust is one of the most commonly used trusts for families with multiple children.

How it works:

• Trustees decide how and when to use the funds — there’s no automatic entitlement.

• Your child is one of a group of potential beneficiaries (which helps protect their benefit status).

• The trustees can use the funds for your child’s education, therapies, equipment, holidays, or general wellbeing.

• The trust is not counted as part of your child’s assets, so it won’t affect means-tested support.

  
  

✅ Under current UK law (as of 2025), a properly drafted Discretionary Trust will not disqualify your child from benefits, provided distributions are made at the trustees’ discretion.

Vulnerable Person’s Trust (Disabled Person’s Trust): A Tax-Efficient Alternative

Another option is the Disabled Person’s Trust, also known as a Vulnerable Person’s Trust. This trust offers favourable tax treatment and is designed specifically for beneficiaries who meet the definition of a “disabled person” under the Inheritance Tax Act 1984.

• ✅ To qualify as a "vulnerable beneficiary," your child must meet one of the following criteria:

  1. Receive a qualifying benefit, such as:

     • Disability Living Allowance (DLA) (care component at the middle or highest rate)

     • Personal Independence Payment (PIP) (daily living component at either standard or enhanced rate)

     • Attendance Allowance

     • Armed Forces Independence Payment

     • Constant Attendance Allowance

     • Incapacity Benefit or Employment and Support Allowance (with a "limited capability for work")

  OR

  2. Be formally certified as incapable of managing their own financial affairs due to mental disorder, in accordance with:

     • The Mental Capacity Act 2005, or

     • The Adults with Incapacity (Scotland) Act 2000 (if applicable)

       
       

Benefits of a Vulnerable Person’s Trust:

• Preferential tax treatment — income and capital gains may be taxed at individual rates, not trust rates.

• Your child can be the main or sole beneficiary, and trustees manage the money on their behalf.

• The trust preserves means-tested benefits and gives you full control over how the funds are used.

  
  

This option can be especially valuable for families with larger estates, or where tax-efficiency is a key concern.

How Do You Choose the Right Trust?

It depends on your family’s needs, including:

• The nature of your child’s diagnosis and level of support required

• The size and structure of your estate

• Whether you have other children or beneficiaries

• Tax considerations

  
  

That’s why it’s so important to seek advice from someone who understands the legal and emotional landscape of parenting a child with additional needs like SEND Protect.

Real Peace of Mind, for You and for Them:

Setting up a trust is more than a legal process — it’s a way to ensure your child is protected, empowered, and well-supported for the future. It gives you peace of mind knowing that someone you trust will manage their finances responsibly and in line with your wishes — even if you’re no longer around to do it yourself.

🧭 Book Your Free 1:1 Call Today:

At SEND Protect, we specialise in helping SEND families plan for the future — from wills and trusts to financial protection and guardianship. If you’re unsure where to start or want to understand which trust is right for your child, we offer free, friendly one-to-one consultations.

Let us walk you through the options and help you put the right plan in place.