If you have a family member who is disabled, has learning difficulties, or is otherwise vulnerable, leaving them an inheritance directly could actually harm them. A direct gift could affect their means-tested benefits, leaving them worse off overall.
A Disabled Person's Trust (also known as a Vulnerable Person's Trust) is specifically designed to provide for a vulnerable beneficiary without affecting their entitlement to state benefits.
In 2026, means-tested benefits such as Universal Credit, Housing Benefit, and Council Tax Reduction all have capital limits. If a vulnerable person's savings exceed £16,000, they lose entitlement to most means-tested benefits.
By leaving assets in a properly structured Trust, the funds are held by the trustees and used for the beneficiary's benefit — but they're not counted as the beneficiary's own capital for benefits purposes.
Disabled Person's Trusts also receive favourable tax treatment. They qualify for the standard rate band for income tax, and there are IHT advantages if the beneficiary is defined as 'disabled' under tax legislation.
The Trust deed must be carefully drafted to ensure it meets the legal requirements for both benefits protection and tax advantages. This is specialist work that requires expert knowledge.
At Castle Family Legal, we create bespoke Trusts for vulnerable beneficiaries, ensuring they receive the best possible provision. Contact us to discuss your family's needs.
