Why Every Special Needs Planner Needs to Understand Benefits & disregards
Families raising a child or adult with additional needs face sustained financial pressure — higher living costs, reduced earning capacity, and low financial resilience when circumstances change. For many, benefits aren’t a safety net; they’re the foundation that allows stability and independence. That’s why understanding the interaction between means-tested benefits and long-term planning is essential for solicitors, advisers, and deputies. Unclear or inconsistent guidance often creates unnecessary worry and concern, leading families to delay or avoid vital steps such as setting up a trust or updating their will.
Six Key ‘Disregards’ in Means-Tested Benefits (e.g. Universal Credit)
When assessing entitlement to means-tested benefits such as Universal Credit, the following are usually excluded from the calculation of capital:
- Main residence: Your main residence, i.e. the home you live in, is disregarded regardless of value.
- Vehicle: One vehicle is normally disregarded unless it was bought to reduce capital immediately before a claim, or its value is deemed unreasonable for the claimant’s situation.
- Personal possessions: Everyday belongings such as furniture, jewellery, and household contents are disregarded.
- Capital up to £6,000: Ignored for assessment purposes. Between £6,000 and £16,000, tariff income applies; above £16,000, entitlement usually ceases.
- Life insurance (pure protection policies): Disregarded while active. Only usually relevant if it pays out and the proceeds are kept as savings.
- Pension savings (before pension age) – Pension funds not yet accessed are usually disregarded until pension credit age or drawdown.
These disregards exist to ensure families aren’t penalised for owning essential assets such as their home, vehicle, or modest savings.
Top Tip: Not All Benefits Are Means-Tested
Benefits such as Disability Living Allowance (DLA) and Personal Independence Payment (PIP) are based on care and mobility needs, not financial means. Distinguishing between these types of benefits helps professionals design structures that protect entitlement without unnecessary complexity.
Professional Takeaway
Understanding benefit disregards is vital when assessing a family’s financial stability. Embedding this knowledge into holistic planning enhances resilience and strengthens outcomes for families. At SENDA, we’re dedicated to building this shared expertise across professions — ensuring joined-up advice and better results for every family.