Leaving Money to a Disabled Child: Why an Outright Inheritance Causes Problems
Most advisers know that leaving money outright to a disabled child can cause problems. The real challenge is helping families understand why, and guiding them towards safer, more sustainable solutions such as a trust.
Many parents assume “a simple will” is enough. In Special Needs Planning, an outright inheritance can put the very things they want to protect at risk: their child’s benefits, their safety and their independence.
Three risks of leaving money outright to a disabled child
1. Capacity and the Court of Protection
If the child lacks capacity to manage money, an outright inheritance usually means someone must apply to the Court of Protection to be appointed as deputy. That brings delay, extra cost, ongoing supervision and the sensitive question of who should act.
2. Vulnerability and financial abuse
Even where the child has capacity, sudden access to a large sum can increase the risk of financial abuse or exploitation. Framing this as a safeguarding issue often resonates strongly with parents.
3. Means-tested benefits
This is often the most visible issue. For Universal Credit, savings under £6,000 are ignored. Between £6,000 and £16,000, the award is reduced, and at £16,000 or more, entitlement usually stops. Turn2us explains how this tariff income works.
Non-means-tested benefits such as PIP aren’t affected by savings, but means-tested support often underpins housing, care and daily living. An inheritance can also affect local authority contributions towards care. For many families, the benefits risk alone shows why an outright inheritance is unsuitable.
Safer alternatives: trusts and a letter of wishes
A trust lets parents leave money for their child’s benefit without it belonging to the child outright. Depending on the family, a solicitor may recommend a discretionary trust or a disabled person’s trust. Well structured, a trust can:
- preserve means-tested benefits, because the funds aren’t the child’s own capital
- safeguard the money, with trustees deciding how and when it’s used
- respect parental wishes long after the parents have gone
A letter of wishes alongside the trust helps trustees make informed decisions about the child’s needs, routines and what matters to them. It humanises the plan and reassures parents that their voice will carry forward.
Reframing the client conversation
The adviser’s opportunity lies in how these risks are explained. Families are often unaware of the pitfalls. Positioning a trust as a way to protect benefits, safeguard funds and carry forward parental wishes can transform their understanding of what secure planning looks like.
Raising these points isn’t about giving legal advice. It’s about equipping families with the right questions and referring them to a specialist solicitor when needed. Advisers who can explain the issue clearly, with empathy as well as expertise, give families something they can’t easily find elsewhere: confidence.
Share with colleagues
SENDA exists to equip and empower advisers working in this complex space. If you found this useful, please share it with your peers. The more consistently we raise these issues, the better protected disabled people and their families will be.
To build your confidence in these conversations, explore our Special Needs Planning training, or sign up to our monthly newsletter.