Disabled/dependent beneficiaries

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It may be desirable for a beneficiary to benefit from the deceased’s estate but not directly.

If the beneficiary is unable to look after their own finances, it is the trustees that should do this for them. Funds are better placed into a special form of trust called a ‘discretionary trust’. The distribution of any money will be at the discretion of the trustees so any means tested benefits that the beneficiary may receive should not be affected.

Substantial gifts made during your lifetime into a discretionary trust for the person should be considered as these may benefit from inheritance tax relief subject to the conditions of the IHT Act 1984 Sect 11 being satisfied.

Alternatively if you have an elderly relative living with you, it is worthwhile giving them a ‘life interest’ in your property (and/or savings) so that if you die before they do, they’ll still have the comfort of living the rest of their days in your home. When the life interest expires, the property and/or money will then go to the default beneficiaries named in your Will.