Estate planning documents

Vulnerable Persons Trust

When someone you love isn't able to manage money or make financial decisions for themselves — whether due to a disability, a mental health condition, learning difficulties, or simply because they're young — leaving them an inheritance outright can do more harm than good. A Vulnerable Persons Trust is designed for exactly this situation. It ensures the inheritance is there for them, managed carefully by people who have their best interests at heart, in a way that actually helps rather than disrupts.

What it does and how it works

A Vulnerable Persons Trust is usually written into a Will, though it can also be established during a person's lifetime. Rather than leaving an inheritance directly to a vulnerable beneficiary, the assets are placed into a trust managed by trustees — people you've chosen and trust completely. The trustees look after the assets on behalf of the beneficiary, making decisions about how and when funds are used to support them. The beneficiary benefits from the trust — they just don't own the assets outright or manage them directly.

The trust is guided by a letter of wishes, written by the person setting up the trust, setting out their intentions for how the beneficiary should be supported. This might include guidance on day-to-day expenses, housing, care arrangements, education, or anything else relevant to that person's life. It's not legally binding — which means trustees can use their judgement as circumstances change — but it's an essential part of making sure the trust serves its purpose.

Who it's designed for

• People with disabilities

  • A beneficiary with a physical or mental disability may not be able to manage an inheritance independently, or may have specialist care needs that require careful, ongoing financial management. A Vulnerable Persons Trust ensures that money is available to support them throughout their life, managed by people who understand their needs and can respond to changes in their circumstances.

• People with learning difficulties

  • Someone with learning difficulties may be perfectly capable of living a full and independent life in many respects, but managing a significant sum of money — making investment decisions, dealing with financial institutions, or simply not being taken advantage of — may be genuinely difficult. A trust removes that burden while ensuring the inheritance is still there to benefit them.

• People with mental health conditions

  • Mental health conditions can be episodic and unpredictable. A person may manage well most of the time but struggle significantly at others. A Vulnerable Persons Trust means that assets are managed with continuity, regardless of the beneficiary's current capacity, and that funds are there when needed without the beneficiary having to manage them during a difficult period.

• Young or immature beneficiaries

  • Sometimes the concern isn't a diagnosed condition — it's simply that a beneficiary is young, or not yet at a stage in their life where receiving a large sum outright would be in their best interests. A trust can hold assets until a specified age or event, releasing them when the time is genuinely right.

The tax position

A Vulnerable Persons Trust has a preferential tax treatment compared to a standard discretionary trust, provided it meets the qualifying conditions set out in the Vulnerable Beneficiaries legislation. Rather than being taxed at the higher trust rates, income and gains within the trust are taxed as though they belong to the vulnerable beneficiary personally — usually at a lower rate. This can make a meaningful difference to the amount available to support the beneficiary over the long term and is one of the key reasons a Vulnerable Persons Trust is preferable to a standard discretionary trust in these circumstances.

Protecting means-tested benefits

This is often one of the most important practical considerations. Many vulnerable individuals rely on means-tested benefits — Personal Independence Payment, Universal Credit, Housing Benefit, and others. Receiving an inheritance outright can reduce or remove these entitlements entirely, leaving the person worse off overall despite having inherited. Because the assets in a Vulnerable Persons Trust don't belong to the beneficiary outright, they may not be counted in a means-test assessment — provided the trust is structured correctly. Trustees can then use the trust to supplement the beneficiary's life in ways that don't jeopardise their existing support.

"The goal isn't to withhold someone's inheritance — it's to make sure it actually helps them. For a vulnerable beneficiary, an outright inheritance at the wrong time, or in the wrong hands, can cause real harm. A trust puts the right people in charge of making sure it doesn't."

Things to consider

• Choosing trustees carefully

  • The trustees of a Vulnerable Persons Trust take on a genuinely important role — they are responsible for someone else's welfare, often over a very long period. They need to be people who know and care about the beneficiary, who will act in their best interests without exception, and who are willing to take professional advice when needed. In some cases, a professional co-trustee — or even a specialist charity trustee — is worth considering alongside family members.

• Reviewing the trust over time

  • A Vulnerable Persons Trust may need to run for many years, or even decades. Circumstances change — the beneficiary's needs evolve, trustees may need to be replaced, and the tax and benefits landscape shifts over time. It's important that whoever manages the trust stays informed and takes professional advice periodically, rather than setting it up and leaving it to run without oversight.

• The letter of wishes

  • For a Vulnerable Persons Trust, the letter of wishes is particularly important. It's your opportunity to explain the beneficiary's needs, preferences, and circumstances in detail — to give trustees the personal context they need to make good decisions. It should be written thoughtfully, kept up to date, and shared with the trustees so they understand your intentions clearly.

• Qualifying conditions

  • To benefit from the preferential tax treatment available to Vulnerable Persons Trusts, the trust and the beneficiary must meet certain conditions defined in legislation. We work with a qualified Doctor of Law on these arrangements to ensure the trust is structured correctly and the qualifying conditions are properly met.

"Planning for a vulnerable loved one is one of the most important — and most personal — things a parent or family member can do. A Vulnerable Persons Trust is the most thoughtful way to ensure they're looked after long after you're gone."

Who a Vulnerable Persons Trust works well for

A Vulnerable Persons Trust is the right structure wherever a beneficiary — whether a child, an adult, or someone whose vulnerability may emerge in the future — is not in a position to manage an inheritance safely and independently. It's used by parents of children with disabilities, by families supporting a relative with a mental health condition, and by anyone who wants to ensure a particular person in their life is genuinely provided for, in a managed and protected way, for as long as they need it.