How can I best look after my loved one after I die? Will a large sum of money put them in a vulnerable position? Will it impact on their means-tested benefits? How can I make sure that they are financially stable if I am not around?
We know from years of experience that the families of people with mental illness often ask themselves these questions, which is why setting up a trust can be a good option.
What is a trust?
In simple terms, a trust is created when someone (known as the settlor) gives assets to someone else (known as the trustee.). These assets make up the trust fund, and the trustee manages it on behalf of someone who will benefit from it (known as the beneficiary).
Why should I create a trust?
There are a number of reasons why you might want to create a trust.
A trust would allow you to make a gift to someone who, for one reason or another, is unable to manage the money themselves. This is often why people set up a trust to help someone with a mental illness.
You can use a Trust to provide for a number of different people, either at the same time or one after the other.
For example, you may direct your trustees to pay the income from the trust fund to your son or daughter with a mental illness during their lifetime, and to pay the capital to other relatives after their death.
You can sometimes use a trust to mitigate tax, particularly inheritance tax. A trust can also minimise the loss of State Benefits such as means-tested welfare benefits, social support or residential care.