How a Vulnerable Persons Trust Can Secure Your Loved One’s Future — Whatever Their Challenges

If you have a child or family member who struggles to manage money due to disability, learning difficulties, mental health conditions, or complex life circumstances, leaving them a direct inheritance might do more harm than good.

A Vulnerable Person’s Trust – more formally known as a Trust for a Vulnerable Beneficiary under UK law – is a powerful estate planning tool that allows you to provide financial support while protecting eligibility for benefits and shielding them from financial risk.

Why Leaving Money Directly Can Be Harmful

For individuals living with disabilities or vulnerabilities that affect their ability to manage finances, a sudden inheritance can unintentionally lead to:

• <Loss of means-tested benefits
• Exposure to financial abuse
• Risk of mismanagement or exploitation
• Spending that doesn’t reflect your wishes or their best interests

In some cases — such as a history of substance misuse or mental health instability — an inheritance can do more harm than good, potentially enabling destructive behaviours or placing your loved one at further risk.

Real Concerns from Real Families

For the past four years, Moneybox Wills & Trusts have been working with local Autism support charitySpace4Autism, East Cheshire Hospice and Just Drop In, along with many others in the area.

But whether caring for someone with autism, a long-term mental health condition, early-onset dementia, or a history of addiction, families often share the same heartfelt question:

“What will happen to my money if I leave it to a vulnerable child?”

How a Vulnerable Person’s Trust Helps

Creating a Vulnerable Person’s Trust ensures that:

• The legacy is held and managed by trustees you appoint and trust
• Means-tested benefits like Universal Credit or Housing Benefit are preserved
• Non-means-tested benefits (like PIP) are unaffected
• Money is used for enriching purposes: therapies, support, holidays, personal needs
• Inheritance can be delayed or made conditional, while still adaptable to the beneficiary’s changing circumstances

This gives you control, flexibility, and long-term peace of mind — knowing your loved one is protected and supported in the way you intended.

When Can You Set Up a Vulnerable Person’s Trust?

You have two main options:

1. During Your Lifetime

• Allows you to actively manage the trust
• Provides immediate support while you are alive
• Very useful as part of a wider IHT planning strategy

2. Through Your Will

• Activates upon your death
• Ensures your estate is passed on in a controlled and protective manner

Moneybox Wills and Trusts can help you choose the approach that best suits your family’s needs and circumstances.

What Makes a Vulnerable Person’s Trust Different?

Unlike a basic Will or generic trust, a Vulnerable Person’s Trust is structured to:

• Qualify for special tax treatment under HMRC rules (if eligibility conditions are met)
• Be discretionary in nature, giving trustees flexibility
• Adapt over time as needs change
• Offer protection from creditors, financial predators, or manipulative individuals
• Avoid the need for constant court involvement, especially if set up early and properly structured

Who Qualifies for a Vulnerable Person’s Trust?

A person may qualify if they:

• Receive PIP, DLA, or Attendance Allowance
• Are diagnosed with a mental disorder under the Mental Health Act
• Are unable to manage their financial affairs due to illness or disability, as certified by a medical professional

Eligibility should be reviewed carefully as HMRC applies specific statutory definitions.

Is It Right for Your Family?

If someone you love is living with disability, addiction, vulnerability, or cognitive difficulty, setting up a Vulnerable Person’s Trust could be one of the most protective and forward-thinking decisions you make.

In some cases, the Court of Protection or a legally appointed deputy may also be involved. Having a trust in place can simplify decisions and reduce the risk of future legal complications.