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For the majority of parents, it’s important to plan ahead and consider how you will support your children through their education and early adulthood. We are often encouraged to set aside savings to provide for our children into their future. Savings accounts, Children’s Bonds, Junior ISAs, Child Trust Funds are products that are available when your children are young; and wider family members, such as grandparents, may also contribute funds to these savings pots.

However, whilst the positive aspects of savings are a given, we are not always made aware of the potential problems that may occur.  These problems are particularly relevant for families with a vulnerable or disabled child and could have significant consequences for your child’s future.

This blog outlines the problems that families saving for a disabled and vulnerable child may encounter:

1. Accessing and managing the finances

You will need to check the requirements of each account/product but generally it will be the case that your child, once they reach the age of 18, will be legally entitled to the savings and will be expected to take control of the management of the account or product.

The institution where the money is held will assume that your child has the mental capacity to make their own decisions, however if your child does not have the mental capacity to manage and access the funds then they will require a Deputy to be appointed to manage this on their behalf. Applying to the Court of protection to become a Deputy can be a lengthy and costly process. There is further information on decision making and mental capacity here.

2. Financial vulnerability

Your child may have the required mental capacity to make decisions and to access and manage the funds in their account(s), or they may be able to do what is necessary to provide any signature or paperwork. However, they may decide to make unwise decisions about how they use the funds or they could be vulnerable to influence from others to spend their money on inappropriate items or even give it away. There are also increasing risks from online scams, social media influence and predatory sales tactics.

Your intentions as a parent may have been for the money to provide some security for them or to be used for specific things to assist them, but this might not happen.  If your child takes control of the funds at the age of 18 then you will have no right to intervene. Your child could, if they wished, make a Power of Attorney to assist them with managing finances but this would not give you a right to ‘take over’.

3. Means-tested benefits and Local Authority funding

You need to also consider whether your child may claim means-tested benefits (i.e. housing benefit) in the future or whether they may receive funding from the Local Authority to pay for any care needs.

Before receiving this kind of financial support, a financial assessment will be carried out to determine their eligibility.  This assessment will take into account any income and capital that your child has and, depending on the amounts, this may affect their entitlement to any benefits or funding. Any savings that you have put in their name will need to be included in the assessment.

If means-tested benefits are impacted, they can only be reclaimed once savings drop below the applicable thresholds. The savings will have to be steadily depleted on things that benefits would have otherwise paid for.

So, what’s the solution?

If you have already put savings aside for your disabled child, then you should check what the position is with each account or investment.  You should find out what will happen when your child reaches the age of 18 and start considering the arrangements that might need to be put in place to manage those funds.

If you have yet to start saving, then you should carefully consider if the above issues may be relevant to you and your child. It is very important that you make those around you aware of these issues. For example, it is common for grandparents to want to save for their grandchildren by lifetime gifts or by a gift in their Will.

For many families setting up a Discretionary Trust or Disabled Person’s Trust may be a more appropriate way for them to provide for the disabled and vulnerable child. Setting up a Trust for them provides parents with a safe place for you to save for your child’s future and leave your child’s inheritance when you die.

These Trusts can:

• Protect eligibility for means-tested benefits
• Allow funds to be managed by trustees who act in your child’s best interests
• Provide long-term financial stability
• Avoid the need for Deputyship in relation to those particular funds

Trusts do require professional advice to set up correctly, but for many families they offer peace of mind that money will be available and used appropriately when needed.

Child Trust Fund Campaign

For children born between the 1st September 2002 and 2 January 2011, they will have a Child Trust Fund set up by the Government. The trust fund companies have always encouraged families to pay more into the account and the Government even gave additional funds to disabled children. Unfortunately, this wasn’t thought through for children who are disabled and vulnerable and who may not have the mental capacity to make decisions at the age of 18. Families in this situation may have to apply for a Deputyship Order to access the money held in the Child Trust Fund.

The Child Trust Fund Access Campaign is ongoing to raise awareness of this issue and to make the process of accessing funds fairer for families who should not have to face legal hurdles just to use money that was intended for their child’s benefit. If this applies to you, it is important to stay updated on current developments and potential policy changes.

How can we help?

We are experts in setting up Trusts that are tailored to provide long-term security and peace of mind for families of a disabled or vulnerable person. For more information on Trusts, or to speak to us about the process and costs, please do not hesitate to contact us for a discussion about your personal circumstances.Bottom of Form