personal finance

How should we plan financially for our autistic child?


Our 15-year-old daughter is severely autistic and will never be financially independent. What sort of things do we need to think about as she approaches adulthood?

Chris Wilson, a private client solicitor at law firm Royds Withy King, says decisions such as the ones you are facing are vitally important both to you and your daughter.

If your daughter is unable to deal with money you should ensure you are registered as her appointee with the Department for Work and Pensions. This will mean you are able to deal with any benefits to which your daughter is entitled. If your daughter has further assets, it may also be necessary to apply to the Court of Protection to be appointed her deputy. This will allow you to deal with all of her finances.

You will also need to consider your own personal situation. If your daughter will never be financially independent, it would not be appropriate for her to receive large sums outright from you during lifetime or on death. It may therefore be sensible to leave any inheritance to her on discretionary trust.

The main advantages with this are that the money will not be considered hers for the assessment of benefits or nursing home fees and that it will reduce the likelihood of third parties taking financial advantage of your daughter. As the money will be controlled by trustees, their appointment will need to be carefully considered.

I would also suggest that thought is given to practical considerations such as where and with whom your daughter will live, and how this will be funded. Obviously, at 15, it would still be appropriate to appoint guardians in your will, but even after this date it may still be a relevant consideration. Are there family members with whom your daughter would be comfortable living, or is sheltered housing an option? It is important that such views are communicated to your trustees.

The situation can be further complicated if you have other children and a significant amount of your funds are required to house your daughter. This could lead to there either being a shortfall in funds to meet her needs or a delayed inheritance for your other children. Is your priority your daughter, or equality between your children?

There are significant tax considerations involved in holding assets in trust. These include income tax, capital gains tax, inheritance tax and stamp duty land tax. Further, it is likely that a trust for your daughter would be eligible for election for special tax treatment under HMRC’s “vulnerable person regime”. Whether this is beneficial would depend on the circumstances at the time.

Finally, if your daughter is financially dependent upon you, you should also ensure you have powers of attorney in place so there are people who can administer your finances if you are unable to do so yourself.

Philip Lansberry, partner and head of legal services at accountant Kreston Reeves, says the first step should be to write a life plan for your daughter. This will include your hopes and wishes for her future, the care and support she may need, and will identify professionals and others who can help her through her teenage and adult life. Do involve your family and, where possible, your daughter when creating this plan.

Next, make applications on her behalf for state benefits. These will include, where eligible, the disability living allowance, personal independence payments, attendance or constant attendance allowance, and universal credit.

Once she has turned 18 and if she has mental capacity to make decisions, your daughter should sign Lasting Powers of Attorney. There are two types — one for property and financial affairs and another for health and welfare. Undoubtedly, both are best. A property and financial affairs LPA will cover her banking, paying bills, dealing with tax and claiming state benefits — anything to do with managing finances.

A health and welfare LPA means decisions your daughter is unable to make, for example where she lives, day-to-day care and medical treatment and other issues, are planned for. If she lacks capacity to sign LPAs, consider making a deputyship application in the Court of Protection. The government has published a series of helpful guides, which can be found at gov.uk, searching for “deputy”.

I would also recommend setting up a vulnerable person’s trust while you’re alive or in your will to hold capital set aside for her and so that she can benefit from a range of special tax breaks. These include deductions from tax on the income received from the trust, exemptions on capital gains tax and inheritance tax. The charge made on trusts every 10 years is also exempt on vulnerable person’s trusts. To claim these special treatments, trustees and your daughter will need to complete the “vulnerable person election” form.

Your choice of trustees for vulnerable person’s trust is crucial. First and foremost, they should empathise with and be supportive of your daughter. In addition, a clear understanding of the law relating to trusts is essential. It is also crucial that you, as parents, have carefully drafted trust wills that provide for her in the most appropriate way commensurate with her needs, backed by an “expression of wishes”.

The opinions in this column are intended for general information purposes only and should not be used as a substitute for professional advice. The Financial Times Ltd and the authors are not responsible for any direct or indirect result arising from any reliance placed on replies, including any loss, and exclude liability to the full extent.

Do you have a financial dilemma that you’d like FT Money’s team of professional experts to look into? Email your problem in confidence to money@ft.com

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