A Disabled Person’s Trust is set up to particularly benefit a “disabled person”. The definition of a disabled person is drawn from Tax legislation and defined as someone who is:-
i) By reason of mental disorder within the meaning of the Mental Health (Northern Ireland) Order 1986 incapable of administering their own property or managing their own affairs, or
ii) In receipt of Attendance Allowance, or
iii) In receipt of Disability Living Allowance by virtue of entitlement to the care component at the highest or middle rate, or in receipt of Personal Independence Payment (PIP) at the standard or enhanced rate for “daily living activities”.
This style of Trust is treated more favourably by the Revenue in terms of Inheritance Tax, Income Tax and Capital Gains Tax which is a relevant consideration if the Trust has a sizeable sum of money. However to qualify for this treatment it is required that the Trust provides that virtually all of its capital and income will be applied for the benefit of the disabled person.
If the disabled person is receiving means tested benefit the income received from the Trust would be taken into account and may result in a loss of such support.
The size of the Trust Fund and the circumstances of the person with the learning disability are key in deciding if this style of Trust is appropriate.