To think that parents cannot leave money to severely disabled offspring free of IHT

[Noras]

Frankly I have been quite upset about farmers kicking up a fuss about IHT when they can transfer 3 million pounds of wealth IHT free and after that it only costs 20% which can be paid over a decade interest free.

As a parent of a disabled adult child I can only transfer one million pounds like anyone else and any unpaid IHT has to be paid over 10 years with 7% interest due.

We have other kids and can’t exclude them from our wills so that eats into the IHT allowance.

My son will struggle to work in any form of paid job.

I was discussing his placement in supported living with a social worker yesterday as a pretty likely destination

His life will inevitably be one of benefits eg universal credit and PIP

We have left % more to him due to his profound needs.

Our combined estate will face IHT charges especially with the fiscal drag.

So through no fault of my son he will live in relative poverty except for what is left after IHT into a vulnerable persons trust.

My son is used to nicer things eg holidays/ clothes etc and has some awareness of his current nicer life style even if he is not that driven by material things.

We would have to deprive ourselves of a decent retirement to ensure he is decently provided for,

I am heart broken to have given birth to someone who will live in relative poverty assuming he has a long life and the monies inherited have to cover say 45/50 years.

I am not the only parent waking up at 3am in fear of their kid’s future it’s a well known thing about parents of kids with disability.

AIBU to think that the Government should allow an IHT allowance for dependants who are classed as high needs eg PIP high or mid levels eg not really able to live independently etc? I can’t believe that they make no allowance in IHT terms for the disabled. As it is his care and needs have been an additional expense to us throughout his life eg 1:1 swimming lessons ,Ed Psych reports, SALT, private OT , personal trainers etc. This always exceeds disability benefits.

if this is real then why the hell have you not taken financial advice on how to set up a lifetime trust for your son? It seems odd that someone wealthy would be so ignorant of financial issues.

Also if you gift him a big lump sum it will reduce his benefits which I’m sure you know.

This. Go to an accountant. Talk to your MP.

Farmers are not responsible for your situation. it’s very strange that you are making such a leap that farmers are causing you to have to pay IHT

here are some things that also cost billions

• Ukraine
• people on benefits
• people on sick pay
• 5billion given to the farming industry

anyone else worthy of your ire?

Exactly this.

so much heartbreak on this thread. Take my hat off to all of you who have worries for disabled chikdren.
@Noras see a good financial advisor and a tax advisor - maybe they would have some other ideas for you. Maybe a trust or you could set up some type of investment fund from now that could be allocated to your son only. I don’t know what options there are but do seek more advice and thrash things out. I mean could you buy a farm! I’d be considering all options.

The UK welfare state is dire for people with severe life impacting disabilities. YANBU on this. Most people have no idea and cannot comprehend what this means for peoples’ lives in our society. The support isn’t there and the money just isn’t there. Best of luck to you xo

Absolutely this. Plus if one of your children requires more financial support than the others due to disability you could leave uneven amounts in your will?

I’m so sorry that this is your reality. I felt heartbroken reading your post. I hope that you manage to find a better solution and some peace.

Gifts, trusts, insurance are all ways to legally minimise the impact of IHT. As many PP have said, you should speak to a financial adviser about estate planning, as they will be able to help. So you are "not unreasonable to think parents can't leave money to disabled kids free of IHT" because that's not an opinion, but you are unreasonable to think "there's nothing I can do about IHT".

It's a shame your other kids don't feel that their sibling needs to inherit more than they do and it has to be an even split to prove that you love them. I can't imagine thinking my parents were unreasonable if they chose to leave the bulk of their assets to my disabled sibling for their basic care needs, but I guess we're all different...

Friends with a severely disabled children are doing the opposite of what you are doing: cutting severely disabled child out of their will completely because they know the state will fund his care. Leaving everything to their other children.

Have you thought about a trust fund. One of your other adult children can be left in charge. This can be set up through a lawyer.

It’s not that avoidable when you have fixed assets that will attract a CGT charge when sold. Also these assets are your pension. Also you have to work out how much money you need to live on and for how long. Some people I’ve heard of have lived until aged 103. It would be great to know when you will die and then think right I need say £35,000 per annum until aged 85 and all else gifted.But what happens if you love to 103? What happens if you need to pay for care?

Are you paying into a pension for your son? That is one of the ways my mum who is a similar situation is funding my disabled sister’s later life. There are also various investments which have a life insurance element which don’t count as capital so don’t affect benefits. You need proper financial advice from someone with expertise in this area and you ideally need your other children on board. When my mum dies the estate goes into a trust which I will administer. My sister cannot inherit outright because she would lose her benefits and her home.

Yes we have one written into our expensively drawn up wills because we could not write a normal will ( which I could have knocked up). I’ve appointed my daughter who will be a tax consultant by then. I’ve also informed her and the others not to expect as much. I have thought of down sizing and moving to a smaller house and gifting non disabled kids in my lifetime leaving remainder to disabled son in will. Again it will be a fine mathematical (speculative) exercise of eg his long will we live for and how much do we need annually ( allowing for various levels of inflation) also likelihood of needing care and wanting better than a state paid care home with no choice. There are so many variables ther3 to get it remotely right.

I am aware of the life time element but the money becomes accessible to social care costs and universal credit loss once the last life insured has died and it becomes a bare trust. Therefore the life insured has to outlive DS!

My kids are on board and indeed one DD will be an ACA CTA tax adviser.

Im happy to make adjustments and move to a smaller house in say 10 or so years time and gift other DC money so that only money to disabled DS passes through our will direct into a vulnerable persons trust.

It's good you've got Wills sorted out. Now you need to see an IFA who will help with cash flow projections and investments that produce income, so you don't feel you have to eke out your capital over an unknown number of years.

Go to an independent advisor, not one of the big investment houses / banks who will only want to sell you their products. You need independent, bespoke advice.

I have some sympathy for your position, but what about the disabled people who don't inherit anything from their parents? They also haven't done anything to deserve that situation.

So, on balance, I'd rather increase the amount of inheritance tax that wealthier families pay and increase state support for all disabled people. Including those who are unlucky enough to have parents that wouldn't ever be able to provide for them.

Even after inheritance tax, your ds will still be better off than the vast majority of disabled people. If you're really concerned, then perhaps you need to talk to your other dc about reducing their share in favour of their brother.

So many of us have disabled children and can't even begin to be worrying about inheritance tax thresholds. I can't be heartbroken for someone to be 'aware that they have the finer things in life'.

DD1 has a discretionary trust but the reality is that unless DH and I die at the same time, there will be nothing to inherit.

Thank you -

Ultimately I had in mind a combination of annuity with draw down for DH pension. We live relatively modest lives other than having a nice home.

My plan is to see how things go when he and I retire.Work out how much we need to spend each year and if we have surplus begin to gift to non disabled kids leaving inheritance for disabled son, ideally we would move to a cute modest house which could become his home if he does not live in supported living.

My only issues is with care costs as they are staggering but equally I want to have some free choice. Ironically funded people ended up in the same care home as my mother who was self funding but it seems to be luck of the draw.

I actually agree that you should be able to avoid IHT in your circumstances, not least because it makes financial sense for the government to allow this. Depending on your sons care needs, social care can be extortionate so if they take a whacking great chunk off you in tax and he is left with not enough to live on for the rest of his life, the state will end up paying for his care anyway. If you could avoid IHT at least you could have some semblance of peace of mind that his future needs have been provided for.

Do you have something like a public trustee? Otherwise a private trust fund but only with 2 people you trust completely as the only co-signatories ( that could be 2nd cousin Glen) but make sure its set up that all money to be spent in best interests of son etc. Possibly a yearly oversight by an accountant wouldn't go astray. That's what I would do.
And spend the money on a good lawyer to draft it ( though it sounds like you may be a lawyer yourself). I'd get it up and running soon as.
Best wishes - and I'm sure your other children will understand, a lovely little nest egg for each of them is a lot more than other people get.

You can’t leave him anything directly anyway. If a person with disabilities has savings over £16k it can affect their entitlement to social care, so you’d need to put it in a Trust.

I am sorry about your situation.

But;

The government are lying through their teeth when they say it is only wealthy farmers who can afford it that are being charged the inheritance tax. There are far more asset rich/cash poor farmers who are going to be caught up in this then the government wants us to know about. The people who truly understand farming thankfully realize how awful what they have done is anyway. Farmers can have millions in assets (land, machinery, livestock, buildings etc) but the cost of running all of this makes them extremely cash poor. These farmers themselves have already come on here and said that they will have to sell land to afford it, making their farm financially unviable or in some cases just sell the farm completely. And posters on here who don't know anything about farming claiming that all farmers buy brand new land rovers and go on exotic holidays every year aren't helping. I told a few friends that are farmers about it and they cried with laughter because nothing could be further from the truth.

I have done that and DC were incredibly supportive and said ‘of course.’

I agree that all disabled people better support.

However there are tax allowances here and there eg people can make certain investments and avoid the 7 year rule no IHT on those investments etc. These sorts of things are only available to the truly wealthy not to normal people like us who could not afford them.

There are lots of policy decisions made about tax. Ultimately for every tax allowances or tax free investment someone else pays more tax. If you give a tax cut to one you make more tax payable by others as the overall tax income requirement is set.

The people who have it the easiest are the very rich who can easily divest themselves of half their assets and live wealthy lives still for the next 7 years. If you think about it the 7 year rule is hugely unfair as it favours the more wealthy. Many people can’t afford to gift without huge sacrifice and an uncertain future.

@Noras

"£335,000 over say 50 years is not going to provide much additional support allowing for inflation."

Many, many disabled people have nowhere near as much as this.

It’s really not that much annually.

It gives an additional £350 or so over benefits per annum .

@Noras

"It’s really not that much annually.

It gives an additional £350 or so over benefits per annum ."

But you don't realise that to most people, especially those who are either caring or because of disability are unable to work, having assets that can provide an additional amount every year even a few hundred is completely unobtainable.