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.

@Noras, if you leave your disabled DS a lot of money he won't be entitled to UC.

You don't seem to be taking on board if you leave your disabled DS £300k he won't get UC.

The vulnerable trust acts as a vehicle to ensure he has no assets himself so they are shielded from UC and social care.

All I want is for him to be in a cosy safe home, able to receive dental care, have access to a quiet swimming pool with a PA and maybe once every 2 years a holiday with a Pa and not look like the person we see wandering around looking scruffy, unshaven in dirty smelly clothes with holes on their shoes. As long as he looks tidy, is happy and kept healthy - job done.

But for many parents, there won't be anything close to £350,000 for their disabled child. I don't think it's that people aren't sympathetic to the issues facing what happens to their children if they are severely disabled when Mum and Dad pass on. Most average families in that situation won't have anything like that to leave.

As has been said, parents of severely disabled children often have to make sacrifices, which means they aren't generally looking at tipping the scales enough for inheritance tax to be a concern. My own parents didn't have those sacrifices as none of their children were disabled, and they are perfectly comfortable, but there's no way their estate is worth enough to trigger IHT. I would have thought that's most people.

Your son will still be better off than the majority facing this situation. It's a horrible position to be in, and I am not invalidating your concerns, but this isn't really about the IHT, since you would have the same problem (only without even £350k) if your assets were closer to the average.

This is about the scandalous lack of social provision for people in your son's situation.

So you think those disabled children who aren’t left money and will have to rely on benefits will be the scruffy smelly hole in shoes ones?

https://www.mencap.org.uk/advice-and-support/wills-and-trusts-service?gad_source=1&gclid=CjwKCAiA9IC6BhA3EiwAsbltOMC4w9RiLlPjEy72Z-hFyQYpFH7YF-nKAWDTyLeBt1MezeozhnPeVRoCxEgQAvD_BwE&utm_source=google&utm_campaign=1766811505&utm_term=mencap%20wills%20and%20trusts

have you worked with mencap to discuss the options for trusts? Can you set up a trust now rather than after IHT?

I think you’ve laboured that point enough for her to be aware. Why should someone, disabled or not, be entitled to universal credit if they’re minted? Why should taxpayers on the bones of their arse subsidise someone with a six figure sum?

Look tidy is a good one. Why are you so bothered whether someone in the street thinks your son looks good.

We’re still alive and not millionaires - ours looks like he lives in a skip. He’s covered in crisps, or mud, or some other stuff. But he’s happy and cared for so who gives a shit.

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.

Yes, I think this is absolutely right. And I guess what I'm saying is, in that world of difficult choices and limited resources, I would prioritise support for vulnerable and/or disabled people on low incomes over and above your disabled son getting a slightly bigger inheritance. That's not because I think your ds doesn't deserve as much support as he can get, but simply because I think there are other equally deserving people who need support as well. Even after the inheritance tax, your ds stands to inheritance significant amount of money, so be will still be much better off than many. It isn't a race to the bottom, of course, but when resources are limited, choices have to be made.

It’s ok to want the best for your DC.

Of course it is but not at the expense of much less wealthy taxpayers.

It’s not is it, OP wanting the best for her DC isn’t a detriment to others.

I have read everything you have written. Including that you have a financial adviser but have not actually asked them to advise you about estate planning.

Someone once called IHT a voluntary tax paid by those who despise their relatives more than they distrust the Inland Revenue. You can do something about it, it's not clear why you ignore EVERYONE pointing this out.

I don’t know if it has been mentioned but you can avoid all IHT by setting up a trust for your disabled son. He sounds like he doesn’t have capacity anyway so you’d appoint trustees to manage his money to provide him with housing and carers. PIP is not means tested and he can still do NI credits only claim via ESA so he will still accrue years towards full state pension.

It is if she’s trying to arrange her affairs to avoid IHT and keep him eligible for universal credit.

Isn’t that what everyone does??

No, it’s what greedy people who think they’re entitled to other people’s money do.

How does a disabled person who isn’t capable of managing their affairs reapply for universal credit when their savings runs dry?

Their carer or care coordinator assigned social worker would do it.

Clearly I’m not ignoring everyone. I have made a will including a vulnerable person’s trust. As things stand I can’t afford to give away money and live for 7 year and frankly it’s too early for that. I do intend to downsize as and when appropriate. Clearly everyone can do that including farmers - they can also give away assets when the time comes.

Also you have huge ignorance about tax as in fact IHT is usually incurred because the alternative rice which is to sell or gift assets in life usually includes a CGT charge and then the asset re based from gift whereas if assets are inherited you get a re base for CGT purposes at death.( which is later).

Only the Uber wealthy can genuinely escape IHT. I speak as someone who clearly took exams in tax.

I would be a complete fool not to use a vulnerable person trust for its intended purpose. I’m sure that you would do the same for your severely disabled kid of grandchild if one day you have one.

True but the choice seems to be that the over rich with many millions pay no IHT - They can afford to give away millions before death.

You can do whatever you like, obviously. I wouldn’t because I have no problem with paying the tax I’m liable for. Every £ of tax avoided affects someone worse off and I’m not cool with that. I find it morally repellent that anyone wealthy would arrange their affairs so that universal credit could be claimed at the expense of a taxpayer on minimum wage.

You don’t use ISAs then? Don’t save into a pension?

I’m already drawing my pension and paying tax on it - that’s how it works, no tax going in, taxed coming out. No ISAs. And neither of those things are comparable to someone with a six figure sum claiming a benefit that’s intended for people in poverty.