Section 89 Trust

What is a Section 89 Trust?

A Section 89 (or S89) Trust, also known as a Disabled Person’s Trust or a ‘trust for the vulnerable’ complies with section 89 of the Inheritance Tax Act 1984. Trusts often attract higher rates of tax than individuals, but where the main beneficiary of a trust is disabled, the trustees are sometimes eligible for special tax treatment. S89 trusts can therefore be a way of ensuring that assets intended to provide care and support of a disabled person deliver the greatest benefits to the beneficiary.

Am I eligible for a S89 Trust?

The main beneficiary of such a trust must fall within a given definition of ‘disabled’, a definition which is still under review but currently includes those who are:

  • unable to manage their own affairs or administer their property due to mental disorder receiving attendance allowance
  • receiving personal independence payment (PIP) or certain levels of disability living allowance (DLA)
  • receiving constant attendance allowance receiving armed forces independence payment.

This is not an exhaustive list but demonstrates that the ‘disabled’ definition describes significant impairment.

Should I set up a S89 Trust?

S89 Trusts are important in protecting the assets of people who are vulnerable or disabled, and timing can be crucial. For example, if a disabled person receives means-tested benefits, a trust must be established before the death of the benefactor (or ‘testator’). If not, the disabled beneficiary could lose the benefits they need to pay for their daily living expenses. However for advice on the best route forward for you and your loved ones, talk to a specialist lawyer like our experts at Wrigleys, who will give you the best information and advice in plain English. We deal every day with S89 Trusts and all other legal and financial matters applying to people who are disabled or vulnerable, so we can help you plan a safer, more secure future for you and yours.

Talk it through with Wrigleys today on 0114 267 5588.

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