A Disabled Trust can mean two different things:
A personal injury related Disabled Trust is a trust created for disabled individuals, which is intended to supplement, but not replace, any means-tested benefits to which the disabled individual may be entitled.
Personal injury related Disabled Trusts are established for working-age adults or some children who want to retain their entitlement to means tested benefits, now or in the future, such as:
Under the current rules – if you have over £6,000 capital you are at risk of having some or all of your benefits reduced. If you have over £16,000 then you are at risk of losing them all entirely. If your compensation is paid directly to you, rather than put into a trust, then you will be classed as having this money as your disposable capital.
If you are expecting to receive more than £6,000 in compensation for your personal injury, then you should consider setting up a Disabled Trust. Even if you are expecting to receive less than £10,000 in compensation for your personal injury, you should still seek advise on whether to establish a Disabled Trust as it still may prove cost effective.
In other circumstances, a traditional Disabled Trust is usually founded by a third party for the benefit of another e.g. a child with a disability. It has certain tax and other advantages apart from fulfilling a protective function.
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