Vulnerable Person Trusts (VPT)

The Vulnerable Person Trust Solicitors at Rowlinsons are experts in VPTs. Our priority is helping you set up and manage a trust that works in your interests, whatever the circumstances. We are on your side, by your side.

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Vulnerable & Disabled Persons Trusts Solicitors

A Vulnerable Person Trust ensures assets are protected for the benefit of someone who is in a vulnerable position, such as having a disability, without risking their entitlement to benefit

Vulnerable Person Trust Solicitors

If you’re responsible for a disabled or vulnerable dependent Rowlinsons Solicitors can help you provide for their financial security while safeguarding assets with a Vulnerable Person Trust. Our Wills, Trusts, and Estates Solicitors have many years of experience helping families and individuals across England and Wales protect their assets using trusts.

Our Wills, Trusts and Estates team are award-winning.  In 2023, Rowlinsons Solicitors was Highly Commended in the Boutique Private Client Team of the Year category at the British Wills and Probate Awards. Our expertise also earned our team the Excellence in Private Client Award from the National Law Society in 2018.

Our team includes some of the most prominent and renowned Wills, Trusts, and Estate Planning Solicitors in Cheshire, several of whom are members of STEP (the Society of Trust and Estate Practitioners) further reflecting our technical know-how and expertise in this specialist area of law.

For expert advice on all matters relating to Vulnerable Person Trusts contact our friendly team today.

 

What is a Vulnerable Person Trust?

A Vulnerable Person Trust (VPT) is a legal structure designed to hold and manage assets on behalf of a vulnerable beneficiary. A Vulnerable Person Trust provides a way to ensure that the beneficiary’s needs are met while protecting their eligibility for means-tested government benefits and safeguarding their assets. If you want to protect the financial position of a vulnerable person you can leave money to a trust in your will or gift the funds during your lifetime.

Who is vulnerable?

For the purposes of a Vulnerable Person’s Trust (VPT), UK tax law defines a vulnerable person more specifically than in general terms.

There are two main categories:

  1. Bereaved Minors: Individuals under 18 who have lost a parent.
  2. Disabled Persons: Those who meet specific disability criteria, including:
    • Individuals in receipt of certain disability-related benefits such as Personal Independence Payment, Disability Living Allowance, or Attendance Allowance.
    • Those with a mental incapacity that makes them unable to administer their property or affairs.

It’s important to note that while you may consider someone vulnerable in a broader sense, only those meeting these specific criteria will qualify for the tax benefits associated with a VPT.

A VPT can be used to support eligible vulnerable individuals with various living costs, including:

  • Daily living expenses
  • Care fees
  • Accommodation costs
  • Medical treatments and therapies
  • Education and training
  • Recreational activities

The trust must be primarily for the benefit of the vulnerable person, although in some cases, it may be possible for others to benefit to a limited extent without compromising the trust’s special tax status.

Setting up a VPT is similar to creating any other trust. You, the settlor, will first have to identify its purpose, i.e. the specific needs and requirements of the beneficiary. This purpose will shape the provisions and guidelines that you write into the trust deed, such as housing expenses, education, healthcare, therapy, and recreational activities.

You will have to choose trustees who are trustworthy and capable of administering the trust because they will be responsible for managing the assets and distributing the trust fund once it is established. They must follow the guidelines laid down in the trust deed and always put the best interests of the vulnerable person first.

To receive the tax benefits, a joint “vulnerable person election” must be made by the trustees and the vulnerable person (or someone on their behalf) to HMRC.

Andrew Graves
Donna Eland
Sarah Snasdell
Chris Smith
Samuel Amer
Cerys Terry
Gemma Kelly
Laura Goldsmith
Megan Chamorro Moris (Renshaw)

Tax benefits

A Vulnerable Person’s Trust (VPT) receives special tax treatment compared to other types of trusts. This preferential treatment applies to various taxes:

  1. Inheritance Tax (IHT): There may be IHT advantages when setting up the trust or adding assets to it.
  2. Income Tax: The trust’s income is taxed at the vulnerable beneficiary’s personal tax rate, which is often lower than the rate applied to standard trusts.
  3. Capital Gains Tax (CGT): The trust benefits from the vulnerable beneficiary’s annual CGT exemption, which can result in lower CGT liabilities.

To qualify for these tax benefits, the trust must meet specific criteria set by HMRC, including strict rules about who can be classified as a vulnerable beneficiary and how the trust’s assets are used.  These benefits are not automatic and must be claimed annually.

These rules ensure that the tax advantages are only available to trusts genuinely set up to benefit vulnerable individuals.

Sometimes others can benefit from the trust without it affecting the trust’s unique position. There is a limit to this, however, as the trust must mainly be for the benefit of the disabled or vulnerable person. You must be careful that other, non-vulnerable beneficiaries don’t receive too much from the trust income or capital because then the trust is no longer eligible for the tax benefits afforded to a VPT.

 

Why Choose Us?

At Rowlinsons, we understand that you and your loved one’s needs are unique which is why we take the time to understand your situation. We’re committed to offering high-quality legal advice so you can create the most effective trust for you.

Our Wills, Trust and Estates team have extensive experience advising clients on the use of trusts. If you’re responsible for someone with a disability we can help you put in place measures to manage their financial needs even if something happens to you.

We’ll be by your side to ensure that you achieve your goals, giving you peace of mind that the people you want to protect are taken care of.

 

Contact our Vulnerable Person Trust Solicitors

If you are looking for legal advice to set up a Vulnerable Person Trusts, contact Rowlinsons Solicitors today.

Our team of Trust Solicitors is Cheshire help clients across England and Wales to set up and manage their trusts, as well as with any matters related to Wills, Trusts, and Estate Planning.

Rowlinsons Solicitors  was awarded Highly Commended in the Boutique Private Client Team of the Year category at the British Wills and Probate Awards 2023, highlighting our commitment to specialist and tailored legal advice. Our STEP-Accredited team members support clients  in Warrington, Widnes, St Helens, Chester, Northwich, North Wales, and across the UK from our offices in Frodsham and Sutton Weaver.

Contact our Vulnerable Person Trusts specialists today to find out how to set up a trust that works for you.

Call us today for an initial no obligation call or click here for a call back. We also have meeting facilities in North Wales by appointment.