What Happens to My Disabled Child When I Die?

By Neha Mehta | Chartered Accountant, Financial Coach and SEN Parent

This question has hounded me for years, surfacing again and again. I suspect it haunts you too. What happens to my child when I am no longer here?

My daughter Udi has complex needs incl. being deaf and brain injury. This affects her in many different ways – from remembering/recalling instructions to understanding them and their implications. She is the reason I do this work, and she is the reason I made sure I understood the answer to this question properly, not just professionally but personally. Because the standard approach of leaving her something in my will, will not work for her. On the contrary, it would actively put her in harm's way because of her vulnerability.

I am using my difficulty, as Michael Caine once put it, and sharing what I have learned with others, hoping this will help you find your own peace of mind. I have a plan, and I hope that by reading these series of articles, eventually, you will too.

The problem with a standard Will

When most people think about providing for their child after they die, they think about their Will. And a Will is necessary. But for a disabled child who is vulnerable, susceptible to being taken advantage of, thinks of the world as a place where everyone helps them, and receives means-tested benefits (things like Universal Credit, Housing Benefit, or care funding) a standard Will can create a serious problem.

Vulnerability. I think you understand this for your own child better than anyone can explain it. So I won't even attempt. If you know, you know.

Benefits. Means-tested benefits have capital limits. In most cases, if your child has savings or assets above £6,000, their benefits begin to reduce. Above £16,000, most means-tested entitlements stop altogether.

If you leave money directly to your child in a standard Will, that money lands in their name. It counts as their asset. And depending on the amount, it can trigger a reduction or complete loss of the benefits they depend on.

This is called the benefits trap. It catches families who had good intentions but not the right structure. That is exactly what this article is here to prevent.

For me, the answer turned out to be a trust.

What a trust actually is

A trust is a legal arrangement where money or assets are held by a group of people called trustees, for the benefit of your child. The critical point is this: the money inside a trust does not belong to your child directly. It belongs to the trust. And because it does not belong to your child, no one can exploit their vulnerability, and it does not count toward their means-tested benefit calculations.

Your child benefits from the money – absolutely and 100%! Trustees can use it to pay for holidays, therapies, equipment, experiences, housing adaptations, whatever improves their life, but it does not sit in their name and it does not put them or their entitlements at risk.

For families like ours, this has turned out to be the single most important financial structure to understand.

There are two types of trust — and the difference matters

Not all trusts are equal. The two most relevant for families in our position are a Discretionary Trust and a Disabled Persons' Trust.

Both protect your child's benefits. But they are taxed very differently, and for a fund intended to support your child for decades, that difference is significant.

A Discretionary Trust is the more commonly known option. It is flexible and widely used. But it carries heavy tax charges, including a charge on the trust's value every ten years, that can erode the fund substantially over time.

A Disabled Persons' Trust is specifically designed for someone with a disability. It offers the same benefit protection but uses your child's own tax allowances instead, which in many cases means little or no tax at all. There are no ten-year anniversary charges during your child's lifetime.

Based on the financial modelling I have done for myself, a Disabled Persons' Trust appears to preserve significantly more of the fund in most cases — though every family's situation is different.

I go into the full comparison, including the specific tax rates, in a separate article: Disabled Persons' Trust vs Discretionary Trust: What Is the Actual Difference?

Does my child qualify?

Not every child qualifies for a Disabled Persons' Trust, but many do. The qualifying criteria include receiving Disability Living Allowance at the middle or higher rate care component, receiving Personal Independence Payment, or having a mental disorder within the meaning of the Mental Health Act 1983.

From what I have learned, children who currently receive DLA or PIP often meet the criteria; though eligibility should always be confirmed individually. I cover the eligibility criteria in detail, including what to do if you are unsure, here: Does My Child Qualify for a Disabled Persons' Trust?

Who looks after the money — and how do they know what you would have wanted?

Two questions sit at the heart of any trust arrangement.

The first is who your trustees will be. These are the people who will make decisions about how the money is used for your child, potentially for the rest of their life. I found that choosing them carefully mattered just as much as setting up the trust itself. How to Choose Trustees for Your Disabled Child's Trust.

The second is your Letter of Wishes. This is a separate document, written by you, that tells your trustees who your child is — their routines, their preferences, what brings them joy, what they find distressing, how you would and would not want the money used. It is not legally binding, but it is your voice in the room long after you are gone. What Is a Letter of Wishes and Why Does Your Disabled Child Need One?

The first step I took

You do not need to have everything figured out before you take the first step. For me, the starting point was a Will that accounted for Udi's needs, with the right trust structure written into it.

Not having that in place was, for years, one of the things that kept me up at night. Putting it right was what finally gave me a sense of peace, both for Udi, and for me.

For something this complex, it's worth working with a solicitor who holds the STEP qualification — Society of Trust and Estate Practitioners — which signals specialist expertise in trust and estate planning.

If you would like to talk through your situation before you get to that appointment — to understand what questions to ask and what structure is likely to be right for your child, I offer a free 30-minute discovery call. No sales, no obligation. I have had this conversation with many parents who came in overwhelmed and left with a plan. That shift - from fear to clarity - is what I do this work for.

Or reach me at neha@steadystepsfinance.co.uk

For educational purposes only. Not regulated financial or legal advice. For personal recommendations, please consult a solicitor specialising in disability and estate planning.