Some good, helpful information… it may be of interest to you or someone you know
More and more often our advice is being sought by the parents of disabled children, concerned to put in place a mechanism to fund the needs of their child, once the parents die.
The example of Bonnie set out below, is typical
Bonnie is a 78 year old widow and has three children. Simon her eldest, is aged 55 and disabled. Simon has Downs Syndrome and has lived with Bonnie all of his life. Simon works at the House with No Steps. Simon is sterile. Bonnie also has twin boys Delaney and Clyde who are aged 52.
Bonnie is concerned because she is ageing and whilst she’s not at all ready to go into retirement accommodation she can see that a time is coming when she may no longer be able to care for Simon. Delaney and Clyde have their families and have stated to Bonnie that although they are not prepared to provide Simon with physical care and accommodation, they are prepared to manage his financial affairs.
Bonnie has organised to put Simon’s name down on the waiting list for accommodation in a group home and has been informed that if she were to die, emergency accommodation and care would be made available for Simon in group housing.
Bonnie intends on taking up the twins’ offer to look after Simon’s financial welfare and to leave, by her Will, funds for that purpose. Bonnie wants to know how this can be achieved.
1. Leave the funds to the twins with a request they apply them for Simon’s welfare. This would, however, leave the twins free to apply the funds for their own benefit possibly to the exclusion of Simon.
2. Leave the funds on trust to Simon with the twins as executors as well as the beneficiaries of any amount left as at Simon’s death. This would require the twins, as trustees, to comply with the “prudent person rule”…as such they would be required to preserve the capital of the trust which would only leave the income of the trust available to fund Simon’s welfare. By way of example, if the amount of funds left were, say, $100,000 then the twins can invest the $100,000 and pay the income for the benefit of Simon. Because they have a primary duty to preserve the capital (i.e. the $100,000) they cannot use any part of the $100,000 for Simon’s welfare.
3. Leave the fund in an “all needs” Protective Trust for the benefit of Simon with the twins as executors and ultimate beneficiaries on Simon’s death. This trust would allow the twins to use both the capital and income of the trust to provide for all aspects of Simon’s welfare.
We would recommend the fully flexible “all needs” Protective Trust. It allows the twins to ensure suitable care, accommodation and support services are provided for Simon.