Vulnerable Person Trust: Protecting a Dependent in Your Will

If you care for someone who is unable to manage money or make financial decisions, you want certainty that your estate will continue to support them after you are gone. A vulnerable person trust can be included in your will to protect that person, give trustees clear powers, and reduce the risk of public funds or inappropriate beneficiaries reducing support.

What is a vulnerable person trust?

A vulnerable person trust, often called a VPT, is a trust you create inside your will to hold assets for someone who is vulnerable. The trust appoints trustees to manage and use the money for the benefit of the main beneficiary, the vulnerable person. It is designed to give trustees flexibility to provide support while offering legal protections so the funds are used in the person’s best interests.

Who might need one?

• Adults with learning disabilities or limited mental capacity.
• People with health conditions that affect their ability to manage money.
• Anyone who is likely to become entitled to means-tested benefits that could be affected by a large inheritance, unless the trust is suitable to protect benefits.

How a vulnerable person trust works

The trustees hold and manage the assets on behalf of the vulnerable beneficiary. They can make payments for items such as accommodation, care, specialised therapies, holidays, clothing, or everyday living costs. Trustees can also provide benefit in non-cash forms, for example by buying supermarket vouchers, paying suppliers directly, or arranging services that meet the beneficiary’s needs.

There are protections built into the trust. Usually other potential beneficiaries, such as siblings or children, are restricted in what they can receive. The vulnerable beneficiary is intended to be the primary recipient of income and capital from the trust; others are typically limited to a small annual amount, often 3% of the trust income or up to £3,000 in a tax year, whichever is lower.

Tax and legal considerations in England and Wales

Vulnerable person trusts have a special status for inheritance tax purposes which can be more favourable than a standard discretionary trust, but tax can still apply in certain circumstances. There can be periodic and exit charges for some trusts. For clear, authoritative information about trusts and tax you can read guidance on GOV.UK: Trusts and taxes on GOV.UK.

Because tax rules are complex and change, you should discuss the specifics with a solicitor or a specialist adviser when you make your will. The trustees also have legal duties to act in the beneficiary’s best interests, keep accounts, and manage investments prudently.

Practical examples

• If your adult child cannot cope with cash, trustees could pay for utilities, buy vouchers for groceries, or pay a support worker directly.
• If the beneficiary receives means-tested benefits, a properly drafted trust can be structured to protect those benefits while still improving quality of life.
• Trustees might pay for one-off items, such as specialist equipment or a short holiday, without handing over large sums of money.

Choosing trustees and drafting the trust

Choose trustees you trust, who understand the beneficiary’s needs, and who are willing to carry out the ongoing duties. You can appoint professional trustees if you prefer independent oversight. Clear drafting in the will is essential to avoid disputes and ensure the trust operates as you expect.

If you do not yet have a will, or if your existing will needs updating to add a vulnerable person trust, our will-writing service can help you include the right clauses. See our Will writing and Trusts pages for more details.

If the person you are protecting may need help making decisions while you are alive, you should also consider a Lasting Power of Attorney. Find out more on our Lasting Power of Attorney page.

To discuss whether a vulnerable person trust is right for your family, contact us or request an online will review and we will talk you through the options.

For independent guidance about the rights of people who lack capacity, Age UK and other charities provide useful information: Age UK.

Setting up a vulnerable person trust can give you peace of mind that the person you care for will be supported in the way you want. Speak to a specialist early so your will reflects your wishes clearly and your chosen trustees are ready to act.

Call to action: If you are ready to include a vulnerable person trust in your will, start with our will-writing service or get personalised advice via our contact form.

Call to action: Need advice about powers of attorney or ongoing care planning? Visit our Lasting Power of Attorney page or book a consultation today.