Leaving a legacy to a child with SEND: when kindness meets the means test
Peter McGahan
Monday 2nd November, 2026.
A LEGACY is normally meant to make life easier. Occasionally, unless it is planned properly, it can be a real mess. Let me make that easier for you with an anonymised example. It’s a very narrow subject and a little techy, but well worth the read to avoid such distress.
Take Mike and Donna (anonymised). They have two daughters in their early 20s, Emma and Lynn. Lynn has learning difficulties and lives in her own flat with support arranged by the local authority. Mike’s father recently died and left the same direct legacy to both girls.
Equal? Yes. Equal outcome? Not necessarily.
The official term is SEND - Special Educational Needs and Disabilities but it covers a wide range of circumstances. Having SEND does not automatically mean someone lacks mental capacity, cannot work, or receives means-tested support. The planning has to start with the individual, not how people are labelled.
In Lynn’s case, the inheritance may count as her capital. For Universal Credit, capital above £16,000 will normally prevent entitlement and capital between £6,000 and £16,000 normally reduces the award. Local-authority care charging has its own rules and capital limits. Not every benefit is means-tested.
The grandfather’s loving gift may therefore partly replace support Lynn was already receiving rather than giving her the extra security he imagined.
Mike and Donna cannot assume a post-death fix will solve that, but they can avoid repeating it.
Their Wills can be redrafted so that, rather than Lynn inheriting her share outright, it passes into an appropriately drafted discretionary trust. In simple terms, the trustees control the trust fund and decide when and how it is used. So Lynn, therefore, does not have an automatic right to demand the whole pot.
A properly structured discretionary trust can help keep the trust fund separate from Lynn’s own capital because she cannot simply demand a payment. The trustees can use money for her benefit, perhaps paying for equipment, holidays, therapies or furniture, while the treatment of payments to Lynn needs checking carefully against the benefits and care rules which apply to her.
The trustees matter. Mike and Donna need people who are trustworthy, sensible and willing to do the job. A letter of wishes can sit alongside the trust explaining what they want the money used for, the support Lynn may need and how they would like the trustees to balance her needs with those of other family members.
If Lynn lacks capacity to make particular financial decisions as an adult, her parents do not automatically retain authority because they are her parents. A Lasting Power of Attorney can only be made by someone who has capacity to make it. Where that is not possible, the Court of Protection can appoint a deputy for property and financial affairs. For benefits alone, an appointee may sometimes be sufficient.
Mike and Donna also want to put money aside during their lifetime. A trust may again be appropriate, but don’t treat “put it in trust” as a magic spell. Lifetime gifts can have tax consequences, trusts bring administration and potentially their own tax charges, and some trusts for vulnerable or disabled beneficiaries can qualify for special tax treatment. The legal drafting needs to match the person and purpose.
Then there are pensions. These should be reviewed rather than assumed to follow the Will, because scheme rules and nominations govern how death benefits are handled. In some cases, a trust may be appropriate, but it is not automatic, and the tax treatment needs checking.
Quick tip: From April 6, 2027, most unused pension funds and pension death benefits will be brought within the estate for inheritance tax purposes, so old pension planning should be revisited.
Finally, speak to grandparents, siblings and anyone else who may leave Lynn money. One direct bequest can undo years of careful planning.
And don’t rely on a deed of variation (changing a will after a person passes) as the rescue boat. A Will can legally be varied after death, but where a beneficiary gives away an inheritance, benefits decision-makers or a local authority may consider whether that amounts to deprivation of capital and still treat the person as having it.
That is the real point. This planning is not about depriving Lynn of an inheritance. It is about making sure the inheritance improves her life.
For families with a vulnerable beneficiary, the best legacy is not simply the largest cheque. It is money with the right legal hands around it.
I am writing a guide to inheritance tax planning. If you would like a complimentary copy, please email info@wwfp.net and one will be sent to you when it is ready.
Peter McGahan is the Chief Executive Officer of Independent Financial Adviser Worldwide Financial Planning. Worldwide Financial Planning is authorised and regulated by the Financial Conduct Authority.
