On Attendance Allowance or DLA? Protect Wealth with DPI Trust

Over the festive season many of us have time to contemplate the year that was i.e., 2023 and the year to come, 2024.  We are no different.

2023 was a difficult year for us with cancer in the family, close family starting attendance allowance benefits, another close family member being sectioned under Mental Health Act 1983 due to epilepsy medication causing Parkinsons leading to Alzheimer’s and psychosis.  In addition, a much-loved grandson with autism.

We are not alone in having difficult family issues to deal with and we have also helped many clients with various issues over the years and 2024 will no doubt be the same.

Tax Attack

• Capital Gains Tax allowances have been reduced from £12,300 to £6,000 this year and £3,000 from 6 April 2023.
• Inheritance tax personal nil rate band of £325,000 has been frozen since 2009 and will remain frozen until at least 5 April 2028.  That’s 19 years of ever-increasing inheritance tax liabilities.
• Discretionary Trusts suffer from lower CGT allowances and 10-year periodic Inheritance Tax charges.

The above got us to thinking again about the Disabled Person’s Interest Trust

To qualify for a Disabled Person’s Interest Trust, you must either be:

• Unable to manage your affairs because of mental disorder under the Mental Health Act 1983 or
• Be eligible for an increased disablement pension, or
• Be eligible for attendance allowance, or
• Be eligible for the care component of disability living allowance at the highest or middle rate, or the mobility component of disability living allowance at the higher rate, or
• Be eligible for the care component of disability assistance for children and young people at the highest or middle rate, or the mobility component of disability assistance at the highest rate, or
• Be eligible for the personal independence payment, or
• Be eligible for the care component of disability assistance for working aged people at the highest or middle rate, or the mobility component of disability assistance, or
• Be eligible for constant attendance allowance, or
• Be eligible for an armed forces independence payment.

There are so many people that are eligible even if they do not claim the above and this presents huge potential asset/wealth/property protection or tax savings:

Disabled Person’s Interest Trust  are discretionary trusts that have full CGT allowances, normal income taxes and no 10 year IHT periodic charge.

• DPI trusts enable you to protect wealth if you are disabled or if you wish to protect money for a disabled friend or relative meaning the monies are ringfenced for them and cannot be mis-managed/abused.
• DPI trusts protect wealth/property and are ringfenced from means tested benefits.
• DPI trusts stays in force until the vulnerable person dies and then wealth can be passed on to generations with IHT protection built in.

Tax efficiency is key here and whilst we have not gone through all the technicalities of a DPI trust, if you are disabled or even just claiming attendance allowance, you may wish to discuss setting one up with us or via your legal adviser.

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