I sat with Alison as we talked about her 19 year old son. She was in despair about his behaviour and the way he was treating her and her husband. He had been adopted at 6 years old but his behaviour was now beyond their control. She had responsibility for trying to sort out his money.
She was worried about the future. Neither she nor her husband were getting any younger. Their house had substantial equity. They hadn’t made a Will – and statistically they are not alone. Research suggests over half of UK adults have not written a Will, with the proportion of those without one in older age groups risen significantly over the past four years.
The UK is suffering from “Wills apathy”, with more than 30 million adults failing to make provisions for when they die. A poll of 2,000 adults by adviser search website Unbiased.co.uk and Certainty.co.uk, the National Will Register, recently found that 58 per cent of the adult population does not have a Will. Apathy remains the number one reason, with 36% saying they just haven’t got round to sorting it out yet, and 8% that it never occurred to them.
In my experience many adoptive parents fail to make Wills or think of how they are going to sort out their family’s finances. Simply getting through each day can be a challenge!
Some of the children placed for adoption have significant issues; some may even lack the capacity to handle money. There are legal ways to address this problem.
If you are caring for a child who is mentally incapable of looking after themselves or their money it is important to ensure that you have a properly drafted will appointing people who you trust to care for them after your death.
If the child is in receipt of any means tested benefits, any money that you leave directly to them will affect the means tested benefits they receive and could mean that financially; they end up worse off.
The best way to deal with their inheritance is to set up a discretionary trust in your Will. You can put any assets you own such as property, cash or shares into the trust as a way of making long-term financial provision for a disabled child or beneficiary. You would then name other potential beneficiaries of the trust, such as any other children, family members or charities perhaps.
It is called a discretionary trust because the trustees can decide who out of the potential beneficiaries to pay income and capital to. This is important because it means that the value of the trust fund cannot be taken into account when assessing any means tested benefits the child receives because the trust fund is not classed as their money.
You can then leave a letter of wishes with your Will to guide the trustees as to how you would like the trust to be administered following your death. You should therefore ensure that you choose people you trust who you feel confident with act in the children’s best interests.
These trusts are complicated and it is therefore important that you obtain advice from a specialist legal advisor.
More importantly you can also name guardians in your Will; people you trust to care for your children following your death.
If you die without leaving a valid Will then the law, (known as the intestacy rules) sets out who will inherit from your estate. This may mean that your children automatically inherit, at the age of 18, which may not be what you want. I have met a number of adoptive parents whose children have severed all contact with them. They had not thought through the implications of this situation.
Others know that the danger is that their children may receive more money than they have ever seen in their life.
If they lack capacity to manage their money and have not made a power of attorney then an application would need to be made to the Court of Protection for someone to be appointed to act as their deputy. The child’s inheritance cannot be accessed until the court has appointed a deputy. This could all be avoided with a properly drafted will appointing trustees to look after the money of behalf of the children.
Alison quite simply had not thought about financial planning – simply living had exhausted her. But I was able to put Alison in touch with an experienced team of legal advisors who provided the expert advice in this area she needed.
Ridley & Hall are one of England and Wales leading firms supporting ‘family and friends’ carers (kinship carers) and in challenging local authorities.