Vulnerable Beneficiaries
One of the reasons for setting up a trust is for the tax-saving aspects of these trusts; another reason is for the protection of beneficiaries, particularly vulnerable beneficiaries.
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10 Mar 2026: Legal Precedents and Case Studies - several landmark cases have shaped how courts in England and Wales treat trusts during divorce proceedings.
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6 Feb 2024: One of the ways in which a discretionary beneficiary may look to challenge the exercise of the trustees' discretion is to request documentation and information concerning the trust and decisions, though they are not generally entitled to the specific reasoning behind those decisions.
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23 Aug 2022: The advantages of a discretionary trust*, reducing your estate for inheritance tax purposes. Giving assets away during your lifetime to specifically vulnerable beneficiaries (disability, mental health condition, or lack of financial maturity).
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*A discretionary trust acts as a protective "shield". Unlike an outright inheritance, the assets are owned by the trustees, which prevents the beneficiary from being exploited or losing essential state support.
Case: Re LMS (2020) EWCOP 52
This case is a primary example of how a trust structure can be used to safeguard a vulnerable person's future when a will has been poorly drafted.
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The Dispute: A 21-year-old woman (LMS) with Sotos Syndrome and autism was left a substantial inheritance (£170,000) directly in her grandfather's Will. If she received this money outright, she would have immediately lost her means-tested benefits.
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The Action: Her family applied to the Court of Protection to "redirect" the inheritance into a Disabled Person's Trust (a specific type of discretionary trust).
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The Outcome: The court authorised the trust. It ruled that the "significant operative purpose" was not to cheat the benefits system but to better fulfil the grandfather's original intent - that the money should actually benefit his granddaughter.
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Benefits Highlighting by the Case
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Preservation of State Support: By moving the assets into a trust, the funds were no longer counted as the beneficiary's personal capital. This allowed LMS to keep her benefits while using the trust funds for "extras" like private therapy or holidays.
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Protection From Exploitation: The court noted that a trust protects vulnerable individuals from being targeted by people who might try to take their money.
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Professional Oversight: It allows for the appointment of trustees (like a solicitor or trusted family member) to manage complex financial decisions that the beneficiary may not be able to handle themselves.
Contrast: The Risk of Getting It Wrong (F v. R (2022))
In the more recent case of F v. R, a man with severe disabilities was provided with the sum of £500,000 outright. In this instance, the court refused to move the money into a trust because there was no evidence that the person who wrote the will intended for the money to be protected in that way. As a result, the beneficiary lost his means-tested benefits.