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If you have a child with special needs then you need legal advice on how best to pass on any assets to them when you are gone. Many parents make the mistake of setting out a standard will and not realising the impact this will have in the future.

Instead parents need to discuss with their solicitor trusts and wills. In particular a discussion on discretionary trust needs to take place.

A discretionary trust is when the trustees of a will have wide powers to utilise any income or capital for the benefit of certain individual. The beneficiary of a discretionary trust does not have the right to receive any benefit from the trust unless the trustees make a decision in their favour. The trustee must not have a financial interest in the assets held in a discretionary trust.

Standard discretionary trusts have an initial levy and yearly levy. However, an exemption from these levies is possible if the trust was created exclusively for a person with special needs. It is possible to add an organisation that is caring for the incapacitated person but nobody else can be included. If a child with special needs has siblings then a separate trust must be set up for the siblings.

It is important to note that while there may be an exemption from discretionary trust tax, this exemption does not automatically extend to income tax, capital gains tax or capital acquisitions tax. There are specific tax implications for both trustees and the beneficiary in relation to the trust income and gains. Any decisions made need to be carefully considered as they may impact on any State Benefits received by your child with special needs.