A well-designed estate plan can help ensure that you have control over how your wealth is managed and distributed after you pass away.
While it’s always a good idea to make plans for how your legacy will support your beneficiaries, it can be especially valuable if they are vulnerable.
Definitions of “vulnerability” vary, but the Financial Conduct Authority (FCA) defines a vulnerable person as:
“Someone who, due to their personal circumstances, is especially susceptible to harm, particularly when a firm is not acting with appropriate levels of care.”
This definition includes children and the elderly, as well as people with:
- Disabilities
- Severe mental health challenges
- Significant debts
- Addiction struggles.
In each instance, it may be a good idea to make specific provisions to ensure your beneficiaries are well looked after once you’re gone. Read on to find out more.
1. Appoint guardians in your will
One of the most important steps in planning for the future of your vulnerable beneficiaries – particularly children – is appointing a guardian. A guardian is the person who will take on the legal responsibility of caring for your beneficiaries if they are unable to look after themselves.
Although it’s possible to appoint a guardian through a separate legal document, the simplest way to do so is by including the appointment in your will. Doing this has the added benefit that related financial agreements (such as a trust) can be included in the same document.
As such, your will can help ensure your vulnerable beneficiaries are both cared for and financially supported (using your wealth) by someone who understands their needs.
When determining who you should appoint as a guardian, you may want to consider if they:
- Are known to your beneficiary
- Live locally
- Understand any benefits they or your beneficiary may be eligible for
- Are fully aware of the proposed guardianship and are willing to accept
- Understand how your beneficiary’s upbringing will be paid for
- Are a trustee of any funds you will leave your beneficiary, and if not, whether they can work well with the trustees.
Taking on responsibility for a vulnerable beneficiary is a big commitment, so it’s important that you, your beneficiary, and the appointed guardian are all happy with the choice.
2. Use trusts to manage asset distribution
Beyond the potential tax advantages of trusts, they also offer greater control over how and when your assets are distributed after you die.
Instead of being passed as a lump sum, assets held in trust can be released gradually or under specific conditions, such as beneficiaries reaching a certain age, completing education, or meeting other predefined criteria.
Once assets are placed in a trust, they are managed by a trustee, who is legally responsible for overseeing them in the best interests of the beneficiaries. While the beneficiaries can benefit from the assets, they do not legally own them until they are distributed according to the trust’s terms.
This structure can be particularly useful for protecting vulnerable beneficiaries, as it means you can set up conditions for capital to be released from the trust in their support.
There are many different types of trusts, and some are specifically designed to support vulnerable people. A financial planner can advise which type would be best for your situation.
3. Write a letter of wishes
A letter of wishes is a personal document that allows you to express specific requests regarding your estate, possessions, or beneficiaries.
Unlike a will, a letter of wishes is not legally binding, and it can be updated at any time without the formal legal process required for amending a will or trust. This makes it particularly useful for providing instructions that may change over time, such as evolving family circumstances or health conditions.
You can use a letter of wishes to outline how you would like your vulnerable beneficiaries to be cared for by the guardian you have designated in your will. For example, you might use it to express your hopes regarding their upbringing, education, or healthcare.
If you have set up a trust, you can also use the letter as guidance for trustees, helping them understand your intentions for how assets should be managed and distributed. This can include suggestions for when and under what circumstances funds should be released, ensuring they are used in a way that aligns with your wishes.
Get in touch
It’s important that your wealth continues to support your vulnerable beneficiaries after you’re gone – and having a well-designed estate plan is key to making that happen.
A financial planner can help you create a plan that takes into account the specific needs of your beneficiaries, such as long-term care, education costs, or protection from financial exploitation. They can also guide you in establishing trusts to ensure your wealth is managed responsibly after you’re gone.
To speak to a financial planner, get in touch.
Email hello@solusfinancial.co.uk or call us on 01245 984546.
Please note
This article is for general information only and does not constitute advice. The information is aimed at retail clients only.
All information is correct at the time of writing and is subject to change in the future.
Please do not act based on anything you might read in this article. All contents are based on our understanding of HMRC legislation, which is subject to change.
The Financial Conduct Authority does not regulate estate planning, cashflow planning, tax planning, trusts, Lasting Powers of Attorney, or will writing.
The value of your investments (and any income from them) can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance.
Approved by Best Practice IFA Group 09/04/2025