Building a safety net: Succession planning for parents of children with disabilities | Mint

I am a 64-year-old widower with three adult children. One of them has a mental disability. I take care of her financial needs but worry about her future after my death, as she cannot manage finances independently. Can I create a structure during my lifetime to protect her interests when I am no longer around?

—Name withheld on request

Navigating through succession planning is complex and confusing for a parent, especially when it involves plan for a child with a mental or physical disability. Creating private trusts has often helped parents to set aside money and assets for the benefit of a child who, owing to disability, is not capable of managing such assets or looking after their finances independently.

Accordingly, you may consider creating a private trust for the benefit of your daughter to hold and manage assets contributed by you to a trust. The assets of the trust will be held by a trustee, whose role it is to ensure that the assets are protected and income derived from the assets is periodically distributed with your daughter being the beneficiary.

You could opt to be the trustee during your lifetime, and consider your other children, or any other family member, friend or a professional to be a trustee instead of or as co-trustees with you. 

When you can no longer act as the trustee due to incapacity or demise, the other trustees could continue to operate the trust as per the trust deed.

In the trust deed, you must specify the guardrails within which they must operate – for instance, that the assets may be invested only in safe investments, and income should be used for the medical requirements of your daughter.

You may choose which of your assets to contribute to the trust, and you may contribute them to the trust during your lifetime or under your will. There are various considerations for determining the preferred approach. It is advisable that you seek legal advice in this regard. 

Please do note that the trust structure needs to be carefully devised so that it is flexible to both present and future needs of your daughter, and is robust to protect the assets contributed the trust on a long-term basis during your daughter’s lifetime. Given the sensitivities and intricacies involved in this process, you should consult a lawyer who will prepare the necessary documentation and also help you review it periodically, as required.

It would also be advisable to involve your other children while creating this structure so that they are aligned with your thoughts and plans. 

—Shaishavi Kadakia is a partner and Sachi Shah is an associate at Cyril Amarchand Mangaldas, Mumbai.

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