What is a disabled person’s interest?

A disabled person’s interest (DPI) is a disabled person’s entitlement to property held in trust. The entitlement could be discretionary or fixed. It is usually created by another person for their benefit but could also be created by themselves.

A trust for a disabled person receives special inheritance tax (IHT) treatment whether created during lifetime or following a death.

The definition of a ‘disabled person’ includes someone who:

1. •

   cannot manage their own affairs because of mental disorder

2. •

   is receiving certain welfare benefits indicating a physical or mental disability

For the full definition, see the Disabled and vulnerable beneficiary trusts ― uniform definitions guidance note.

IHT treatment of a disabled person’s interest

A DPI is a qualifying interest in possession (QIIP). See the Qualifying interest in possession guidance note.

For IHT purposes, this means that the disable person is treated as if they own the underlying trust property, with the following consequences:

1. •

   a person who transfers property during his lifetime to a trust for