Question: What is the definition of 'disabled person' for purposes of the Finance Act 2006 changes to the Inheritance Tax Treatment of Trusts?
Answer: the definition is (in broad terms): a person who
- cannot administer his property or manage his affairs by reason of mental disorder; or
- is in receipt of an attendance allowance, or
- receives a disability living allowance through entitlement to the care component at the highest or middle rate.
See IHTA 1984 s89(4)-(6).
The Four Categories
FA 2006 expands on the regime hitherto provided in IHTA 1984 s89 Trusts for Disabled Persons by adding categories (ii), (iii) and (iv) below to the previous category (i).
(i)a settlement which falls within s89, necessarily a discretionary trust, is kept out of the r...