Ask Paul: How can we support our adult child with an intellectual disability?

Dear Paul, our daughter is 21 and receives a disability support pension (DSP) due to her intellectual disability.

While she will be able to live somewhat independently in the future and will need oversight for the rest of her life, it is unlikely she will be able to sustain a job, so she will likely be reliant on DSP for many years yet. 

We own our home, which is currently valued at about $500,000. Our wills state that upon our deaths, the proceeds of the house will be left in equal shares to our three children, along with other assets.

My question is how to best set up my daughter's share of the inheritance (her eldest sibling will be her guardian), to protect her interests and minimise any impact on her DSP. Thank you for any advice you can give. - Wenda

Making provisions for a child with a disability is, as you know, Wenda, not a simple task. I am not a solicitor, so I'd like you to discuss this with whomever is assisting with your wills, but I can give you some general information.

First, a future inheritance is not likely to impact her DSP. Today, a single non-homeowner can have $579,500 in assets and a homeowner $321,500, so I think we can put that issue to one side.

Now to the harder parts.

Housing is going to be critical for your daughter. Here the views of her two siblings are so important. It gives me a lot of comfort that your son is happy to be her guardian.

That is a great support for you and your daughter, but how would your other two children feel about them each owning a third of your family home, while your 21-year-old daughter has a lifetime right to live there?

Or would they be willing to use, say, half the value of the home to buy an apartment as tenants in common, where your daughter held a percentage of the property that reflected her inheritance and the other two children a smaller proportion each?

This would at least free up some cash for your other two children, while ensuring a secure home for your daughter.

Her long-term housing, I would suggest, is the first key issue in your estate planning. If cash were to be held in her name and she rented, which I feel may not be the best solution, the traditional approach would be to hold that in trust for her with your son as trustee. But there are costs to establishing a trust and annual accounting fees.

This is fair enough, but if she received about $170,000, you would need to consider the annual costs. The upside is that a trust with your son as trustee would be a secure place to hold money for her.

The key point will be around your family dynamic. As your daughter can live 'somewhat independently' but will probably not be able to work, she has security of income from her disability pension.

As a parent myself and thinking about your situation, it is the security of her forever housing that would be front of mind for me.

Get stories like this in our newsletters.