Estate Planning for a Person with Disability

Objectives and legal framework

For families, the estate plan has three core objectives: ensuring lifelong care and dignity for the person with disability, ring?fencing assets so they are not misused, and minimising disputes among relatives after the primary caregivers are gone. The relevant legal framework spans the Indian Trusts Act 1882 (for private trusts), personal succession laws, the Rights of Persons with Disabilities Act 2016, the National Trust Act 1999 (for certain intellectual disabilities) and the Guardians and Wards Act 1890.

Assessing needs and capacity

The starting point is a detailed assessment of the person’s condition, level of functional independence, ability to take financial decisions and likely long?term medical and support requirements. Families should treat this as professional exercise, taking inputs from doctors, therapists and financial planners so that cash?flow estimates, housing arrangements and caregiver support are realistically costed for decades rather than years.

Role of wills in such families

Every parent or primary caregiver should execute a will that: (a) clearly identifies the person with disability as a beneficiary; (b) earmarks specific assets or insurance proceeds for that person; and (c) dovetails with any trust structure that has been or will be created. The will should avoid vague bequests, lay down the order of succession if the first?line guardian or trustee predeceases the testator, and exclude unsuitable heirs where justified, consistent with applicable personal law.

Using private trusts

A private “special need” or “special child” trust is usually the central instrument in such estate plans, because it allows assets to be managed for the beneficiary without exposing them to mismanagement or imprudent spending. Under the Indian Trusts Act, parents, grandparents or a legal guardian can settle movable and immovable property into a trust under a written trust deed, appointing trustees to hold and apply the property for the person with disability as beneficiary.
 

Key design choices for the trust

• The trust deed should spell out in detail the objectives, nature of expenses to be met (medical, residential, education, therapy, assistive devices, caregivers), investment rules and limits on encashing or selling core assets.
• It should prescribe how income is to be applied, whether capital can be dipped into, who can replace trustees, and what happens to any surplus after the beneficiary’s lifetime, so that there is no legal vacuum later.

Guardianship and decision-making

Where the person with disability lacks full legal capacity, guardianship must be planned along with the financial structure. Depending on the disability and age, guardianship may flow from the Guardians and Wards Act 1890, or from the National Trust Act 1999 for persons with autism, cerebral palsy, intellectual disability or multiple disabilities, which allows parents, relatives or registered organizations to seek appointment of a guardian even after the person turns 18. The emerging concept under the Rights of Persons with Disabilities Act is of “limited guardianship”, whereby the guardian acts jointly with the person with disability for specified decisions and periods, respecting their will and preferences instead of displacing them entirely.

Coordinating trustees and guardians

In practice, one set of individuals often acts as legal guardian (for personal and medical decisions) and another as trustee (for property and investments), though the roles can overlap. The estate plan should set out how these roles interact: for instance, requiring trustees to consult the guardian on major expenditure, but preventing unilateral withdrawals that could prejudice the corpus meant for lifelong care.

Tax considerations and cash?flow buffers

Families supporting a dependent with disability can claim fixed deductions under section 80DD of the Income?tax Act for expenditure on medical treatment, training and rehabilitation or for contributions to specific schemes, with higher limits where disability is at least 80%. Separately, a person with disability can claim a deduction under section 80U on their own income, subject to prescribed conditions and certification standards notified under disability law. From a planning perspective, the trust’s investment policy should build in liquidity for at least 12–24 months of essential expenses and maintain a balance between growth assets and stable income?generating instruments, keeping in mind the beneficiary’s risk tolerance and likely longevity.
 
A thoughtful estate and investment plan for a person with disability is ultimately not about documents or products; it is about preserving autonomy, dignity and continuity of care across the person’s entire lifetime. When families take the trouble to articulate their wishes through a well?drafted will, a carefully designed special?needs trust, clear guardianship arrangements and an investment policy that matches real?world expenses, they reduce uncertainty for the dependent and for the next generation of caregivers.

The task is to convert very human anxieties into enforceable rights: ring?fenced assets, accountable trustees and guardians, tax?efficient structures, and a governance framework that can withstand both family disputes and the passage of time. If these elements are harmonised early—well before any medical or financial emergency—the result is a robust, legally defensible plan that outlives the parents, supports the individual in practical ways, and gives the family the one benefit no statute can confer on its own: genuine peace of mind.