Is there anyone in the family who would be vulnerable if they controlled their own money?
I attended an online seminar presented by the European Financial Planning Association (EFPA) where this question was raised.
How many financial planners have asked this question? I would suggest that the answer is ‘Not many’. So, the next question would be ‘How can someone that does generational financial planning not ask this question? We were confronted by some surprising statistics that there are somewhere in the region of 4 to 6% of children under 18 (10 million) in the EU experiencing moderate or severe disabilities. The parents and grandparents, whose families are affected, will often want to make provision for these vulnerable members of the family for when they are no longer here.
However, without proper planning, large sums left to vulnerable people can present a huge problem and we were given examples where such people were exploited or stolen from. Is there a potential solution that a financial planner could recommend to help families provide for such eventualities?
Disability Trusts
While disability trusts do exist in the Czech Republic, they’re referred to more formally under the legal concept of a trust or trust fund within Czech civil law rather than being designated solely for disability purposes. In fact, this is an area I had not considered when I was initially involved in the first Czech Trust Association.
What Is a Trust in Czech Law?
A trust (“svěřenský fond”) was introduced into Czech law through the Civil Code effective as of January 1, 2014. It’s a property management vehicle where the settlor (founder) transfers assets to a trustee for a specified purpose or for designated beneficiaries . Trusts must be established via a notarial deed, detailing key elements such as assets, beneficiaries, trust purpose, and distribution conditions
Since January 1, 2018, trusts require registration in a special trust register; a trust only legally exists once registered (unless set up via will).
Can You Use a Trust to Benefit a Disabled Person?
Yes. While there’s no specific “disability trust” category in Czech law, trusts can be tailored for individual purposes — including securing long-term care, support, or financial stability for a person with disabilities.
A trust can be structured to hold assets for the benefit of a person with disabilities, with clear terms on how and under what conditions they may access funds. Law firms in the Czech Republic explicitly mention using trusts to guarantee wellbeing of offspring without full legal capacity or those unable to live independently. And, trusts are also widely used for asset protection and securing long-term welfare, which may align well with disability planning needs.
Therefore, while not marketed under the “disability trust” label, Czech trusts can be customised to serve that function.
Summary
While the Czech Republic doesn’t offer a designated “disability trust” like some other jurisdictions, its legal framework for trusts is flexible and robust enough to be adapted for that purpose. With proper legal setup, a trust can provide long-lasting support, security, and care oversight for individuals with disabilities. Such trusts can be funded by lump sum investments and/or life assurance. All of which can be discussed with an appropriately qualified financial planner.
Final Word
There is the question ‘Doesn’t the State provide for vulnerable people with disabilities?’
Let’s look at how combining a trust with state-supported benefits work in our next insight!
