All parents hope that after they pass on their children will be as financially secure as when they were around to care for them. That's why individuals buy life insurance, serious-illness protection policies, save for a rainy day and have pension plans with provisions for their dependants. Despite possible financial hardships most children eventually grow up, find jobs and provide for their own needs.

For parents of disabled children, caring for these special offspring long term is far more difficult. When parents die, there is often no one to look after the disabled child, or in more cases, the disabled adult. Siblings - who have already made many sacrifices on behalf of their disabled brother or sister - are often unable or unprepared to care for them as most families now depend on two incomes to pay the mortgage. Even when parents are alive, State support is woefully inadequate for the care needs of disabled children and adults.

According to the Department of Health, the overall number of persons with intellectual disability requiring a new service - residential, day or both - in the next five years is 3,380. From these figures it's obvious that the State is doing little to meet the short- and longterm care needs of the disabled and is leaving it largely up to parents.

"The basic wish of any parent with a disabled child is to make sure that they're properly taken care of throughout their lifetime," says Financial Engineering Network's Mr Aidan McLoughlin. Mr McLoughlin has set up a number of financial vehicles for clients who are permanently incapacitated and for parents with disabled children.

"The way financial mechanisms are set up depends on the ability of the child but the basic mechanism must be a discretionary trust. This type of trust has a provision for parents with disabled children, which is built into the inheritance tax code. This mechanism avoids the tax incurred if a similar trust were set up for a child that is not disabled," he said.

A legal expert in the area of disability, Mr John Costello of Eugene F. Collins solicitors, agrees that this is the best route towards ensuring a comfortable future for a disabled person.

"The discretionary trust is the most common route because any beneficiary under a discretionary trust cannot call for a distribution to be made to him or her. They have no legal entitlement to the funds, so the legal position is that it should not be means tested," said Mr Costello.

Other types of financial provisions may lead to a removal of the disability allowance or medical card through means testing. In the case of a discretionary trust: "The trustees pay capital at such times and such amounts as they see fit. It is important that when a discretionary trust is drafted that trustees are given the choice to give funds to the beneficiary or charities and institutions caring for persons with disability," he said.

Parents are advised to include a "letter of wishes" with the discretionary trust. This provides trustees with directions as to when payments should be made to the child. It is morally binding on the trustees. Despite the specifications, the letter's lack of legal status frees the funds from being means tested, says Mr Costello.

With medical fees of about £50,000 (€6,3486.9) plus a year, most incapacitated individuals cannot afford to lose their medical cards or disability allowances.

Parents should also think about linking pension plans and life insurance into the trust to provide income during the child's lifetime.

"There's an ability to link the provision to the child into a pensions structure. This creates a guaranteed income for life for the child through a pension which is tax deductible to the parent," says Mr McLoughlin.

The income is treated as taxable income to the child but medical costs are tax deductible to the child. "If the child needs constant care as a result of their medical condition these expenses are usually quite high," he said. A discretionary trust can also use life cover funds to provide some of the benefits. It is essential that these funds are paid to the trust and not directly to the child to ensure that essential State benefits are retained.

It is also essential that the needs of the disabled child's siblings are addressed when parents plan their will and other inheritance mechanisms.

Increasing property prices are causing heartache for some parents of mentally or physically disabled children.

"The problem is that more and more people are living longer with disability and with older parents. Family homes are now worth so much and these larger sums mean more income is being generated. When the capital sum is taken into account, it's a disadvantage to a disabled child's benefits," says National Association for Mentally Handicapped of Ireland's (NAMHI), Ms Deirdre Carroll.

The fear among many parents and those working in the field is that the Department of Social, Community and Family Affairs will start denying more disabled people Disability Allowance and medical cards through means testing of discretionary trusts. Without these benefits, proper medical care for disabled children is financially out of reach for many families or would cause undue hardship to parents and other family members.

Discretionary trusts, when properly administered, allow disabled children some quality of life when their parents are gone. Once the safeguards are removed, disabled children are at the mercy of the State and the institutions run by it.

"The fact is there is no decent residential place for disabled adults. I think there should be personal assistance and independent advocates for disabled adults so you don't have disabled people dependent on their parents who can't afford it," says the co-ordinator of the Forum of People with Disabilities, Ms Theresa McAteer.

Independent advocates could also protect the rights and needs of disabled persons when their parents pass away.

"We need to start thinking as a society about the needs of disabled people, right from the cradle to the grave," says Ms McAteer.

Many bodies representing the disabled are calling for the next Budget to include a personal assistance allowance to the disabled so they may hire personal care-givers who may assist them with basic needs like meals, personal hygiene, mobility, transportation and grocery shopping.

There may be hope for change as last year's Finance Act provided some assistance to incapacitated individuals by allowing tax exemptions for qualifying trusts. Two provisions - section 12 and section 205 - basically say that if trust funds are raised for a disabled person following a public appeal they are exempt from income tax, CAT and DIRT if certain conditions are met. Section 12 says trustees are exempt from income tax in respect of income arising to them from the investment of the trust funds. They may also reclaim any deposit interest retention tax (DIRT) paid by them after April 6th, 1997. Incapacitated individuals are allowed payments from, and income arising from investment of the payments, tax-free if the monies are the sole or main income for them.

If the trust's public subscription amount is more then £300,000, any one individual may not contribute more than 30 per cent of the amount in the fund.

Section 205 exempts from Capital Gains Tax (CAT) monies raised by public subscription for permanently incapacitated individuals provided that these monies are held by a qualifying trust. This exemption will apply to all gifts and inheritances taken on or after April 6th, 1997.

Providing income for a disabled child may be structured in many other ways, including will provisions, deeds of covenant and gifts. It is essential that parents with disabled children consult an independent fee-based adviser who may analyse the pros and cons of the various methods available.

For the basics, NAMHI has a slightly out-of-date booklet detailing suggestions on how to provide income without losing benefits, considerations for making a will and types of trusts. NAMHI may be contacted at 5 Fitzwlliam Place, Dublin 2, tel: (01) 676 6035, fax: (01) 676 0517.