Every family is different, and good estate planning will explore lots of different tools to make sure that your family are properly looked after, including implementing various trust structures.
What is a Special Disability Trust?
A Special Disability Trust is a trust that receives special treatment pursuant to the Social Security Act 1991 (“the Act”), which can be established by parents or immediate family members for the future care and accommodation needs of a person living with severe disability.
Benefits of Special Disability Trusts
In addition to financing the future care and accommodation needs of the beneficiary, the trust assets (up to a limit) and income do not impact any income support payments that the beneficiary is also receiving.
The asset limit (which is increased each year) is currently $724,750.00 and does not include the principal place of residence of the beneficiary.
There are also gifting concessions for the immediate family member who contributes to the trust.
Requirements of a Complying Special Disability Trust
To comply for the concessions, the Special Disability Trust must meet several requirements pursuant to the Act, including:-
- There can be only one principal beneficiary for whose benefit the trust is established.
- The primary purpose of the trust must be to provide for the care and accommodation needs of the principal beneficiary. The trust must comply with restrictions on the amount of funds that are able to be applied towards other purposes.
The trust also has the discretion to apply funds for other purposes for the health, well-being, recreation, independence and social inclusion of the principal beneficiary. There is a yearly limit on this discretionary spending, currently being $13,000.00.
- The trust must be established either via a trust deed during the life of the parent or immediate family member, or established via their will. Special Disability Trusts established after 20 September 2006 are also required to include various compulsory clauses set out in a prescribed Model Trust Deed.
- There are restrictions on payments by the trust to Immediate family members for the care of the principal beneficiary.
- The trustee of the trust must either be an independent professional trustee, or more than one trustee such as multiple family members.
- The trustee must also comply with investment restrictions, provide annual financial statements and conduct independent audits when required.
- The principal beneficiary must be a person with severe disability.
This may be a beneficiary has reached 16 years of age who:
- Has a level of impairment that meets the criteria for a disability support pension, invalidity service pension, or income support supplement, on the grounds of permanent incapacity;
- Has care needs that would qualify a sole carer for carer payment or carer allowance, or is living in an accomodation service for people with severe disabilities, which is funded wholly or partly by an agreement between the Commonwealth and the States and Territories; and
- Is not working, or have any likelihood of working, in employment at or above the relevant minimum wage for more than seven hours a week, or participating in the supported wage system.
For a principal beneficiary under 16 years of age, the criteria are that because of the severe disability or a severe medical condition:
- the person’s carer is qualified under the Disability Care Load Assessment (Child) Determination with a rating of intense;
- a treating health professional has certified that because of the disability or condition they will need personal care for 6 months or more and the personal care is required to be provided by a specified number of persons; and
- the carer has certified in writing that the principal beneficiary will require the same care or an increased level of care to be provided in the future.
If you wish to discuss your own estate planning documents contact Baker Love Lawyers on (02) 4944 3322.
