Special Disability Trust

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Special Disability Trust

What is a Special Disability Trust?

A Special Disability Trust is a trust created in a will for a beneficiary who has a severe disability. Special Disability Trusts provide for the current and future care and accommodation needs of a family member.

The trust is not limited to beneficiaries under the age of 18 – it extends to any beneficiary with a severe disability that precludes them from managing their own affairs.
It is a way of setting up financial security for your loved one with a disability once you are no longer here to do that for them.

What are the benefits of a Special Disability Trust?

The benefits of a Special Disability Trust include:

  • Peace of mind knowing that your beneficiary will be taken care of financially;
  • Family members gifting assets up to $500,000 to the Trust may receive an exemption from the usual gifting rules which could assist their own eligibility to social security benefits;
  • Up to $681,750 (as at July 2019, indexed each year on 1 July) in assets can be held in trust without affecting social security benefits.

Who can be a beneficiary of a Special Disability Trust?

To ‘qualify’ for the use of a Special Disability Trust, Centrelink must assess the beneficiary as being ‘severely disabled’.

The disability criteria can be severe physical, intellectual, psychiatric or behavioural disability or medical condition.  A disability trust cannot be established unless the beneficiary has met the strict Centrelink eligibility test.

What can a Special Disability Trust be used for?

A Special Disability Trust can only be used for limited purposes, which include:

  • reasonable accommodation for the person with the disability;
  • care costs arising from the disability;
  • medical expenses (including health insurance);
  • maintenance expenses on the trust assets;
  • discretionary spending as set by the law.

Essentially this means that funds can be set aside to support your beneficiaries needs.

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