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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.
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.
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.
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.