Anyone can set up a Special Disability Trust, which is a private Trust, in order to support and plan for the future needs and accommodation of a person or a child who is suffering from severe disability.

The child suffering from severe disability should meet the eligibility criteria as per the definition of severe disability in order to be the principal beneficiary of the Trust and this assessment is undertaken by Centrelink or Department of Veterans’ Affairs (DVA).

The 2 most important eligibility criteria for a child to be the principal beneficiary of the Trust are:

The child should be ‘profoundly disabled’, if he/she are below 16 years of age; or

The child must qualify for a disability support pension or equivalent, if he/she are or above 16 years of age.

Following are the characteristics of a Special Disability Trust:

Only one principal beneficiary, the person or the child for whom the Trust is established and they should meet the set eligibility criteria;

Should provide for the accommodation and care needs of the principal beneficiary;

Should have a Trust deed that contains the clauses as set out in the model Trust deed;

Should have one or more independent trustee;

Should comply with the investment restrictions;

Should provide annual financial statements; and

Should conduct independent audits when required.

Under the Social Security Act 1991(the Act) and the Veterans’ Entitlements Act 1986, a Special Disability Trust is given concessional treatment if the sole objective of the Trust is to maintain and care for a severely disabled person or child.

A Special Disability Trust commences from the date when all the requirements under the Act are satisfied.

A severely disabled person or child can only have one Special Disability Trust

The benefits of a Special Disability Trust are as follows:

Immediate family members such as natural parents, legal guardians, adoptive parents, grandparents and siblings of the principal *Beneficiary can avail the gifting concession of up to $500,000 combined; and

The principal beneficiary can enjoy an assets test assessment exemption of up to $596,500 every indexed year.

A Trust ceases to operate as a Special Disability Trust upon death of its principal beneficiary.

Since 1 January 2011, a principal beneficiary of a Special Disability Trust can work up to 7 hours a week at or above the relevant minimum wage. The Trust can also pay for the beneficiary’s medical expenses including private health fund membership and the maintenance expenses of the Trust’s property.

In 2012-2013 Budget measure, the Government has expanded and has agreed that the Trust is able to spend up to $10,500 in a Financial Year on discretionary items not related to the care and accommodation needs of the beneficiary of the Trust.

Feel free to contact our team of experts at Owen Hodge Lawyers if you wish to establish a Special Disability Trust.

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