Special disability trust – Briefing Note | Andreyev Lawyers
Please download a copy of our Briefing Note on Special Disability Trusts.
Special Disability Trusts - Briefing Note 0 244 downloads
This Brief outlines the structure, use, eligibility requirements and benefits of...
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This Brief outlines the structure, use, eligibility requirements and benefits of Special Disability Trusts
A Special Disability Trust (SDT) is a specialised type of trust that allows parents and immediate family members to plan for current and future needs of a person with severe disability. The trust can pay for reasonable care, accommodation and other discretionary needs of the beneficiary during their lifetime.
If an immediate family member transfers assets into the SDT, generous concessions are available to benefit both the contributor and beneficiary. Tax and social security concessions are intended to encourage family members to make future arrangements for a beneficiary with a severe disability.
Payment of rent or purchase of the primary place of residence of the beneficiary, if the payment is not made to an immediate family member of the beneficiary;
Maintenance of trust property assets to keep the property in comparable condition or a condition that is safe to use (excluding replacement); and
In addition to these expenses, the SDT can fund discretionary spending up to the set limit. For the current financial year 2014/15, the limit for discretionary spending is $11,000. This figure is adjusted to CPI on 1 July in each year. ‘Discretionary spending’ includes things such as ordinary food, vehicle registration and petrol, toiletries, recreation and leisure activities, property insurances (including building, contents and vehicle), payment of utilities, and non-specialised clothing and footwear.
A person is eligible to receive Disability Support Pension if they:
A carer is eligible to receive Carer Payment if they:
Net income on trust assets is taxed at a lower personal income tax rate; and
The Appointor has ultimate control of the SDT because they can appoint and remove the Trustee. An Appointor can be any person or corporation who is not the Settlor or the Beneficiary.
The Beneficiary is the person who benefits from the SDT. The Trustee determines what the Beneficiary receives from the SDT.
Centrelink may also review the documents of the trust each year to decide whether the trustee has used the money in the trust for the care and accommodation of the person with the severe disability. If a trustee or trust deed is found to be non-compliant with the SDT requirements all gifts will lose their concessional treatment.
The SDT will end on the earliest of either the death of the beneficiary, when the assets are fully expended on the beneficiary, or at any earlier date as required by law.
If you think an SDT may be a good option for you, please contact us to discuss your situation and the assistance we can provide in establishing an SDT for you.
Please download a PDF copy of this Briefing Note on Special Disability Trusts.
NOTE – Please note that the information in this Briefing Note is current as at the 2014/15 financial year.