What is a Trust?
A trust is a legal relationship between a trustee and a beneficiary. It provides an obligation for a trustee to look after certain property or money for the benefit of another person (the beneficiary). For example, if you include a trust in your will, you are leaving money to a certain person so that they can look after it or use it for the benefit of another person.
What is a Special Disability Trust?
Special disability trusts allow parents and immediate family members of people with severe disabilities to arrange a trust for the person with disability. This trust will be able to provide for their care, accommodation and other discretionary needs throughout their lifetime.
Why should you include a Special Disability Trust in your will?
If you are the carer of someone with a severe disability, this special disability trust may provide a good way to give you peace of mind that your loved one will be financially taken care of after you are gone.
You may also benefit from tax and social security concessions. These concessions were put in place to encourage families to make these important arrangements for their loved ones. However, if your beneficiary is benefitting from other trusts at the same time, you will not qualify for these concessions.
What are the requirements for the Trust?
1. There must only be one principal beneficiary; this means that only one person with disability is able to benefit from the trust, and they must meet certain eligibility criteria (discussed later in this article).
2. The trust must provide for accommodation and care needs:
a)Reasonable Accommodation Expenses may include:
Payment of rent or the purchase of a home for the beneficiary where the payment is not made to an immediate family member.
Home Modifications in connection to the beneficiary’s disability (e.g. installing handrails in the bathroom).
Maintenance of assets within the trust in order to keep it in comparable condition and safe to use (excluding replacement).
Fees for residential care service.
b)Reasonable Care Expenses may include:
Expenses strictly connected to the beneficiary’s disability (e.g. vehicle modifications, sleeping and sensory aids, specialised food etc.).
All medical and dental expenses including:
Private health fund membership,
Medicines Surgery Specialist AND general practitioner services
c)Discretionary spending up to the limit specified within each year (the limit changes each year). This spending can be used for: Ordinary food, Vehicle registration, Petrol, Toiletries Recreation and leisure activities, Property insurance (building, contents and vehicle), Utility bills, Non-specialised clothing and footwear.
3. A trust deed is required which contains clauses set out in the model provided by Centrelink (it is not the same as a normal trust).
4. The trustee (the person in charge of looking after the money) must be independent, or there must be more than one trustee if they are not independent.
5. There are investment restrictions which must be complied with.
6. Financial statements must be provided each year.
7. Independent audits must be conducted when required.
What is the Eligibility Criteria for the Beneficiary?
The beneficiary must meet the definition of “severe disability” in order to be eligible for a Special Disability Trust. This will be assessed by Centrelink. The criteria are set out below:
Over 16 years of age and under the aged pension age.
Meet Australian residency requirements.
Are permanently blind, or have been assessed as having a physical, intellectual or psychiatric impairment of at least 20 points on impairment tables.
Are participating in the Supported Wage System; or are unable to work for 15 hours or more per week within the next two years due to their impairment
Have actively participated in a support program (unless their impairment is severe).
Meet income and assets tests.
Centrelink will determine eligibility based on medical reports and potentially job capacity assessments.
Can Carers benefit from the Trust as well?
Carer payments are also able to be drawn from the trust if the following criteria is met:
The carer personally provides constant care in the home.
Income and assets tests are met.
The carer lives in Australia and meets residency requirements.
If the person being cared for requires care in the home or in hospital and meets the eligibility requirements listed above.
Further Information: If this trust sounds like something that may interest you and you would like to consider including it in your will, please don’t hesitate to contact us for further information on 1800 22 33 90.
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