When should you consider using a special disability trust?

When should you consider using a special disability trust?

For parents and other family members of a person with a disability, the question of how their family member will be cared for if they are no longer able to do so is a critical one. Special Disability Trusts were introduced in 2006 to allow parents and immediate family members to plan for the current and future care and accommodation needs of a person with a severe disability or medical condition.
Provided that it has been properly drafted, a special disability trust will attract concessions from both a taxation and social security perspective, for both the beneficiary of the trust and the family members who contribute.

In order to attract the concessions available to a Special Disability Trust, the trust:

  • must have only one beneficiary;
  • must have a beneficiary who has a ‘severe disability’ (as that term is defined in the relevant legislation;
  • must have been established for the primary purpose of meeting the ‘reasonable care and accommodation needs’ of the beneficiary;
  • must include specific model clauses;
  • must have either an independent trustee, or two non-independent trustees’ and
  • must comply with certain investment, reporting and auditing requirements.

Special Disability Trusts can be created during the lifetime of a relevant family member, or by will.  Which way is appropriate will depend on each family’s circumstances and objectives.

Special Disability Trusts may not be appropriate or necessary in all circumstances, and affected families should obtain appropriate legal and financial advice before proceeding.

It may be that an alternative and more cost effective estate planning techniques are more appropriate.

Ballantyne Law Group’s expert estate planning team would be pleased to assist you and your family in this complex area. If you have a family member with a severe disability or illness, please contact us on (07) 5606 7332 to discuss this or any other matter.

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