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Transitional Trusts

Document

Last amended: 9 October 2006

SDT requirements

For a trust to be a special disability trust (SDT) the trust must meet certain requirements and the trust deed must contain certain clauses.

Exemption notices for pre 20 September 2006 trusts

From 20 September 2006 until 30 June 2007 an exemption notice can be given to trustees of a trust established before 20 September 2006 if:

Exemption notice

The exemption notice must be in writing and contain:

  • the period of the exemption,
  • the clause of the model trust deed to which the exemption applies, and
  • the action the trustee must take within the exemption period to make the trust deed comply with the model trust deed.
Waiver notices for pre 20 September 2006 trusts

    

If a trust was established before 20 September 2006 it may not be possible to alter the trust deed to comply with the clauses of the model trust deed that comes into effect from 20 September 2006. A waiver can be given where a trust deed cannot be altered and the trustee provides a statutory declaration that they will comply with the SDT requirements. That is:

  • the trust is protective,
  • the person with a severe disability is the principal beneficiary,
  • the trust will only be used to meet the care and accommodation needs of the severely disabled person, and
  • the trust will comply with the investment rules as set out for an SDT.

Note: However, the waiver can only apply for the period that the trustee continuously complies with the agreed conditions in the statutory declaration.

Contents of waiver notice

The waiver notice must be in writing and contain:

  • the start and end date of the period of the waiver,
  • the matter to which the waiver applies, and
  • the conditions, if any, that the trustee must comply with.


According to section 52ZZZW of the VEA, a special disability trust is a trust that has been established solely in order to provide for the current and future care and accommodation needs of the beneficiary who is a person with a severe disability.

 

 

To be eligible to be the principal beneficiary of a special disability trust, a person must have a severe disability. A person with a severe disability is:

  • a person who has reached 16 years of age:
  • whose level of impairment would qualify the person for disability support pension from Centrelink or who is already receiving invalidity service pension or invalidity income support supplement, and
  • who has a disability that would, if the person had a sole carer, qualify the carer for carer payment or carer allowance, or
  • who is living in an institution, hostel or group home in which care is provided for people with disabilities, and for which funding is provided (wholly or partly) under an agreement between the Commonwealth and State/Territory governments, and
  • who has a disability as a result of which he or she is not working and who has no likelihood of working for a wage that is at or above the relevant minimum wage, or
  • a child under 16 years of age who is a profoundly disabled child as defined in subsection 197(1) in the Social Security Act 1991.