Last amended: 10 June 2011
What is the purpose of a special disability trust?
The purpose of a special disability trust (SDT) is to assist families, who have the financial means to do so, to make private financial provision for the current and future care and accommodation needs of family members with severe disabilities. This measure took effect from 20 September 2006. Each trust can have only one principal beneficiary and a principal beneficiary can have only one SDT. The principal beneficiary can have other (non-SDT) trusts in addition to the SDT.
A beneficiary assessment must be completed prior to setting up a SDT. When the beneficiary is being paid by Centrelink, the assessment is completed by Centrelink. Once the assessment has been completed, a copy of the assessment should be requested for placement on file. All SDT cases should be referred to the Trust and Companies Team.
Characteristics of an SDT
An SDT must meet the following requirements:
- the principal beneficiary must meet the eligibility criteria,
- the trust must be 'protective' in nature,
- the trust must have only one principal beneficiary (the person for whom the trust is established),
- the assets of the trust must not include any compensation received by or on behalf of the principal beneficiary,
- the trust must provide primarily for the accommodation and care needs of the principal beneficiary,
- the trust must comply with the expenditure restrictions for purposes other than the primary purpose
- the trust must have a trust deed, or be established via a will, that contains all of the compulsory clauses set out in the model trust deed,
- the trust must have an independent trustee, or at least two trustees (for example family members) must manage it,
- investments by the trust must be at arm's length from the immediate family members and the investment strategy must take into consideration the care and accommodation needs of the person with a severe disability,
- the trust must comply with the investment restrictions
- the trustee must provide annual financial statements to DVA or Centrelink, and
- the trustee must arrange for independent audits when required.
Note: If a trust does not contain the compulsory clauses (and cannot be issued with a waiver), or it contains clauses that could override the relevant compulsory clauses, it will not be classed as an SDT.
Eligibility of the principal beneficiary
The beneficiary must have a severe disability.
Care and accommodation
The primary purpose of an SDT is to meet the reasonable care and accommodation needs of the principal beneficiary.
Assessment of income and assets for SDT
All income from the SDT is exempt from the income test, while the principal beneficiary is allowed an assets test exemption up to the special disability trust assets value limit.
Gifting to SDT
There are limitations to gifting to an SDT.