Special Disability Trusts: A Clear Path to Long-Term Support
Planning for the future of a loved one with a severe disability involves more than care – it involves financial stability. A Special Disability Trust (SDT) offers a legally supported structure to provide that security. With the right understanding, families can use this tool to support care and accommodation while accessing valuable financial concessions.
Who Can Benefit?
To establish an SDT, the beneficiary must have a severe disability as assessed by Centrelink or the Department of Veterans’ Affairs. This ensures that the trust serves individuals with significant limitations in daily life. Each trust is dedicated to one beneficiary, keeping the focus entirely on their unique needs.
How Does It Work?
Families can create an SDT using either a trust deed with compulsory clauses or through a will (testamentary trust). Once established, the trust must follow strict rules that ensure it operates solely for the benefit of the individual.
Unlike general family trusts, SDTs are structured to:
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Pay only for care, accommodation, and related expenses
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Protect the beneficiary’s access to government support
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Comply with ongoing reporting and legal obligations
What Can the Trust Pay For?
Trustees must ensure that spending directly benefits the beneficiary. For example, they may fund:
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Mobility and medical aids
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Accessible housing and modifications
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Therapy, support services, and personal care
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Approved discretionary items that enhance quality of life
By prioritising the individual’s well-being, the trust fulfils its core purpose.
Who Manages the Trust?
An SDT must be managed by two or more trustees or by a professional trustee. These trustees take full responsibility for ensuring the trust is used properly and remains compliant with the law. Their decisions must always serve the best interests of the beneficiary.
Investment and Real Estate
Although SDTs can hold assets like property, trustees must adopt conservative investment strategies. Real estate can be used for accommodation or to generate income, but only if it aligns with the trust’s purpose. All investments must reflect the need for stability and low risk, not financial growth.
Legal and Reporting Requirements
To maintain its legal status, the trust must meet key compliance obligations each year:
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Annual financial statements
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Tax return (if required by the ATO)
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Statutory declaration from a trustee confirming correct use of funds
These documents must be submitted by March 31 each year. Additionally, authorities may request an independent audit, adding an extra layer of transparency and accountability.
Why SDTs Matter
Meeting the requirements of an SDT enables access to means test concessions. These concessions reduce the impact of assets on pension eligibility, helping families manage long-term costs more effectively. More importantly, SDTs offer peace of mind, knowing that a loved one’s essential needs are protected.
Final Thoughts
Although setting up and managing an SDT involves careful planning, the benefits are substantial. With professional advice and a clear understanding of legal requirements, families can build lasting financial security for those who need it most. In doing so, they empower individuals with severe disabilities to live with dignity, independence, and support.
If you have any questions, need assistance, or would like to explore how a Special Disability Trust could benefit your situation, we’re here to help. Contact us today by clicking here
For personalised financial assistance tailored to your unique needs, connect with the dedicated team at Forman Financial Services, our trusted sister company specialising in comprehensive financial solutions. Click here.
Disclaimer and Warning
The information above is of a general nature only. It should not be used as a source to make financial decisions. It’s also important to note that the legislation and figures related to this topic tend to change regularly and therefore the information above may not reflect the current status. We recommend that if you are looking for advice on this matter, you should contact us.