Special Disability Trust – Assessment

by | Feb 5, 2020 | Special Disability Trust | 0 comments

What is a Special Disability Trust?

A Special Disability Trust (SDT) provides for a person with a severe disability. Each trust can include only one beneficiary, and each person may be a beneficiary of only one SDT.

Before establishing an SDT, the Department of Human Services (DHS) should assess the beneficiary. The DHS evaluates medical impairment, care needs, and work capacity using legislative criteria. If the beneficiary already has a DHS record, the department may rely on existing information. Additionally, medical evidence or a work test may be requested.

Beneficiary Eligibility

  • Employment: From 1 January 2011, a beneficiary can work up to seven hours per week at or above the minimum relevant wage in open employment and still qualify for an SDT.

  • Supported Wage System (SWS): Beneficiaries working under the Commonwealth’s SWS have no hour limit.

  • Custody: Beneficiaries in jail or psychiatric confinement can qualify if they meet eligibility criteria.

  • Residency: Beneficiaries must live permanently in Australia, as SDTs cover care needs within the country. Temporary overseas travel is allowed.

Restrictions on Contributions

Not all assets are eligible for contribution to an SDT. Two types of assets are restricted:

  1. Assets from the beneficiary or their partner:

    • Only allowed if the asset comes from a bequest or superannuation death benefit.

    • The bequest or benefit must have been received within three years before the transfer.

  2. Compensation payments:

    • Any compensation received by or on behalf of the beneficiary cannot be contributed.

In addition, these rules preserve compensation payments for direct care and prevent beneficiaries from using personal assets to qualify for income support.

Steps to Establish an SDT

  1. Obtain approval from the Department of Human Services confirming the beneficiary qualifies.

  2. Acquire a Model Trust Deed.

  3. Establish the trust.

  4. Donate eligible assets to the trust.

  5. Invest the assets according to the trust strategy.

Ongoing Management

  • Pay income from the trust to the beneficiary.

  • Prepare annual financial statements as of 30 June, completed by a qualified accountant.

  • Maintain expenditure records for auditing purposes.

Get Expert Advice

Setting up and managing an SDT can be complex. Contact us today to ensure your trust is compliant, maximizes benefits, and secures your loved one’s future.

[Learn more about our specialised SDT services]

Disclaimer

The information above is general and should not be used as the sole basis for financial decisions. Legislation and figures may change over time. For personalised advice, consult a qualified professional.