Special Disability Trusts provide a crucial avenue for supporting individuals with severe disabilities by allowing contributions from various sources. While the framework is generally open to donations, there are some important exceptions and conditions to be aware of. In this post, we will explore who can contribute to a special disability trust, the exceptions to this rule, and the types of gifts that are accepted.
Who Can Contribute.
Once a special disability trust is established, individuals, organisations, or corporations can make gifts to support the trust’s mission. However, there are exceptions that need to be considered to ensure compliance with regulations.
- The Settlor:
– Explanation: The person establishing the trust, known as the settlor, cannot be a donor to the trust (refer to section 1.7 of the model trust deed).
- The Principal Beneficiary and their Partner:
– Condition: Unless the contributions by the principal beneficiary (the person with severe disability) and their partner are funded by a bequest or superannuation death benefit within 3 years of receipt.
– Example: If a special disability trust is set up for an individual, any contributions from that person or their partner must be funded by a bequest or superannuation death benefit within 3 years of receipt.
- Compensation Money:
– Condition: No person or organisation can gift compensation money received by or on behalf of the principal beneficiary.
– Act Reference: SSAct section 23(1) Dictionary, section 1209R Trust property requirements.
Types of Gifts:
It’s crucial to understand the types of gifts that are accepted and the conditions associated with them.
- Unconditional Gifts:
– Requirement: All gifts must be unconditional (refer to section 3 of the model trust deed).
– Note: The nature of the gifts should not come with any strings attached, ensuring the trust has flexibility in utilising the contributions.
- Frequency of Contributions:
– Condition: With the exceptions mentioned, anyone can contribute to the special disability trust as many times as they wish, provided the gifts are unconditional.
- Acceptable Assets:
– Flexibility: Any type of assets can be gifted to the special disability trust, as long as they can be used to produce income or provide care and accommodation for the principal beneficiary.
– Example: Contributions can range from a share portfolio to an investment property, with the income generated being utilized to support the person with severe disability.
Understanding the regulations and exceptions surrounding contributions to special disability trusts is vital for ensuring the sustained support and care for individuals with severe disabilities. By adhering to these guidelines, donors can play a crucial role in enhancing the quality of life for those in need.
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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.