A Comprehensive Guide to Beneficiary Eligibility
What Is a Special Disability Trust?
A Special Disability Trust (SDT) is a specific type of trust designed to provide for the long-term care and accommodation needs of a person with a severe disability. It allows families and carers to set aside funds for the beneficiary’s future welfare without affecting their eligibility for certain income support payments, such as the Disability Support Pension, within prescribed limits.
The person for whom the trust is established is known as the principal beneficiary. To access the concessions associated with an SDT, the principal beneficiary must meet a specific legal definition of having a severe disability.
A Common Misconception: Income Support Payments
Importantly, a person does not need to be receiving an income support payment at the time an SDT is established. Instead, eligibility depends on the severity of the person’s disability, not their current payment status.
As a result, a person may still qualify even if they are not receiving payments due to circumstances such as exceeding asset limits or being subject to a preclusion period.
Example 1: Compensation Payout
Jane received a large lump-sum compensation settlement. Because of this, she is in a preclusion period and does not receive any income support payments. However, her disability meets the required definition of “severe.” Therefore, her parents can still establish an SDT to help meet her ongoing care needs.
Example 2: Incarceration
James is currently in psychiatric confinement related to a criminal charge and is not receiving income support payments. Despite this, he meets all eligibility criteria for a person with a severe disability. Accordingly, his grandparents can establish an SDT to provide for his future care and accommodation needs once he is released.
Eligibility Criteria for Adults (Aged 16 and Over)
For a person aged 16 or older to be the principal beneficiary of an SDT, they must satisfy a three-part test that defines a “severe disability” for trust purposes.
1. The Impairment Benchmark
The person’s level of impairment must be severe enough to qualify them for the Disability Support Pension (DSP). Alternatively, they may already be receiving an invalidity service pension or the Invalidity Income Support Supplement (ISS) from the Department of Veterans’ Affairs (DVA).
This test establishes a baseline for disability severity. It focuses on whether the person meets the qualification standard, not whether they currently receive the payment.
2. The Care Needs Test
The person must demonstrate a significant need for care. This requirement can be met in one of two ways:
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Option A: The person has a disability that would qualify a sole carer for Carer Payment (CP) or Carer Allowance (CA).
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Option B: The person lives in an institution, hostel, or group home that provides care for people with disabilities and receives government funding under a formal agreement between the Commonwealth and the relevant state or territory. This may include funding arrangements under the NDIS or the National Health Reform Agreement.
3. The Work Capacity Test
Finally, the person must have a limited capacity to work. Due to their disability, there must be no reasonable likelihood that they could work more than seven hours per week at or above the relevant minimum wage.
This test assesses the long-term impact of the disability on the person’s ability to engage in meaningful employment.
Eligibility Criteria for Children (Under 16)
Different rules apply when the principal beneficiary is under 16 years of age. In these cases, eligibility focuses on assessments by carers and health professionals rather than work capacity.
A child under 16 is considered to have a severe disability for SDT purposes if all of the following conditions are met:
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Severe condition: The child has a severe disability or a severe medical condition.
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Carer assessment: The child’s carer has received a qualifying rating of intense under the Disability Care Load Assessment (Child) Determination 2020. This rating indicates that the child requires a very high level of personal care.
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Medical certification: A treating health professional has certified in writing that the child will require personal care for six months or more and that this care must be provided by a specified number of people.
Note: A special provision applies to individuals who were SDT beneficiaries and classified as a “profoundly disabled child” immediately before 1 July 2009. However, new applicants must meet the criteria outlined above.
Frequently Asked Questions
Does the type of income support payment matter?
No. SDT eligibility does not depend on the type of income support payment the beneficiary receives now or may receive in the future. Instead, it depends on whether their level of impairment would qualify them for the DSP or a corresponding DVA payment.
For example, if a person with an SDT transitions from the DSP to the Age Pension at age 67, the SDT and its means-test concessions continue to apply. This is because the underlying disability has not changed.
What residential care qualifies under the Care Needs Test for adults?
The person must live in an institution, hostel, or group home that provides care for people with disabilities. In addition, the facility must receive funding, either wholly or partly, under an official agreement between the Commonwealth and a state or territory government.
Examples include funding arrangements under the NDIS or the National Health Reform Agreement.
Who determines whether someone meets the eligibility criteria?
Services Australia (Centrelink) generally conducts the assessment. They review the evidence provided against legislative requirements, including medical reports and assessments related to DSP, Carer Payment, and Carer Allowance qualification standards.
Important Disclaimer
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.
Next Steps
Given the complexity of Special Disability Trust eligibility and the potential impact on entitlements, a tailored review is often appropriate. Our team can assess your circumstances and help ensure you are receiving your correct entitlements. If you would like assistance, please contact us to arrange time.