Special Disability Trusts
Since 20 September 2006, families have been able to establish a Special Disability Trust, which attracts social security means test concessions for the beneficiary and eligible contributors. The purpose of the trust is to assist immediate family members and carers who have the financial means to do so, to make private financial provision for the current and future care and accommodation needs of a family member with severe disability and receive means test concessions.
It is necessary that, before a Special Disability Trust is established, the prospective trust beneficiary be assessed as severely disabled under the legislation for this type of trust (for details see Special Disability Trust beneficiary assessment process).
Since 1 July 2011 the amount that can be spent in a financial year on discretionary items not related to the care and accommodation needs of the beneficiary of the trust has been indexed annually.
The amount of discretionary spending was initially set at $10,000 on 1 January 2011 and is indexed on 1 July each year to increases in the CPI. The current discretionary spending amount is specified in Social Security Guide - Chapter 220.127.116.11 Special Disability Trusts – discretionary spending.
Frequently asked questions
Means test concessions
For a Special Disability Trust, the principal beneficiary is the only attributed stakeholder under the Trust and Company rules.
For the principal beneficiary, all assessable trust assets up to the concessional asset value limit are exempt from the social security assets test. Where the assets of the trust exceed the limit, the amount in excess of the limit will be counted as assessable assets for the person and will be assessed against the relevant assets test thresholds. The concessional asset value limit for a Special Disability Trust is specified in the Social Security Guide - Chapter 18.104.22.168 Means testing of Special Disability Trusts. The limit was initially set at $500,000 on 20 September 2006 and is indexed on 1 July each year to increases in the CPI.
Where immediate family members contributing to the trust are in receipt of a social security or veterans' entitlement payment and are within five years of Age Pension age or older, they may be eligible to receive a concession from the usual social security or veterans' entitlement rules relating to making gifts (disposal of assets). For the purposes of this concession, 'immediate family members' include natural parents, legal guardians, adoptive parents, step parents, grandparents and siblings.
Setting up a trust in your will
A Special Disability Trust can be a testamentary trust established through a will (that is, it does not come into effect until after the death of the person making the will).
Model Trust Deed
The Model Trust Deed has been developed to help families who have decided to set up a Special Disability Trust. The Model Trust Deed contains both compulsory clauses needed to satisfy requirements for accessing the social security concessions and non-compulsory clauses that provide options for the person with severe disability and their family.
Deed of Variation of Special Disability Trust Deed – Revised Purpose Test
Special Disability Trusts created before 1 July 2011 need to be varied to reflect the legislative beneficial measures that came into effect on 1 January 2011 and in accordance with the Trust Deed, Reporting and Audit Requirements Determination 2011. The beneficial measures introduced as at 1 January 2011 altered the purpose of a Special Disability Trust from ‘sole purpose’ to ‘primary and other purposes’.
To assist you in updating your existing Special Disability Trust’s deed, a Deed of Variation of Model Trust Deed has been created to ensure your Special Disability Trust meets all current legislative requirements. The variation needs to be signed and attached to your Special Disability Trust’s deed and lodged with Services Australia to ensure the Special Disability Trust remains compliant.
Note: The Deed of Variation of a Model Trust Deed for Special Disability Trusts is based upon varying the Model Trust Deed, as previously published prior to 1 July 2011. If you have any concerns you may wish to speak to your legal representative.
Deed of Variation of Special Disability Trust Deed – Duration of Trust
To assist you in updating your existing Special Disability Trust’s deed, a Deed of Variation of Model Trust Deed for Duration of Trust has been created. This variation includes a clause that will extend the duration of a Special Disability Trust beyond the date of the death of the Principal Beneficiary to give adequate time to allow trustees of a Special Disability a grace period to wind up the trust. The variation needs to be signed and attached to your Special Disability Trust’s deed and lodged with Services Australia. There is no requirement to make this change.
To ensure Special Disability Trusts are compliant with legislation, the Trustee must provide annual financial statements of the trust as at 30 June of the relevant financial year. The financial statements must include information, which complies with the Australian Accounting Standards.
One requirement of this process is that the Trustee sign a statutory declaration document which can be accessed below. More information on financial statements and reporting procedures can be found in Questions and Answers.
Special Disability Trusts: Getting things sorted booklet includes information on:
- planning for the future, taking account of disability issues generally,
- how families can use trusts to provide for family members with disability, and
- availability of concessions from social security and veterans' entitlement means tests for beneficiaries and eligible family members establishing a Special Disability Trust.
For more information about the social security treatment of Special Disability Trusts see the Social Security Guide - Chapter 4.14 Means Test Concessions for Special Disability Trusts.
To find out more about Special Disability Trusts:
- contact the Services Australia Special Disability Trust Team by:
- phoning 132 717, for the cost of a local call except from mobile and pay phones, or
- writing to Reply Paid 7819, Canberra BC ACT 2610, or
- visit the Special Disability Trusts page on the Services Australia.