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On 20 September 2006, the Federal Government introduced social security concessions for people with a severe disability and their families.
The new rules allow a person with a severe disability to be the beneficiary of a “special disability trust” (set up on its own or as part of a will) with assets up to $500,000 plus a house, before the social security assets test starts to apply. This replaces the general rule that a person’s assets include money held in trust for them.
There are also concessions for close family members who put money into a special disability trust: when considering whether they are eligible for social security, the family member will not be deemed to retain the assets given to the trust, as would be the case under the usual gifting rules.
The rules for special disability trusts are strict and complex. In particular, the trust can only pay for “care and accommodation”, which may be restrictive in some circumstances. Whether a special disability trust is appropriate depends on
- how important social security entitlements are, both for the person with a severe disability, and for their family members, usually parents
- what assets would be available either while parents are alive, or in their estates after they die, to put into such a trust
- whether such a trust will cover the significant needs of the person with a disability or whether something broader or more flexible is necessary.
However, these changes do create another option to consider when deciding how to plan for the future of a person with a disability.
Stephen Booth has been closely involved with the implementation of the special disability trust concept, having been asked by the Department of Family and Community Services to write plain language booklets explaining special disability trusts.
If you would like advice on special disability trusts, wills or other issues concerning intellectual disability and estate planning, contact:
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