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What is a Special Disability Trust (SDT)?

A Special Disability Trust (SDT) is a trust established primarily for the current and future financial needs of a person with a severe disability or medical condition. SDT’s enable parents and families of severely disabled people to take control of their loved ones’ care and accommodation needs for the duration of their lives, providing peace-of-mind that they will always be looked after.

Who can setup a Special Disability Trust?

Generally an SDT is established by the parents or immediate family of a severely disabled person. There can only be one principal beneficiary of the fund, and this person must meet specific eligibility criteria.

What are the benefits?

Many parents and families of disabled people live with chronic worry about what will happen if they are no longer there to support their loved one. A Special Disability Trust can remove that worry and empower the family with full control over the future care and accommodation needs of their loved one.

  • Peace-of-mind that your loved one will be looked after

  • Full control over how the trust funds are spent

  • Financial concessions from Centrelink

  • Financial concessions from the ATO

Click here to download our Special Disability Trust brochure

Watch our video to get a better understanding of Special Disability Trusts.


How does it work?

Special Disability Trusts are complex structures that must be setup and managed by qualified professionals to ensure compliance and proper management of funds.

Purpose

The purpose of the Special Disability Trust must be to meet the reasonable care and accommodation needs of the principal beneficiary.

Eligibility

To be eligible to be a beneficiary of a Special Disability Trust, the principal beneficiary must meet the definition of a severe disability as defined by the Department of Human Services.

Characteristics

  • Only one principal beneficiary allowed

  • Provides for the accommodation and care of the principal beneficiary

  • Must have an independent trustee or more than one trustee

  • Must comply with investment restrictions and requirements

Contributions

  • Contributions or gifts of assets to any value allowable

  • Almost anyone can make a contribution to a Special Disability Trust

Benefits (current as at 1 July 2018)

  • Gifting/Capital Gains Tax concessions of up to $500,000 combined for eligible family members of the principal beneficiary

  • Assets test assessment exemptions of up to $669,750 available to the principal beneficiary (indexed 1 July each year)

Claire Williams is Financial Affairs’ Special Disability Trust expert. In this video she provides an overview of what Special Disability Trusts are and who they can benefit.

 

Could a Special Disability Trust work for your family?

If you have a family member with a severe disability you will be familiar with the stress and anxiety that arises when you think about their future. Establishing a Special Disability Trust can provide comfort and control.

Anyone can setup up a Special Disability Trust so long as the principal beneficiary meets the definition of a severe disability. This definition includes all types of physical, cognitive and medical disabilities, that effect a person’s ability to live independently.

A Special Disability Trust enables you to:

  • Set it up while you are alive, stipulate the terms, appoint the Trustee and make contributions.

    Other types of arrangements require you to die before the Trust can be setup, causing significant stress and anxiety. An SDT can be setup by anyone, have strict terms and conditions defined and receive contributions, without requiring anyone to die first.

  • Define exactly how and where the beneficiary will be cared for once you die.

    Special Disability Trust funds can only be used for the care and accommodation needs of the beneficiary, giving you full control and peace-of-mind that no one will be able to take financial advantage of the beneficiary’s vulnerability.

  • Receive Capital Gains Tax concessions up to $500,000 (eligible family members only)

  • Receive assets test assessment exemptions up to $669,750 (principle beneficiary only)

Financial Affairs client Damian Meagher talks about his experience working with Financial Affairs on his brother’s Special Disability Trust.


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