What are the Requirements of a Special Disability Trust?

When establishing a Special Disability Trust, it is important that all the requirements are met. As we have seen in the blog What is a Special Disability Trust, the trust can only be established for one beneficiary (not including residuary beneficiaries) and must cease when the beneficiary dies. The trust must also be managed by a Trustee.

To be an eligible beneficiary of a Special Disability Trust, the beneficiary must meet the definition of a severe disability, as defined under section 1209M of the Social Security Act 1991 (Cth). Any beneficiary over the age of 16 must have:

1. An impairment that would qualify them for the disability support pension or
   1.  Be receiving invalidity service pension or
   2.  Be receiving income support supplement on the grounds of permanent incapacity.
2. A disability that would qualify a person to receive the carer allowance if they were the beneficiary’s sole carer or
   1. Be living in an institution, hostel or group home for people with disability that is under a Commonwealth agreement between the States and Territories.
3. A disability that means
   1. They will not be working or have no likelihood of working more than 7 hours a week for a wage that is at or above the minimum wage.
   2. Be working for wages set in accordance with the supported wage system. This means that if the beneficiary is working more than 7 hours, they must be earning an amount under the minimum wage.

If the beneficiary is under the age of 16, in accordance with section 1209M of the Social Security Act 1991 (Cth), the beneficiary must have:

1. A severe disability or a severe medical condition.
2. A carer with a qualifying rating under the Disability Care Load Assessment (child) Determination for the principle beneficiary.
3. A treating health professional that has certified in writing that the beneficiary’s disability means:
   1. They will need personal care for 6 months or more
   2. The personal care is required to be provided by a specified number of persons.
4. A carer that has certified in writing that the beneficiary will require the same or increased level of care in the future.

Another requirement that must be considered when setting up a Special Disability Trust is the Trustee. The trust must have at least one trustee, who can be a family member, friend or an independent trustee such as a trustee corporation. It is their responsibility to manage the assets of the trust and ensure that it is being used for the accommodation and care needs of the beneficiary. The trustee must sign a statutory declaration stating that they:

• Are a resident of Australia.
• Are not disqualified from managing corporations under the Corporations Act 2001 (Cth).
• Have no convictions of an offence or dishonest conduct against Federal, State, Territory or foreign law. 
• Have not been convicted of an offence under the Social Security Act 1991 (Cth), or the Social Security (Administration) Act 1999 (Cth), or the Veteran’s Entitlement Act 1986.

An important thing that must be noted before establishing a Special Disability Trust, is the single trust rule. No other Special Disability Trusts can be in existence for the principal beneficiary of the trust. It is recommended that you seek legal advice before establishing a Special Disability Trust. Contact us for a free 30 minute consultation in our office at Lindfield or over the phone if you prefer. 

We also suggest you seek financial and tax advice before setting up a disability trust. We recommend Price Financial Intelligence if you are looking for someone to provide you with financial advice.

Photo by alexandre saraiva carniato.

Any information on this website is general in nature and should not be taken as personal legal advice. We recommend that you speak to a lawyer about your personal circumstances.