What is a Special Disability Trust and why would you need one?
Special Disability Trusts provide for the current and future care and accommodation needs of a family member with severe disability. Their purpose is to assist immediate family members and carers who have the financial means to make private financial provision for the beneficiary.
What can the trust be used for?
The trust can only be used for limited expenses for the beneficiary including:
- Medical and dental expenses
- Private health fund membership
- Reasonable accommodation costs
- Care costs arising from the disability
- Maintenance expenses on the trust assets
The trust can also spend up to $11,250 per financial year on discretionary items relating to the beneficiary's health, wellbeing, recreation, independence and social inclusion.
Benefits of a Special Disability Trust
Generous concessions are available to benefit both the contributor and beneficiary. These concessions are intended to encourage family members to make future arrangements for a beneficiary with a severe disability.
The benefits of a Special Disability Trust are:
- Immediate family members of the principal beneficiary are eligible for the gifting concession of up to $500,000 combined.
- An assets test assessment exemption of up to $636,750 (indexed annually) is available to the principal beneficiary
- Unexpected income is taxed at the beneficiary's personal tax rate, rather than the top marginal rate.
Who is eligible?
To be eligible to be a principal beneficiary of a Special Disability Trust, the person with the disability must meed the definition of severe disability and be assessed by Centrelink.
Please contact KK Partners to discuss your situation if you think that a Special Disability Trust may be a good option for you