If you have children, relatives or friends who suffer from a disability or are vulnerable for some particular reason it is possible to set up a trust (either in your will or during your lifetime) to look after their needs. These types of trusts are known as “Protective Trusts”.
By including a protective trust provision in your will you can give the money or assets you would have otherwise given to the disabled or troubled person to a trustee to look after on behalf of that person who will become the beneficiary of the trust. The trustee that you name could be another family member or an independent person or professional body who will then have the power to give the money or assets to the beneficiary in whatever way they consider most appropriate. They may, for example, decide to give regular payments to help with living or education expenses or they may choose to buy an asset such as a house. In this way you can remove any risk that your beneficiary will waste what you have provided for them. It is also possible that if the particular vulnerability ceases to exist the trustee can choose to give all the assets of the trust to the beneficiary and end the trust.
Special Disability Trust
A specific type of Protective Trust is a “Special Disability Trust”. This type of trust was introduced by the government to enable parents and immediate family members to cater for the future care and accommodation needs of a person with a severe disability. The advantage of a Special Disability Trust is that it can have assets of about $550,000 without these assets impacting on the disabled persons income support payment and immediate family members who contribute to the trust may receive a concession from the normal social security rules regarding making gifts.
To be eligible to be a beneficiary under a Special Disability Trust the disabled person must meet the definition of severe disability which requires a level of impairment that would qualify the person for a disability support pension, would qualify the persons carer for a carer payment or allowance and the person must not be working or have any likelihood of working for a wage that is at or above the minimum wage. The trust itself must be protective in nature, have an independent trustee or alternatively more than one trustee who may be family members and it must provide for the care and accommodation needs of the disabled person.
Anyone who has the care of a person with a disability should as part of their succession planning consider a Protective Trust or a Special Disability Trust. Our society today is reliant on family members supporting disabled or disadvantaged members of our community and these measures can play a part in securing their future wellbeing.
For more information or assistance please do not hesitate to contact Trevor Kuhle.