Parents of children with disabilities naturally are greatly concerned about what will happen to their children after they die.
They want the peace of mind of knowing that their child will be adequately provided for and their care needs met.
This is obviously particularly important in the case of people with severe disabilities who are unable to look after themselves or their finances.
In many cases parents have devoted a lifetime of care to their children through their childhood and into adulthood.
Many people are also concerned about an inheritance to a disabled child affecting their special disability pension, which a lot of disabled children depend on.
In 2006 the Federal Government passed the Family Housing Community Services and Indigenous Affairs and Other Legislation Act 2006. The effect of the legislation was to establish exceptions to the means test that applies to trusts for persons with severe disabilities.
These trusts, known as Special Disability Trusts, are established for the sole purpose of providing care and accommodation for the person with the disability.
The beneficiary must be a person with a severe disability who is receiving the disability support pension under the Social Security Act 1991.
A Special Disability Trust can have assets worth up to $596,500.00 (indexed) without the assets impacting the beneficiary’s income support payments.
Individuals can set up a Special Disability Trust in their Will which ensures that their assets do not form part of the trust until and after they have passed away. Therefore, their assets will be left to the Special Disability Trust to be used to meet the reasonable care and accommodation needs of the beneficiary.
A Special Disability Trust ensures that all care expenses and medical expenses including private health insurance can be paid for out of the trust funds.
It also allows a trustee to spend a maximum of $10,250 in a financial year on items such as food, clothing or general gifts.
Establishing such a trust provides considerable peace of mind for parents, knowing that the child’s welfare will be safeguarding into the future.
It is highly advisable to seek expert legal advice when setting up such a trust.