|
|
|
|
|
This topic contains information on the following:
A trust is a special disability trust if the following requirements of this division of the SSAct are complied with:
The PRIMARY PURPOSE of a special disability trust is, during the lifetime of the principal beneficiary, to meet the reasonable care and accommodation needs of the principal beneficiary.
Act reference: SSAct section 1209L What is a special disability trust?, section 1209M Beneficiary requirements, section 1209N Trust purpose requirements, section 1209P Trust deed requirements, section 1209Q Trustee requirements, section 1209R Trust property requirements, section 1209S Reporting requirements, section 1209T Audit requirements
Policy reference: SS Guide 4.14.3.30 Special Disability Trusts - Care & Accommodation
Anyone can establish a special disability trust. However, before a special disability trust can be established, it must be determined that the intended principal beneficiary meets the definition of severe disability. This assessment is undertaken by Centrelink or DVA.
After determining whether the person with a disability is eligible to be a principal beneficiary of a special disability trust, a special disability trust can be established through either a trust deed or via a will (i.e. a testamentary trust).
The model trust deed exists which contains clauses that are required for the trust to be classified as a special disability trust. For a copy of the model trust deed, refer to the Special Disability Trusts page on the FaHCSIA website. If a trust does not contain the compulsory clauses (and cannot be issued with a waiver), or it contains clauses that could override the relevant compulsory clauses, it will not be classed as a special disability trust.
Centrelink assesses that a trust is a special disability trust.
A special disability trust commences from the date when all the requirements under the SSAct are satisfied. This may or may not be from the date that the trust was established or enacted if via a will.
If the trust is assessed as being a special disability trust, a new determination is made about the rate of the person's, either a contributor or the beneficiary, payment. In calculating the new rate the trust income and assets may be exempted which can result in a rate increase to the person, hence a favourable determination.
Date of effect rules that apply to favourable determinations are set out in SS(Admin)Act Part 3 Division 9.
Generally, if a person contacts Centrelink advising that a trust should be assessed under the special disability trust provisions, and a favourable determination is made that the trust is a special disability trust and the person's rate of payment should be increased, the determination takes effect either on the day on which the person so informed the department or on the day on which the event or change occurred, whichever is the later.
Act reference: SSAct section 1209U Waiver of contravention of this Division
SS(Admin)Act Part 3 Division 9 Date of effect of determinations
Social Security (Special Disability Trust) (FaHCSIA) Guidelines 2011
Social Security (Special Disability Trust) (DEEWR) Guidelines 2011
Each principal beneficiary can only have one special disability trust, and each special disability trust can only have one principal beneficiary. The principal beneficiary can however have other trusts in addition to the special disability trust.
Example: Joe has a special disability trust that pays for some or all of his care and accommodation needs. He is also a beneficiary in his family's discretionary trust, which is not a special disability trust. The assets of the special disability trust are assessed to determine whether Joe is entitled to any means test concessions. The income and assets of Joe's discretionary trust, however, are subject to the income and assets test.
Act reference: SSAct section 1209M(6) Single trust rule
The trust is not allowed to receive compensation payments that are paid to, or on behalf of, or held in trust for the principal beneficiary.
Act reference: SSAct section 1209R(2) Trust property requirements
The trustee must formulate and give effect to an investment strategy, the dominant purpose of which is to satisfy and fulfil the 'primary purpose' of the trust, which is to pay for the reasonable care and accommodation of the principal beneficiary as determined by the trustee from time to time. Subject to these needs, the investment strategy must have regard to:
As part of the trust's investment strategy, it can purchase real estate for the accommodation, or a right to accommodation, for the principal beneficiary. The trust can also purchase property for rental purposes, if the property is rented at market value and the income from the rent is used for the benefit of the beneficiary.
These requirements are specified in the model trust deed. For a copy of the model trust deed, refer to the Special Disability Trusts page on the FaHCSIA website.
Act reference: SSAct section 1209P Trust deed requirements
Policy reference: SS Guide 4.6.4.50 Granny Flats - Features, Rights & Interests
On the death of the principal beneficiary, the trust ceases to be a special disability trust. For further information refer to 4.14.4.30.
Act reference: SSAct section 1209M(5) Living beneficiary rule
_______________________________________________________
Last reviewed: 1 July 2011
