All parents worry about their children when they die, however for those parents with disabled children the worry is even greater.
Peace of mind can be achieved. A well drawn Will can incorporate a Special Disability Trust to take effect on the death of the surviving parent. Special Disability Trusts were created by the Federal Government in 2006 to allow parents and other family members to provide assets for a disabled person with a severe disability, without affecting the disabled person’s entitlement to the disability support pension.
How does it work?
- A Special Disability Trust can hold a maximum of $578,500.00 (this amount is indexed annually) and apart from $10,250.00 per annul, income and capital of the trust cannot be used for the disabled person’s general day to day living expenses. The trust must be used for the disabled person’s reasonable:
- Care needs which arise as a result of the disability, e.g. mobility aids and a modified motor vehicle;
- Accommodation needs which arise as a result of the disability, e.g. the purchase of a modified residence or the payment of an accommodation bond in a residential care service.
What assets can the child have?
- The value of assets held outside the Special Disability Trust for the benefit of the disabled person will not affect his/her entitlement to the disability support pension as follows:
- If the disabled person owns a home $186,750.00;
- If they do not own a home $321,750.00.
- Thus, at present, the maximum parents can leave for the benefit of a disabled child is $900,250.00 ($578,500.00 & $321,750.00).
The special disability trust is only for the benefit of the child and can not be used by a de facto partner or child for their own purposes.