When you are a parent, a constant concern at the back of your mind is “What will happen to my child when I’m not around?” As your child grows, proves their capability, and starts taking care of themselves, this fear gives way to pride and relief. But for those parents whose children are severely disabled, this kind of solace remains elusive. However, since 2006, there has been some light at the end of the tunnel for these parents in the form of Special Disability Trusts.
What are Special Disability Trusts?
As their name suggests, Special Disability Trusts are legal arrangements created to provide for a severely disabled child or family member. The funds should predominantly be used for the beneficiary’s care and any accommodation requirements resulting from the disability.
Special Disability Trusts are beneficial because the assets held in the trust do not affect the beneficiary’s entitlement to the disability support pension, ensuring that the child will not lose their entitlements and remain financially secure. However, there’s a limit on how much a Special Disability Trust can hold. As of June 2023, the maximum is $781,250, with annual indexing. Furthermore, a maximum of $10,250 per annum can be used for the child’s day-to-day needs.
Setting up a trust
Setting up a Special Disability Trust involves the following steps:
- Getting an official declaration that the child is severely disabled through the Special Disability Trust beneficiary assessment process
- Consulting a lawyer to draft a will and facilitate the establishment of the trust
- Following the Model Trust Deed, which includes mandatory clauses set by social security legislators, and recommended clauses that give more rights to the child and parents.
Impact of Special Disability Trusts
While Special Disability Trusts have been widely embraced, there remains some uncertainty about their impact on the child’s life. It is abundantly clear that these trusts provide a sense of financial security and assurance about the child’s future. Some of the benefits associated with Special Disability Trusts include:
- maintaining entitlement to the special disability pension
- parents’ assets provision
- security in the event of parental death
- reduced burden on family members
- overall financial security for the child.
Wills
A person can also set up a testamentary trust through a will. This process involves setting up the trust in your will for the benefit of a child or grandchild. The trust comes into being after your demise and the will is executed. For parents of severely disabled children, this can be a viable place to house your Special Disability Trust.
However, you can bring a Special Disability Trust to life even while you are still alive. This is especially useful for parents who are divorced or unable to directly support their child, as the trust can ensure the child’s financial security.
Conclusion
Setting up a Special Disability Trust is a profound expression of love and care that helps secure the future of a disabled child. However, amidst the frenzy of everyday life and the unique challenges faced by disabled children, it may also be a daunting task for parents.
A trusted family lawyer plays a crucial role. They can handle the intricacies and legal requirements for establishing the Special Disability Trust, ensuring it operates as you wish with a trustee of your choice. With their expertise in establishing trusts, family lawyers can make the process straightforward and stress-free for the family. A Special Disability Trust is designed to assist your child, and there is no better time to do so than the present.
If you require legal advice or representation in any legal matter, please contact Taylor Rose.
