Special Disability Trusts
SDTs are most usually established by a parent, either during their lifetime or by operation of their will. SDTs are used to pay for accommodation, health-related costs (including medical and health insurance expenses), and other expenses related to the disability; in addition, SDTs have a discretionary expenditure of approximately $12,500 per year available for other purposes (eg; holidays, evenings out and clothes).
If a person is not capable of working more than a few hours a week, they may well qualify to be the beneficiary of a SDT. Solicitor Robert Kilgannon, experienced in SDTs, can advise you, on an obligation-free basis, whether your intended beneficiary would likely qualify for a SDT.
Some advantages for the person or family setting up the SDT include:
- a Centrelink gifting concession of up to $500,000 combined is available for eligible family members of the principal beneficiary.
- capital gains tax exemptions on assets gifted to a SDT (yes, really!)
- peace of mind: the ongoing needs of a beneficiary can be met, even in circumstances where family members or a primary carer can no longer provide assistance.
- when the SDT ends any funds or assets that are left are given back to the donors or under instructions they nominate; the money stays in the family.
Some advantages for the primary beneficiary of a SDT include:
- SDT assets valued at up to nearly $700,000 are exempt from the Centrelink assets test for the beneficiary.
- the beneficiary’s home, if held in the SDT, will be further excluded from Centrelink means testing.
- income from the SDT is excluded from the Centrelink income test, and deeming does not apply to the assets within the SDT.
- SDTs are not subject to the higher income tax rate which normally applies to trusts. The SDT’s unexpended income is taxed at the beneficiary’s personal income tax rate rather than at the highest marginal personal tax rate.
Who can be a trustee:
- parents, brothers, sisters or friends of the beneficiary who are over 18 years of age and an Australian resident but for indivuduals a minimum of two years are required;
- any professional trustee company, or a legal, accounting or financial planning organisation.
Precisely how useful a SDT will be for your family will be is very much dependent on individual circumstances, both of the donor and the beneficiary. Robert Kilgannon would be pleased to discuss these issues with you in an initial complimentary phone conversation.