Passing ownership of assets to a disabled beneficiary can have the undesired result of reducing the beneficiary’s government pension.
The introduction of the Special Disability Trust (SDT) in 2006 was the Australian Government’s response to this problem.
SDTs can be established in a Testator’s Will and allow assets to be left to a disabled beneficiary without having adverse effects on their Centrelink entitlements.
SDTs may also be set up whilst you are alive and the restrictions and concessions applicable will be the same as those that apply to SDT’s created by a Will.
Who is eligible?
SDTs are only available to beneficiaries who meet the definition of “severely disabled” as defined in section 1209M of the Social Security Act 1991.
What are the benefits?
1. Asset Test Exemption
- The assets of a SDT up to the value of $609,500.00 (indexed annually) will not be included in the beneficiary’s asset test;
- Income from the assets of a SDT will not be included as income of the beneficiary; and
- The principal home of the disabled person is not counted in the asset test.
2. Gifting Concession
Gifts up to the value of $50,000.00 to a SDT by a person who:-
- is an immediate family member of the severely disabled beneficiary; and
- is receiving an eligible form of social security pension; will not affect the giftor’s social security payment.
Whilst SDTs are potentially beneficial for persons with severe disabilities and their families, they are not suited to everyone.
For more information on whether a Special Disability Trust is right for you, please contact the experienced team at Everingham Solomons because Helping You is Our Business.