One of the most important areas to consider when drafting a will is whether or not you establish a testamentary trust to provide ongoing financial support for another person. While there are many different types of trust, one of the most important to understand is a Special Disability Trust.
A Special Disability Trust refers to an arrangement that is made to provide ongoing support for a relative who has a severe disability.
There are a number of areas which set a Special Disability Trust apart from other trusts. The main purpose of this option is to provide a regular source of finances that can cover the ongoing care and accommodation of a relative with a disability.
As well as being able to provide ongoing financial assistance for care and accommodation, these trusts can also provide up to $10,000 every year for the provision of discretionary items.
What’s more, income from one of these trusts will not be included in the means testing for any other income support payments your relative receives. The only requirement is that the size of the trust remains below an indexed amount, which stood at $609,500 on July 1 2013. This indexed amount is adjusted periodically to account for changes in the value of the Australian dollar and inflation.
It is also important for individuals to know that their relative will need to meet certain legislative criteria before they can become the beneficiary of a Special Disability Trust. These criteria are the same as those that the Department of Social Services will apply when assessing whether an individual qualifies for a severe disability pension.
If you would like to know more about setting up a testamentary trust, including a Special Disability Trust, it is important to consult with a wills and estates lawyer.