Most Australian social security benefits are means tested, with a limit placed on the assets that a recipient can own or potentially benefit from.
Where a recipient is classified by Centrelink as having a “severe disability” (more stringent a test than eligibility for a disability support pension), additional assets can be given to the trustees of a special disability trust and (subject to an indexed cap for investment assets) be excluded from means testing for the lifetime beneficiary.
Special disability trusts must prioritise the care and accommodation needs and expenses of a lifetime beneficiary. They often remove the need for the lifetime beneficiary to prepare a Will as the donors to the trust determine who benefits from the remaining trust assets when the lifetime beneficiary dies.
Special disability trusts are most commonly established in the Will of a relative such as a parent or grandparent, but can also be established to own a home for the lifetime beneficiary, assist donor in qualifying for a means tested pension themselves or as part of the family law settlement between the parents.
A personal trust summary is available from Estate Planning Equation – Preventative Law for a special disability trust.
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