So many times when we meet parents of special needs children we are informed that the scariest question they ask themselves is ‘who will care for their child when they are unable to continue the care or are no longer around’.
Since 2006, families are allowed to establish Special Disabilities Trusts for their children. The purpose of this Trust is to assist family members and carers make private financial provision for the current and future care and accommodation needs of a family member with severe disability.
The trust can be used for the following:
- Accommodation and care costs for the person with the disability
- Medical expenses (including health insurance)
- Maintenance expenses on the trust assets
- Discretionary spending.
The benefits of Special Disability Trusts vary depending on individual family situations but may include the following:
- Not losing entitlement to special disability pension
- Entitled to parents’ assets
- Ensure financial security of the child.
Ideally, the Trust should also be considered as part of a broader estate plan together with a Will, Enduring Power of Attorney and Enduring Guardianship. If you have a business, then a Corporate Power of Attorney needs to be included in the Estate Plan.
How to create a Special Disability Trust
How to establish a special disability trust for your child:
- The child is needs to be severely disabled according to the Special Disability Trust beneficiary assessment process
- Engage a lawyer to prepare an Estate Plan and establish the Trust.
- Follow the Model Trust Deed that prescribes the compulsory clauses needed by the social security legislators, as well as recommended clauses that give more rights and options for the child and the parents.
One way of ensuring that your child is taken care of when you are not around is to establish a testamentary trust through a Will. In your Will, you can set up the trust for your child (or grandchild) and it will only take effect after your Will is opened and probate begins.
Establishing a Special Disability Trust is an opportunity for family members to take care of the future of a disabled child. However, it is important to get the right advice and set up the Special Disability Trust in the way that you and your child gain the most benefit relative to available funding models.