A Special Disability Trust

What is a Special Disability Trust?

  • A Special Disability Trust is a trust, created during your lifetime (or by your will when you die) for the benefit of a person who has a severe disability. If established strictly in compliance with the applicable legislation and regulations, it will place assets in the hands of a trustee

What are the Components of a Special Disability Trust?

  • A trust deed which must include some compulsory standard form clauses.

  • A trustee who will hold and manage the trust assets.

  • A single beneficiary who can only be a person who is severely disabled.

  • The trust assets, being amounts of money, shares, property, investments, etc that you choose to be transferred into the trust for the benefit of the disabled person.

Why Would I Want to Establish a Special Disability Trust?

  • There may be some advantages available from using a Special Disability Trust if you want to provide for the accommodation and care of a family member who is physically, intellectually, psychiatrically or medically disabled such that they would be classified as unable to work greater than seven hours per week.

  • The beneficiary would have to be so disabled that they qualified for the Disability Support Pension.

  • The money or assets that you might pay into a Special Disability Trust can have a total value up to approximately $620,000.00 without affecting the beneficiary’s entitlement to the Disability Support Pension.

  • Normally if you are receiving a Social Security benefit and you give away your money or your other assets then you may be deemed to still hold them for the purpose of determining your eligibility to receive the benefit, however if you contribute that money or assets to a Special Disability Trust set up to care for a family member then the deeming rules may not apply to you and so your own pension may not be affected.

  • More favourable income tax rules apply to the income earned by the assets held in a Special Disability Trust.

  • Like all trusts there should be a trust deed however in the case of a Special Disability Trust the deed must contain some compulsory standard clauses or else it won’t be eligible for the benefits.