Introduction
What is this booklet about?
Families of people with disability, especially parents, often ask ‘What will happen when I can no longer provide care?’ It can be hard looking after the interests of a person with disability at any time, but making arrangements for the future can be even harder.
This booklet and the Planning for the Future – People with Disability booklet are intended to make things simpler by explaining the options. This booklet deals briefly with planning for the future taking account of disability issues generally and how families can use trusts to help look after family members with disability. It also explains how new income support (social security and veterans’ entitlement) concessions for special disability trusts can help in providing for family members with severe disability.
Before using this booklet
Whether the information about income support in this booklet will apply to you, or to a person with disability, depends on eligibility for income support from Centrelink or the Department of Veterans’ Affairs (DVA). Before establishing a special disability trust, you must verify with Centrelink or DVA that the person for whom the trust is being established is ‘severely disabled’ as required by the special disability trust rules. Where the person with disability does not meet the definition of ‘severely disabled’, the income support concessions will not be available.
This booklet builds on the information in Planning for the Future – People with Disability. You should read this booklet first as it will:
- examine options in relation to estate planning and providing for the future of a person with high support needs, including how to begin the process of planning for the future and how to implement that plan;
- explore issues that may arise both for individuals and families when deciding how to put the plan into action, including how to get legal and financial advice;
- provide information on how guardianship, accommodation and care options affect what you can do; and
- identify supports and contacts for obtaining further information.
This booklet only gives general information. How this affects you depends on your own situation. Which parts of it are most applicable or important will differ substantially from family to family. Every person with severe disability has different levels of ability which should be taken into account. The resources available, and the opinions of family members and of the person with the disability, will differ from case to case.
You should not copy the sample ‘special disability trust deed’ in section 3 without getting specialist legal, accounting or financial planning advice. The use of a special disability trust should be part of a well-considered estate plan for the family, and particularly for the person with severe disability. Contacts for obtaining specialist advice, and some other sources of information, are set out in Planning for the Future – People with Disability.
Outline of this booklet
Section 1, The who’s who and what’s what of trusts and wills, looks at some of the expressions used when talking about trusts and wills, and what they mean. It also briefly looks at how a trust operates, from the point of view of the trustee and of the person with the disability, and some of the legal and accounting requirements, reporting obligations and tax issues connected to trusts.
Section 2, Special disability trusts and social security, deals with how the income test and the asset test (which apply where there are entitlements to social security or veterans’ entitlements payments) apply to trusts, and details the concessions arising from the Australian Government’s initiative on special disability trusts.
Section 3, The model special disability trust deed, is a sample of a special disability trust deed that contains the clauses which are essential for the trust to comply with the requirements of the special disability trust legislation. It also contains notes explaining how the provisions work and how they relate to the issues covered in the other sections of this booklet.
Some points about how this booklet is written
Who should read this booklet?
Because the issues discussed in this booklet are most often relevant to parents of a person with severe disability, the ‘you’ referred to in the booklet is primarily a parent. However, the same principles apply to other family members or friends considering providing benefits to a person with severe disability.
Questions and answers
The questions asked in this book are the questions parents and other family members most often ask when talking about estate planning where one of the people involved is with disability.
‘Disability’ and ‘severe disability’
Because the income support concessions relate to providing for people with severe disability as defined in this context (see section 2), this term occurs often in this booklet.
However, even where the disability is not severe in terms of the definition in legislation, a lot of the same issues have to be considered by parents or others considering setting up a trust or a will as estate planning methods.
Some people with disability are quite capable of handling their own financial affairs, care and accommodation without assistance, so there may not be any need to go into the things discussed in this booklet.
Income support, social security and veterans’ entitlements
When discussing the concessions which took effect on 20 September 2006, this booklet sometimes mentions ‘income support’. The rules apply equally to benefits administered by the Department of Veterans’ Affairs (DVA) and by Centrelink. However, to simplify the explanations, the booklet mainly talks about income support, using that expression to cover both social security administered by Centrelink and veterans’ entitlements administered by DVA.
‘Property’ and ‘money’ and ‘assets’
In this booklet, the property of people or trusts will be referred to as their ‘assets’ or ‘property’. ‘Property’ used in this way does not mean only land or real estate. It includes money, shares or any other type of asset.
Trusts and wills: making arrangements while you are alive or after you die
This booklet focuses on trusts because the income support concessions work through a trust mechanism.
You can set up a trust while you are alive, or you can set up a trust through your will, to take effect after you die. The legal rules which apply, and the considerations you need to take into account, are the same whether the trust is set up while you are alive or through your will.
This is explained in more detail in the Planning for the Future – People with Disability booklet.