Trust options for children with disabilities

Estate planning for families with disabled children comes with an added layer of worry and forethought.

If you have a child with high support needs, you can draw up what is known as a “care plan” which will include information about:

• The wishes of the person living with a disability
• What accommodation will satisfy their needs and desires
• What activities they enjoy and want to continue
• Which family and social connections are important for them to maintain
• How capable their child is in managing their own affairs.

If your child received a Disability Support Pension, a Department of Veterans Affairs Invalidity Service Pension, or DVA Invalidity Income Support Supplement, a special disability trust (SDT) may be an option.

An SDT aims to help family members provide for the current and future care and accommodation needs of a child with a severe disability.

It can also meet some of their spending needs, for items such as food, clothing, therapy and recreation without affecting any social security entitlements.

The child must be assessed as being severely disabled, and this definition differs between individuals aged under 16 and those aged 16 and over.

For ages 16 and over, they must:

• Have an impairment that qualifies them for income support
• Have a disability that would, if they had a sole carer, qualify the carer for a carer payment; or if they are living in an institution, care is provided for people with disabilities and funding is provided by the government 
• Have a disability that means they are unable to work more than seven hours a week 

For ages under 16:

• Be a person with a severe disability or medical condition and
• Have a carer who has been given a qualifying rating of “intense” under the Disability Care Load Assessment (child) determination for caring for that person

Testamentary trusts are another option for providing for your disabled child, and they do not have the same constraints as an SDT.

However, assets in a testamentary Trust will count towards the income and asset test for determining eligibility for social security entitlements.

Some disabled children can independently manage their own personal and financial affairs, or they might have a financial manager appointed to help them. In these cases, a direct gift from your estate could be an option. This could include cash, a specific asset, or death benefits from a superannuation fund.

However, unlike Trust options, it is difficult to place controls over how the funds are dealt with. If you’re worried your child might lack the capacity to make decisions, or if there’s a risk of financial abuse, the risks need to be weighed against the benefits.

Whatever you choose to do, it’s important to remember any child is an eligible claimant for family provision purposes in your Will and a disabled child will have their own unique needs and circumstances.

Bickell & Mackenzie are experts when it comes to estate planning. We’re here to put your mind at ease and ensure that your family will be adequately cared for in the future. Contact our office to make an appointment today.