07 Aug 2015

Making financial provision for disabled children

Parents of children with severe disabilities often come to us with concerns relating to the future financial needs of their disabled children.

These clients typically want to ensure that:

  • These beneficiaries are financially looked after once they themselves are no longer around,
  • The monies they intend to leave to them are managed appropriately, and
  • That the child’s current and/or future Centrelink entitlements are not adversely affected.

When devising an appropriate estate planning strategy for such clients many additional factors must be considered to ensure the disabled child receives the best possible outcome from their inheritance.

Leaving funds or assets directly to a severally disabled child is often inappropriate as the disabled child may be unable to manage their financial affairs and so trust structures, such as testamentary discretionary trusts are often considered. Although testamentary discretionary trusts can offer flexibility in the management and distribution of capital and income of an estate, they can also have significant consequences on the disabled beneficiary’s eligibility for Centrelink benefits and other concessions such as pension concession cards and medical subsidies.

To overcome some of these issues, clients with severely disabled beneficiaries may wish to consider implementing a Special Disability Trust. A Special Disability Trust can be established for a beneficiary with a “severe disability” as defined in the Social Security Act (“the Act”) and is governed in respect of asset limits, income distributions and investment restrictions by the Act.

If you are concerned about making adequate provision for the financial wellbeing and care of a disabled beneficiary we can canvass the requirements of a Special Disability Trust with you and assist you in assessing its suitability for your estate planning objectives.

For more information on Special Disability Trusts, see our Fact Sheet Special Disability Trust or email info@hktlegal.com.au 

 

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