Booklet: Special Disability Trusts (SDT) (Chapter 10 – What are the administrative requirements of a special disability trust?)

Booklet: Special Disability Trusts

Below is Chapter 10 of our ‘Special Disability Trusts’ booklet. To read the other chapters of our booklet, click the links below:

Please note that the information in this booklet is current as at the 2024/2025 financial year.

If the eligibility requirements have been satisfied, how might you proceed to establish the trust?

You only have one chance to set up an SDT for a particular beneficiary so it is important to ensure that the trust is set up correctly the first time. All relevant documentation must be approved by Services Australia.

There are usually four key roles in creating an SDT: the Settlor, the Appointor, the Trustee and the Beneficiary.

  • The Settlor:
    • The Settlor is the person or company who establishes the trust by contributing an initial amount into the trust (known as the “settlement sum”) and executing a trust deed. After the trust is set up, assets or cash to purchase assets can then be transferred into the trust.
    • A Settlor cannot be a beneficiary, contributor or trustee of the trust. To make sure of this, the Settlor has no further involvement with the SDT.
  • The Appointor: The Appointor has ultimate control of the SDT because they can appoint and remove the Trustee. An Appointor can be any person or corporation who is not the Settlor or the Beneficiary.
  • The Trustee:
    • The Trustee manages the day to day running of the SDT, and makes decisions affecting the day to day operations and investments of the SDT.
    • Anyone except the Beneficiary can be the Trustee as long as they meet the legislative requirements. The Trustee can either be an individual or a corporation.
    • An individual, or a director of a trustee corporation, must:
      • be an Australian resident;
      • not have been disqualified at any time from managing corporations under the Corporations Act 2001 (Cth);
      • not have been convicted of an offence of dishonest conduct against a law of the Commonwealth, State, Territory or foreign country; and
      • not have been convicted of an offence under the Social Security Act 1991 (Cth), the Social Security (Administration) Act 1999 (Cth) or the Veterans’ Entitlements Act 1986 (Cth).
  • The Beneficiary: The Beneficiary is the person who benefits from the SDT. The Trustee determines what the Beneficiary receives from the SDT.

Services Australia may also review the documents of the trust each year to decide whether the trustee has used the money in the trust for the care and accommodation of the person with the severe disability. If a trustee or trust deed is found to be non-compliant with the SDT requirements all gifts will lose their concessional treatment.

The SDT will end on the earliest of either the death of the beneficiary, when the assets are fully expended on the beneficiary, or at any earlier date as required by law.

To download a PDF of our booklet, enter your email below.

 

The information contained in this post is current at the date of editing – 11 September 2024.

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