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Special Disability Trusts

Special Disability Trusts. Nick Bruining CFP B.Com, CPL(H), Dip FP, FFPA, FAICD, APMESA Authorised Representative of N.C. Bruining & Associates Pty Ltd AFSL 245514 www.ncba.com.au. Warnings. Don’t Yawn Don’t do anything until You thoroughly understand all the implications or;

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Special Disability Trusts

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  1. Special Disability Trusts Nick Bruining CFP B.Com, CPL(H), Dip FP, FFPA, FAICD, APMESA Authorised Representative of N.C. Bruining & Associates Pty Ltd AFSL 245514 www.ncba.com.au

  2. Warnings • Don’t Yawn • Don’t do anything until • You thoroughly understand all the implications or; • You seek specialist personal advice • So you can sue them if its wrong.

  3. Our Family

  4. Other Families • Similar • Endeavour to make provision for their children • Recognise that there are special issues for the disabled child • Try to set things up so they are not dependent on the “system” to provide everything.

  5. Centrelink Concessions • Medical Eligibility • Non means Tested Payments • Carers Allowance $114 pfn • Carer Disability Assistance Payment for kids <16 $1,000 • Carer Supplement of $600 • Rest Are “Means Tested”

  6. Means Tests • Means to self fund or partially self fund • Except Blind Pension • Income Test • Asset Test – Whichever produces the lowest pension is the one used. • Awareness of how these work and; • SDT is something we can do to reduce their affect • All legitimate and legal

  7. Pension • Single $755.50 pfn or $19,643 + bits ‘n pieces (Concession Cards etc) $19,643 at 5.5% would require $357,000 It is worth while structuring the child’s affairs to access these benefits.

  8. Income Test • Singles • $152 pfn • $1,463 or $43,238 • Couples • $268 pfn • $2,546 or $66,196 • Each $ over reduces by 50c until it cuts out as above.

  9. Income Test • What’s Included • Earnings • Rental • Foreign Pensions • What’s not • Interest • Dividends • Gifts • Winnings

  10. Income Test • Deeming System • A notional rate of interest applied to all “Financial Investments” • Includes • Bank Accounts • Shares • “Managed Investments” • Others (Gifts over 10K pa /30K 5 year limits) • Singles, 1st $45,400 3% - then 4.5% • Couples 1st $76,600 3% - then 4.5% • Worked back to Per fortnight.

  11. Deeming • So, How much can you have ? • Singles - $102,958 • Before the Income test starts to bite

  12. Assets Test • Home Owners • Singles $192,500 • Couples $273,000 • Non Home Owners + $139,500

  13. Assets Test • Each $1,000 over threshold reduces pension by $1.50 per fortnight. • Cuts off pension at $696,250 ($835,750 non homeowner) • Includes Financial Assets • Personal Assets (Cars, Personal effects) • Real Estate (excluding dwelling)

  14. Enter the SDT • Special Disability Trusts The Trust Holds the assets subject to rules (The Trust Deed) Trustee(s) Centrelink/ Auditors Beneficiary

  15. SDTs • Introduced in 2006 • Introduce a raft of concessions • Predominantly Centrelink based

  16. Key Elements of SDTs • Special Set of rules (Deed) available from Centrelink in a pro-forma document • Maximum amount in trust $596,500 plus residence • Pays for reasonable care & accommodation plus:

  17. Key Elements continued • Health Insurance • Discretionary of $10,250 per annum • But NOT to parents etc • Income taxed like normal income to individual

  18. Key Elements continued • All assets exempt from Asset test • All income exempt from Income test • Benefits to others • No CGT on assets transferred in • No Stamp Duty Payable • DOES NOT COUNT UNDER GIFTING RULES • Could see you or Grandparents/Siblings Qualify for Pension.

  19. Where to from here ? • Centrelink FISOs 132300 • Free service • Nice People • Financial Planning Association • 1800 626 393 • Access this presentation at www.ncba.com.au > Downloads

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