Set up a special disability trust
We will set up a trust that funds care for life without costing your family member their pension.Leaving money to someone with a severe disability is the point at which ordinary estate planning stops working. A straightforward gift can push them over the assets test and cost them the Disability Support Pension, along with the concessions that come with it. A special disability trust is the structure Parliament created for exactly that problem. It carries means-test concessions that no ordinary trust has, and it is tightly defined. The beneficiary, the trust’s terms and the way its funds are spent all have to meet statutory requirements.
The pension protected
A substantial part of the trust's assets is disregarded for the beneficiary's means testing.
Drafted to the statutory requirements
A deed missing the required clauses produces an ordinary trust with none of the concessions.
Contributors advised too
Family members who contribute can have gifting amounts exempted, which affects their own planning.
What is a special disability trust, and who can it benefit?
A special disability trust is a structure recognised under social security law to fund the care and accommodation of a person with a severe disability. It carries concessions that ordinary trusts do not. A substantial amount of its assets is disregarded for the beneficiary’s means testing, and family members who contribute can have gifting amounts exempted. The concessions are matched by tight rules. The beneficiary has to meet a statutory definition of severe disability, and the deed has to contain required clauses. The fund can only be spent on permitted purposes.
Who can be the beneficiary of a special disability trust?
Only a person who meets the statutory definition of severe disability. It is a specific test rather than a general description, and it is assessed against the person’s condition and care needs. Confirming eligibility is the first step, because the concessions depend entirely on it.
Will the trust affect their pension?
That is the point of it. A substantial amount of the trust’s assets is disregarded for the beneficiary’s assets test, which is why the structure exists. The concession is capped and indexed, so the amount matters. Assets above the disregarded level are still counted.
What can the money be spent on?
Primarily the beneficiary’s care and accommodation, with an allowance for other discretionary spending. The permitted purposes are defined, and spending outside them can put the concessions at risk. The trustee should have clear advice on this before the first payment is made.
Is a special disability trust always the right answer?
No. It suits families where the beneficiary meets the statutory test and the fund is genuinely for care and accommodation. Where the person does not qualify, or the provision is broader, a protective testamentary trust can work better. The structure should follow the circumstances rather than the label.
Find out whether the structure fits your family
Tell us about the person you are providing for and what you want the fund to cover. We will tell you whether a special disability trust is the right structure.
Providing for someone should not cost them what they already receive
You want to make sure someone is looked after for the rest of their life. The difficulty is that money left to them directly can reduce or remove the support they currently get. A special disability trust solves that, but only if the beneficiary meets the statutory test and the deed is drafted to the requirements. Getting either wrong produces an ordinary trust with none of the concessions.
- We will confirm whether the beneficiary meets the statutory definition of severe disability.
- We will draft a deed containing the clauses the legislation requires.
- We will advise the trustee on the purposes the fund may and may not be spent on.
- We will advise contributing family members on which gifts are exempt.
- We will tell you where a different structure would serve your family better.
You are planning for someone who will need care after you
You are a parent, or a sibling, thinking about what happens to someone in your family. The question is who looks after them when you no longer can. There is usually a house involved, and superannuation, and a wish to treat other children fairly at the same time. The worry is not only whether there will be enough. It is whether providing it will take away the pension and services they rely on now.
What's included in your special disability trust service
- An eligibility assessment against the statutory definition.
- A special disability trust deed containing the required clauses.
- Advice to the trustee on permitted and prohibited expenditure.
- Advice to contributors on gifting concessions and their own position.
- Coordination with the wills and estate planning of the contributors.
- Advice on alternatives where the statutory structure does not fit.
What goes wrong when the structure is not used
The most common outcome is not a badly drafted special disability trust. It is an ordinary gift that nobody realised would cause a problem.
An inheritance received directly is counted for the assets test. Where it is large enough, the Disability Support Pension reduces or stops, and the concession card can go with it. The family’s provision has replaced a secure lifetime income with a fund. That fund now has to cover both the care and the things the pension used to cover.
The second failure is a trust that was meant to be a special disability trust and does not qualify. The beneficiary does not meet the statutory definition, or the deed is missing required clauses. Sometimes the fund is spent on things outside the permitted purposes. In each case the concessions are simply not available, and the trust is assessed like any other.
From a worry about provision to a fund that protects both
We start with whether the person qualifies, because everything follows from that. The statutory definition of severe disability is specific, and it is worth confirming before a structure is designed around it.
Where it fits, we draft the deed with the clauses the legislation requires. We advise the trustee on what the fund may and may not be spent on. We work through the contribution side as well, so family members know which gifts are exempt and how the concessions interact with their own position. Where a special disability trust is not the right answer, we say so and set out the alternatives. A protective testamentary trust sometimes does the job better.
How we set up a special disability trust
Confirm eligibility, draft to the requirements, then advise the trustee.Confirm eligibility
We check the beneficiary against the statutory definition before any structure is designed around it.
Draft to requirement
We prepare a deed containing the clauses the legislation requires for the concessions to apply.
Advise the trustee
We set out what the fund may be spent on, and advise contributors on the gifting concessions.
A trust that funds care without costing the pension
This is rarely a planning question and almost always a personal one. Families arrive at it worrying about what happens to someone they love when they are no longer there to manage it.
Two of our lawyers are full members of the Society of Trust and Estate Practitioners. Three of our lawyers are recognised in Doyle’s Guide for estate and succession law. We advise on special disability trusts, testamentary trusts and provision for beneficiaries with additional needs. Where the statutory structure does not fit, we will tell you that rather than drafting one anyway.
Our great lawyer guarantee
Six principles we hold to, whatever you bring us and however long it takes.
Take the time
We listen carefully to understand what you want to achieve, then step you through the advice and the documents.
Share our knowledge
We pass on as much as we can, so you can make your own informed decisions.
Stick to our knitting
We only do what we are good at, so you never pay for our learning.
Work as one team
Someone is always available to answer your question or point you the right way.
Fair pricing
A fixed or capped quote for advice and documents, so you do not carry the price risk.
It is your show
We are in it for a front row seat to witness your success, not for our egos.
Set up the right structure for your family
Tell us about the person you are providing for and what you want the fund to do. We will confirm whether the statutory structure fits, and draft it if it does.
More on this area of law
Read more about special disability trusts, testamentary trusts and provision for beneficiaries with additional needs, and how ADLV Law can help.
You’ve been told to make a family trust election. Here’s what that actually means.
You’ve been told to make a family trust election. Here’s what that actually means.
If you’re running a family business or managing family wealth through a trust, chances are your accountant has recommended that you “make a Family Trust Election”
Changes to trust taxation in the Federal Budget: Is there still a case for keeping a family trust in my structure?
Changes to trust taxation in the Federal Budget: Is there still a case for keeping a family trust in my structure?
We’re hearing this question from many of our clients since the Federal Budget announcement on 12 May 2026 introduced proposed changes to how family trusts (also
Australia’s new AML/CTF rules: what changes from 1 July 2026
Australia’s new AML/CTF rules: what changes from 1 July 2026
If you have engaged a lawyer, accountant, conveyancer or real estate agent recently, you may already have been asked for more identification than usual. From 1
Protecting your trust: planning for trustee incapacity before it happens
Protecting your trust: planning for trustee incapacity before it happens
If you are creating a testamentary or discretionary trust, you want to know it will operate smoothly long after you are gone. But what happens if
Bucket vs Banker: How the right company structure can supercharge your family wealth strategy
Bucket vs Banker: How the right company structure can supercharge your family wealth strategy
Should I involve my children in the control of my family trust?
Should I involve my children in the control of my family trust?
Budget Update Notice: The 2026/27 Federal Budget contains proposals that may affect the information in this article. As at the date of this notice, these are
Trust Distributions Summary – (Trust Distributions Guide Booklet Chapter 6)
Trust Distributions Summary – (Trust Distributions Guide Booklet Chapter 6)
Budget Update Notice: The 2026/27 Federal Budget contains proposals that may affect the information in this article. As at the date of this notice, these are
Risk Management and Common Traps – (Trust Distributions Guide Chapter 5)
Risk Management and Common Traps – (Trust Distributions Guide Chapter 5)
Budget Update NoticeThe 2026/27 Federal Budget contains proposals that may affect the information in this article. As at the date of this notice, these are proposed
Timing, Authority and Validity of Distributions – (Trust Distributions Guide Booklet Chapter 4)
Timing, Authority and Validity of Distributions – (Trust Distributions Guide Booklet Chapter 4)
Budget Update Notice: The 2026/27 Federal Budget contains proposals that may affect the information in this article. As at the date of this notice, these are