Disclaimer — The information below is for general educational purposes only and does not constitute legal, financial or tax advice.…
Disclaimer — The following material is for general educational purposes only and does not constitute legal, financial, or tax advice. Rules on trusts, guardianship and income-support concessions change. Families planning for a vulnerable person in Queensland should obtain tailored advice from a solicitor experienced in succession law and a licensed financial adviser before acting.
Parents and carers of people with intellectual disability, autism, cerebral palsy, acquired brain injury or serious mental illness often worry about two things:
- Who will make legal and medical decisions when parents are gone or capacity deteriorates?
- How to leave an inheritance without jeopardising the person’s Centrelink or NDIS supports—or exposing the funds to predators or waste.
Queensland offers a suite of legal tools—Special Disability Trusts, Testamentary Discretionary Trusts, and guardianship or administration orders—that can protect assets, maintain government benefits and ensure trustworthy decision-makers are in place.
Choosing the Right Trust Structure
| Feature | Special Disability Trust (SDT) | Testamentary Discretionary Trust (TDT) |
|---|---|---|
| Purpose | Enable person with severe disability to meet reasonable care & accommodation expenses | Flexible estate-planning vehicle that can stream income to any beneficiary, including a person with disability |
| Established by | Living settlor (gift) or by will | Only by will; comes into effect on death |
| Centrelink asset test treatment | First $781 250¹ exempt from beneficiary’s assets; income concessions also apply | No automatic exemption—assets counted against beneficiary unless trustee can legally direct funds elsewhere |
| Eligible disability criteria | Must satisfy Social Security Act s 1209M (severe functional impairment or high care) | No disability test |
| Allowed expenditures | Accommodation, medical, ancillary or discretionary up to $13 000 p.a. | Any outgoings the trustee decides are in beneficiaries’ interests |
| Tax concessions | Trust income taxed to beneficiary at individual rates; CGT main-residence rollover possible | Minor beneficiaries enjoy adult tax rates (s 102AG ITAA 1936); CGT 50 % discount available |
| Trustee/reporting obligations | Annual Centrelink audit; lodging financial statements; strict investment limitations | Standard trustee duties; no Centrelink oversight |
| Ideal when | Beneficiary already receives Disability Support Pension/NDIS and needs protected housing | Family wants flexibility (multiple siblings, changing needs) and tax-effective income splitting |
¹ FY 2025–26 indexed amount (threshold reviewed each July).
Establishing a Special Disability Trust
- Confirm eligibility. The intended beneficiary must meet the legislative definition of severe disability. Obtain medical evidence (e.g., treating specialist reports).
- Prepare the trust deed. Centrelink publishes a model SDT deed; deviation may void concessions. Deed must appoint at least two trustees (or a professional trustee company).
- Apply for Centrelink approval. Lodge the deed, medical reports and financial projections using Form SS313. Processing time is usually 4–8 weeks.
- Settle the trust. Assets can be gifted during life or under a will. Lifetime gifts are exempt from Centrelink deprivation rules up to the current concessional limit ($781 250).
- Meet ongoing compliance. File annual audited accounts and statement of compliance; notify Centrelink of large discretionary expenses.
Tip: Real property (unit or house) owned by the SDT is exempt, regardless of value, provided the beneficiary occupies it or the trustee can justify the purchase as future accommodation.
Testamentary Discretionary Trusts for Broader Flexibility
A TDT is created under a will. The executor transfers assets into the trust at probate, then a nominated trustee distributes income or capital among a class of beneficiaries.
- Advantages
- Adult tax rates apply to minors receiving trust income—helpful for siblings or grandchildren.
- Trustee can adapt to changing support regimes (e.g., NDIS reforms).
- Funds can bypass a beneficiary’s means test if trustee simply withholds distributions (assets remain in trust).
- Risks
- If the trustee starts streaming capital to the person with disability, Centrelink may treat that capital as the beneficiary’s asset.
- Family-appointed trustees can fall into conflict; naming a professional co-trustee or an independent appointor (with power to remove trustees) reduces risk.
Guardianship and Administration for Decision-Making
Financial and personal-decision authority in Queensland is governed by the Guardianship and Administration Act 2000 (Qld).
| Order Type | What It Covers | Who Issues | When to Seek |
|---|---|---|---|
| Administration Order | Financial matters: paying bills, managing investments, signing leases | Queensland Civil and Administrative Tribunal (QCAT) | Adult lacks capacity and has significant assets or income |
| Guardianship Order | Personal/health matters: medical treatment, accommodation, services | QCAT | Adult lacks capacity and no enduring power of attorney (EPA) is in place |
| Enduring Power of Attorney | Financial and/or personal matters | Executed by adult while they still have capacity; avoids QCAT | Suitable for younger adults with stable capacity or early-stage degenerative conditions |
Trustees do not automatically act as guardians/administrators; families often appoint the same trusted person to both roles for simplicity, but QCAT reviews suitability.
Coordinating Trusts with NDIS and Centrelink
- Disability Support Pension (DSP) assets test: $301 750 for a single homeowner (FY 2025–26). Assets held inside a Special Disability Trust up to the concessional amount are ignored.
- NDIS means testing: The National Disability Insurance Scheme is not means tested, but high assets can influence decisions on co-payments for supported independent living.
- Rent Assistance and public-housing eligibility: Discretionary distributions from any trust can be assessed as income.
Engage a benefits adviser to project the combined effect of trust income plus wages, pensions or supported-employment earnings.
Practical Case Study
Situation
Ana (68) and Leo (70) have two adult children: Marcus (average earnings) and Chloe (age 34, moderate intellectual disability, receives DSP, lives at home). Parents own a mortgage-free Brisbane house ($1.1 m) and shares ($650 k).
Planning steps
- Solicitor drafts a will with two testamentary trusts:
- Chloe Trust receives the family home and $350 k shares; Leo’s sister and professional trustee company act as co-trustees.
- Marcus Trust receives remaining shares, allowing income splitting to his own children.
- Deed for Chloe Trust mirrors Centrelink SDT template to secure asset-test exemption.
- Parents execute a mutual Enduring Power of Attorney naming Marcus and aunt jointly for Chloe’s health and financial matters if QCAT involvement becomes necessary.
- Life insurance on Ana and Leo nominates the Chloe Trust directly to provide a cash buffer for maintenance and rates.
Outcome
When Ana and Leo pass away, the house moves into the Chloe Trust exempt from asset testing. Trustees rent out half the property to a student (helping with care) while Chloe remains eligible for full DSP. Marcus receives his inheritance via a flexible TDT with adult-rate tax on income streamed to his minor children.
Tips for a Robust Special-Needs Estate Plan
- Keep clear, updated medical reports—Centrelink reviews eligibility periodically.
- Appoint independent co-trustees or an “appointor” with power to replace a rogue trustee.
- File detailed trust minutes showing how each expenditure benefits the beneficiary; audits focus on purpose.
- Use blended approaches—an SDT for living costs plus a separate testamentary trust for siblings can provide both concession and flexibility.
- Communicate intentions via a memorandum of wishes to guide future trustees and guardians on lifestyle preferences.
Key Take-Aways
- Special Disability Trusts offer Centrelink concessions but impose strict eligibility and spending rules; ideal for high-care recipients dependent on DSP.
- Testamentary Discretionary Trusts provide tax-effective flexibility and asset-protection but do not attract automatic social-security exemptions.
- Guardianship or administration orders (or an enduring power of attorney) are essential complements, ensuring day-to-day decisions align with the trust’s financial framework.
- Effective special-needs planning often blends multiple strategies: professionally drafted wills, Centrelink-compliant trust deeds, life-insurance nominations and up-to-date decision-making appointments.
Sources / Citations
- Social Security Act 1991 (Cth) pt 3.18A — Special Disability Trust concessions.
- Social Security (Disability Support Pension) (FA) Instrument 2025 — asset thresholds.
- Queensland Civil and Administrative Tribunal, Guardianship and Administration for Adults – Practice Guide (2025).
- Australian Taxation Office, Guide to Capital Gains Tax 2025, ch 12 — testamentary trusts and minor beneficiaries.
- Department of Human Services, “Guide to Special Disability Trusts” (Edition 11, 2025).