When contemplating putting together an estate plan, an important aspect to consider is the personal circumstances of the prospective beneficiaries of your Will.

Special Disability Trusts

If a beneficiary would benefit from assistance in managing their inheritance, as a consequence of a disability that prevents them from managing their affairs, it is possible to set up a trust in your Will to look after their needs and protect their interests. This type of trust is known as a Special Disability Trust.

The Special Disability Trust (“SDT”) is a Federal Government program that works to assist family members and guardians to provide for the future care and accommodation needs of family members with a disability.

The SDT attracts social security means test concessions for the Principal beneficiary and eligible contributors to the trust. The benefit and the purpose of the SDT, as opposed to a standard protective trust, is to assist immediate family members and carers who have the financial means to do so, to make private financial provision for the future care and accommodation needs of a family member with a severe disability and receive means test concessions, and ensuring that the disabled beneficiary’s entitlements are not adversely impacted by their inheritance.

The SDT can hold up to $694,000 (indexed annually on July 1) without the trust assets contributing towards the disabled beneficiary’s resources when calculating their entitlements to the Disability Support Pensions and allows for concessions from gifting rules. Where eligible family members contributing to the trust are in receipt of a social security or veterans’ entitlement, and are within five years of Age Pension age or older, they may be entitled to receive a concession from usual rules in relation to making gifts or disposing of assets.

Eligibility Requirements

In respect to eligibility requirements for the proposed beneficiary of a SDT, certain criteria must be met, including:

a. where the Principal Beneficiary is 16 years or older

i. the Principal Beneficiary must:

(A) have an impairment that would qualify them for the disability support pension;

(B) be receiving an invalidity service pension; or

ii.the Principal Beneficiary must:

(A) have a disability that, if the person had a sole carer, would qualify the carer for carer payment or carer allowance; or

(B) lives in an institution, hostel or group home that provides care for people with a disability; and

iii. the Principal Beneficiary must have a disability as a result of which they either

(A) are not working or unlikely to work for more than seven hours per week for a wage at or above the relevant minimum wage; or

(B) are working for wages set in accordance with the Commonwealth supported wage system.

An important function to note when considering whether a SDT would be a suitable estate planning tool, is that funds held in a SDT can only be used by the trustees for the ‘care and accommodation’ of the Principal Beneficiary, with restrictions in place on certain payments.

While these requirements are quite stringent, there are allowances for the following payments to be made to or for the Principal Beneficiary’s benefit with up to $12,500 per year (as at 1 July 2020, indexed annually) to be spent on ‘discretionary items’ for the Principal Beneficiary. Discretionary spending can include items relating to the beneficiary’s health, wellbeing, recreation, independence and social inclusion.

How can Sharrock Pitman Legal assist?

As Accredited Wills & Estate specialists, we provide sound and concise legal advice for you and the trust beneficiary. If specific advice is sought in relation to the matters contained in this article, or any other estate planning matters, feel free to contact us on 1300 205 506 or by email at sp@sharrockpitman.com.au.

We look forward to being of service.

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The information contained in this article is intended to be of a general nature only and should not be relied upon as legal advice. Any legal matters should be discussed specifically with one of our lawyers.

Liability limited by a scheme approved under Professional Standards Legislation.‍

Written by a member of our Legal Team

Sarah Slattery

For further information contact

Sarah Slattery

Sarah is an Associate Lawyer at Sharrock Pitman Legal. As a member of our Wills and Estates team, Sarah is dedicated to successfully resolving her clients matters in a cost-effective and timely manner. For further information, please contact Sarah directly on (03) 8651 3322.

When is Probate not required?

Lost Family Trust Deeds – an update

Lost Trust Deeds: a common problem

When contemplating putting together an estate plan, an important aspect to consider is the personal circumstances of the prospective beneficiaries of your Will.

However, in this article we will set out the factors that influence how long it will take to obtain a Grant of Probate and to administer an estate in Victoria.

The basics

First things first: what is a Grant of Probate? A Grant of Probate is effectively a document issued by the Supreme Court of Victoria which formally authorises an executor to manage the estate of a deceased person in accordance with their Will. Without Probate, the asset holders (say a bank or share registry) cannot be satisfied as who has the correct authority to receive the deceased's assets and may refuse to pay out.

Sometimes, for smaller estates or if assets are mostly jointly owned with a surviving spouse, asset holders might agree to release payment without requiring a Grant of Probate. This is usually on the basis that the person who receives payment promises to repay (or Indemnify) the asset holder if it turns out they paid to the wrong person.

If there is no Will, then you cannot obtain a Grant of Probate. Instead you obtain Letters of Administration. This is effectively the same, in terms of authorising someone to administer the estate, and would usually be obtained by the person who is the closest next-of-kin to the deceased.

“A Grant of Probate is effectively a document issued by the Supreme Court of Victoria which formally authorises an executor to manage the estate of a deceased person in accordance with their Will.”

Timeframes for Probate in Victoria

In order to obtain a Grant of Probate, the Supreme Court needs to be given information about the assets and liabilities of the estate, the deceased person, the witnesses to the Will, the executors and the Will itself. An advertisement of your intention to apply for Probate must also be published on the Supreme Court website for at least 14 days prior to any application being lodged.

Often, making enquires to obtain all the necessary information can take a number of weeks. Also, you will need the Death Certificate for the application for Grant of Probate and possibly for making proper enquires regarding the assets and liabilities. Waiting for the Death Certificate to issue can therefore add a few more weeks to the process. Overall, if you have your application for Grant of Probate lodged within 1 to 2 months from the date of death, you are making timely progress.

The Court itself usually does not take long to process the application (maybe another 1 to 2 weeks) and this is completed using the electronic Supreme Court filing system. This means you do not have to go to a Court hearing. The timeframe for processing applications for Letters of Administration is even less, given that there is no Will document for the Court to consider. There is also a general discretion for the Court to raise a 'Requisition' asking for more information before they review the application - this can sometimes delay matters.

“Overall, if you have your application for Grant of Probate lodged within 1 to 2 months from the date of death, you are making timely progress.”

So, here we are a few months after death and you finally have a Grant of Probate or Letters of Administration. It is important to remember that this is the start of the estate administration and not the end. For a very simple estate, you might only need a further month or so to cash the assets and pay them to the correct beneficiaries. However, it can often be more complex than that. Factors that determine the timeframe to administer the estate include:-

Some assets will take time to cash or transfer. For example, if selling a property, final settlement might be 60/90/120 days from the day of sale.
There is a 6 month period for challenges to be brought against the estate and executors must wait until this period expires before distributing the estate, if there is any risk that a disgruntled family member might come forward.
There might need to be final tax returns for the deceased or for the estate. Failing to wait for the ATO to process these could leave the executor personally liable for a tax bill.

You might need to advertise for creditors to come forward and wait for a period of months while this advertising timeframe expires. This protects the executor if they are unsure of all of the deceased's financial dealings and creditors.
It might not always be a good time to immediately cash estate assets. For example, the shares just took a nose-dive, do you still sell regardless of available price?

There is a general rule that executors have an 'executor's year' to complete the estate administration. This means that you should be aiming to have the estate finalised and distributed within 12 months from the date of death.

Liability limited by a scheme approved under Professional Standards Legislation.

Need help with Probate?

Our expert legal team is ready to take your call!

Mitchell is the Managing Principal of Sharrock Pitman Legal. He is an Accredited Specialist in Commercial Law (accredited by the Law Institute of Victoria). He also deals with areas of Employment Law, Wills & Estate Planning and Probate and can answer all your questions related to probate.

For further information, contact Mitchell on his direct line:

DIRECT LINE:

(03) 8561 3318

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Special Disability Trusts

When contemplating putting together an estate plan, an important aspect to consider is the personal circumstances of the prospective beneficiaries of your Will.

Special Disability Trusts

Eligibility Requirements