Beneficiaries With Special Needs

Protecting Beneficiaries Who Need Extra Support

For many families, planning a Will is more than just deciding who gets what. If a child, sibling or partner lives with a disability, mental illness, an addiction or financial vulnerability, leaving them a direct inheritance can do more harm than good — it can affect their Centrelink entitlements, expose the funds to creditors or family-law disputes, or simply be too much money to manage all at once.

The right structure under your Will protects the beneficiary, preserves their entitlements and gives a trusted person the discretion to provide for their needs over time. We help NSW families design Wills that quietly do this work for the rest of the beneficiary's life.

Common Situations We Plan For

Some of the most common reasons families ask us to set up protected provision under a Will:

• A child or sibling with a significant disability who receives the NDIS and the Disability Support Pension
• A beneficiary on the autism spectrum or with an intellectual disability who may not want to manage a large lump sum
• A loved one with mental illness whose capacity fluctuates
• An adult child with a gambling or substance-use disorder where a direct cash inheritance carries real risk
• A beneficiary in a fragile or controlling relationship where an inheritance could be lost to family-law claims
• A young adult who isn't yet ready to manage significant assets
• An elderly partner or parent already supported by the Age Pension

Every family situation is different. There's no single right answer — the structure should match the beneficiary, the size of the estate and the family dynamics.

Special Disability Trusts (SDTs)

A Special Disability Trust is a specific federal structure governed by the Social Security Act 1991 and the Veterans' Entitlements Act 1986. Done correctly, it gives the beneficiary:

• An asset-test exemption for Centrelink purposes up to a concessional limit (indexed each year — currently around $813,250 for 2025–26)
• Income-test exemption on income generated within the trust
• The ability to fund reasonable care, accommodation and medical costs without affecting the Disability Support Pension

The trade-off: SDTs are tightly regulated. The beneficiary must meet the "severe disability" definition under the relevant Act, and the trust deed must follow the Model Trust Deed published by the Department of Social Services. We assess eligibility at the first meeting and design the trust as part of your Will.

Protective Testamentary Trusts

For families whose beneficiary doesn't qualify for an SDT, or whose needs go beyond what an SDT permits, a protective testamentary trust built into your Will is usually the right answer.

A protective testamentary trust works like this:

• The beneficiary's share of your estate is held by a trustee rather than being paid out directly
• The trustee — often another family member, a professional trustee, or both jointly — applies the funds for the beneficiary's benefit at their discretion
• Distributions can fund anything that supports the beneficiary's wellbeing: housing, medical and therapy costs, education, support workers, transport, a vehicle, top-up income
• The capital is protected from creditors, bankruptcy and (in most cases) family-law claims against the beneficiary
• The trust continues for the beneficiary's lifetime, with a "gift over" clause directing where any remaining funds pass on their death

Choosing the Right Trustee

The trustee makes or breaks a protective trust. They'll be administering funds for the beneficiary for years, sometimes decades. The best appointments are typically:

• A trusted family member who knows the beneficiary well — combined with a backup or co-trustee for accountability
• A professional trustee company (e.g. NSW Trustee & Guardian, Perpetual, Equity Trustees) for larger trusts or where there's no suitable family member
• A combination — a family member who knows the beneficiary, plus a professional trustee for administrative oversight

We talk through trustee selection carefully at the planning stage. Getting the right person — or the right team — is often more important than the trust mechanics themselves.

Guardianship and Financial Management

Some beneficiaries already have a Financial Management Order made by the NSW Civil and Administrative Tribunal (NCAT) or a private financial manager appointed under the Trustee and Guardian Act. Where that's the case, the testamentary trust needs to be designed to work alongside the existing arrangement — not duplicate or conflict with it. We coordinate the planning between your Will, the existing order and any guardianship arrangements.

Common Questions

Will an inheritance affect my child's NDIS funding?

The NDIS itself is not means-tested, so an inheritance generally doesn't directly affect NDIS funding. However, the Disability Support Pension, rent assistance and other Centrelink supports your child relies on alongside NDIS are means-tested. An inheritance left outright can reduce or cancel those payments. A Special Disability Trust or protective testamentary trust avoids this problem.

Will an inheritance affect the Disability Support Pension?

Yes — the DSP is asset- and income-tested by Centrelink. An inheritance paid directly to the recipient counts as an asset and as deemed income. A Special Disability Trust (for eligible beneficiaries) and a properly-drafted protective testamentary trust can both shield the inheritance from those tests.

What is a Special Disability Trust?

A Special Disability Trust is a federal trust structure under the Social Security Act 1991 that provides Centrelink asset-test exemptions for inheritances left to a beneficiary with a severe disability. The trust must follow the Model Trust Deed published by the Department of Social Services and is subject to ongoing compliance requirements.

What's the difference between a Special Disability Trust and a testamentary trust?

A Special Disability Trust is a strict federal structure for eligible beneficiaries that delivers Centrelink asset-test exemptions. A protective testamentary trust is more flexible — it doesn't require the beneficiary to meet the "severe disability" definition, but it also doesn't deliver the same Centrelink concessions. We assess which structure suits your family at the first meeting.

Who can be a trustee of a protective trust?

A trustee can be a trusted family member, a professional trustee company, or a combination of both. The key qualities are reliability, financial literacy and a genuine commitment to the beneficiary's wellbeing. For larger or more complex trusts we often recommend a co-trustee arrangement combining a family member with a professional.

What happens to the trust funds when the beneficiary dies?

The trust deed specifies a "gift over" — typically the remaining funds pass to other family members, charities or a combination as directed in your Will. Special Disability Trusts have specific rules about what can happen to the residual funds, which we'll explain at the planning stage.

Can I update my existing Will to add a protective trust?

Yes. We can either prepare a new Will incorporating the trust, or in some cases add a codicil to your existing Will. The right option depends on how recent and how comprehensive your current Will is. Read more on making and updating a Will.