Legal Hypothetical: Judge orders creation of Special Disability Trust

WHEN Jack passes-away at the age of 60, he had been in a de facto relationship with Jill for six years.

Jack had three children from a previous relationship, one of whom, David, suffers from a severe disability.

Shortly before Jack’s death, he transferred two properties into joint names with Jill.

They also held joint bank accounts.

The bank accounts included a substantial sum, which Jack had cashed-in from his superannuation fund.

Upon Jack’s death, the jointly held assets passed to Jill by way of survivorship.

These assets totalled $3 million.

Jack had no substantial assets in his sole name and there was no need for a grant of probate to be obtained.

When Jack’s children discover that they stand to receive no inheritance from their father’s estate, they make a Family Provision Application in the Supreme Court of NSW.

The Court ultimately rules that it is appropriate to designate some of the jointly owned assets as “notional estate”, to be clawed-back into Jack’s estate for the purpose of making awards to his children.

The Court orders that David is to receive a lump sum of $100,000 and a further $450,000 to be paid into a Special Disability Trust for his benefit.

A Special Disability Trust can pay for care, accommodation and medical needs.

It is also able to undertake a modest level of “discretionary spending”, which can include payments for recreation and leisure activities, and food and clothing, not related to the beneficiary’s disability.

It must contain the clauses set out in the Centrelink compliant “Model Trust Deed” and need not be established by a Court.

This type of trust can permit assets test assessment exemptions.

Jack’s other two children are awarded $160,000 and $170,000 respectively.

The difference in the amounts arose after the Court conducts a thorough investigation of their different financial circumstances and finds that one of the children has greater needs.

Email Manny Wood, Principal Solicitor and Accredited Specialist in Wills and Estates at TB Law at or call him on (02) 66 487 487.

This column is only accurate at today’s date and is not legal advice.

By Manny WOOD, Solicitor

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