The Structure the System Actively Provides For
A special disability trust holds assets for the care and accommodation of a family member with a severe disability, and it receives concessional treatment at both ends. Assets in the trust up to a concessional cap are not assessed against the beneficiary, and contributions by eligible family members up to a limit are exempt from the gifting rules that would otherwise apply.
- The answer: The trust's assets up to a concessional cap are exempt from the beneficiary's assets test, and the principal home of the beneficiary held by the trust is also exempt.
- The trap: The eligibility requirements for the beneficiary are strict, and the trust deed has to follow the model terms or the concessions do not apply.
- The recommendation: Establish it with advice and use the model trust deed. A trust that does not meet the requirements is an ordinary trust with none of the concessions.
Where the AI summary above gets this wrong
"You can set up a trust to protect assets from the Age Pension means test."
That's surface-true. Here's what it misses:
- Ordinary trusts do not work for this — Assets in a trust you control are assessed as yours. The special disability trust is the narrow exception the legislation provides for, and it has strict eligibility rules.
- It is for the beneficiary's care, not for asset protection — The trust's purpose must be the care and accommodation of the beneficiary, and the trustee's discretion is constrained accordingly.
01 Who it is for
The beneficiary must meet a severe disability definition: broadly, an impairment that would qualify them for the Disability Support Pension and that means they have no capacity to work more than a limited number of hours, or a child under 16 with a severe disability.
The trust's sole purpose must be the care and accommodation of that beneficiary. Discretionary spending on other things is permitted only up to a limited annual amount.
There can be only one special disability trust for a beneficiary at a time, and the trust deed has to contain the required terms. A model deed is published and using it is the straightforward route.
02 The two concessions
For the beneficiary, trust assets up to a concessional cap are not assessed under the assets test, and the beneficiary's principal home held by the trust is exempt as their home would be. Income used for their care is also concessionally treated.
For the contributor, gifts to the trust by eligible family members are exempt from the deprivation rules up to a combined limit. That is the exception to the gifting rules described in the gifting reference.
Contributions above that limit are assessed as ordinary gifts, and assets in the trust above the concessional cap are assessed against the beneficiary in the ordinary way.
Shows: the Age Pension retained by the beneficiary through the concessional asset exemption, and any amount above the cap that is still assessed. Ignores: the income concessions, the gifting exemption for contributors, and the beneficiary's own assets outside the trust.
03 Getting it right
The requirements are specific and the consequence of missing them is that the trust is an ordinary trust with none of the concessions. That is a worse outcome than having done nothing, because the assets are still committed.
The trust also has reporting obligations and must have its accounts prepared and provided annually. It is an ongoing arrangement rather than a one-off structure.
This is one of the few places where the cost of proper advice is clearly justified. The concessions are substantial, the rules are detailed, and the families using it have limited capacity to absorb a mistake.
Source: Services Australia — Asset types
This is one of the few structures the system deliberately provides rather than merely tolerates, and it is under-used because it is not widely known. If you have a child who will need lifelong support, it is worth proper advice — the concessions are substantial and the requirements are exacting enough that a homemade version gets none of them.
FAQ
How does a special disability trust affect the Age Pension means test for my child?
Trust assets up to a concessional cap are not assessed against the beneficiary, and their principal home held by the trust is exempt. Assets above the cap are assessed in the ordinary way.
Are contributions to the trust treated as gifts?
Contributions by eligible family members are exempt from the deprivation rules up to a combined limit. Amounts above that limit are assessed as ordinary gifts.
Can I use an ordinary trust instead?
No. Assets in a trust you control are assessed as yours. The special disability trust is the narrow exception the legislation provides for, and its deed must contain the required terms.
Sources
Regulator references
- Services Australia — Disability Support Pension · Services Australia · 2026The Disability Support Pension: the medical and non-medical rules for qualifying.Last verified: 2026-09-07
- Services Australia — Assets test for Age Pension · Services Australia · 2026The assets test: which assets count, the thresholds, and the taper that reduces the payment.Last verified: 2026-09-07
Calculator unit tests · the assertions this page's worked example is checked against, and their last result
Changelog
- 2026-09-07 — initial publish (new format)
Run this rule against your situation
See what this rule does to your own projection — month by month, to age 90.
Join the Waitlist
Jordan Reeves
Founder of Talk Through Wealth. A software engineer for over a decade before turning to retirement planning, Jordan built the projection engine after watching family members get fragmented, country-by-country advice that never reconciled. He writes about retirement the way the engine computes it: month-by-month, lifetime-long, and skeptical of any rule of thumb that hasn't been run through the math.