With advances in modern medicine, the life expectancy for people with disabilities has significantly increased. Unfortunately, this means that many individuals with special care requirements are now outliving their families or other financial support systems. Setting up a trust can have significant benefits for people with disabilities, especially when it comes to long-term care, preserving government benefits or legal claims, as well as for estate and tax planning.
Depending on the severity of the disability, costs incurred are ongoing and unavoidable and a sad reality is that many disabled people rely entirely on a disability grant as their source of income. This can create serious challenges, as a disability grant is not sufficient to cover the cost of living expenses once a person’s support system is gone. Examples of expenses include medication, nappies, therapies, assistive devices, transportation and special needs schooling or care centre fees.
Peace of Mind
Local movement therapist, Paula Van Eeden of Imvula Therapy Centre shares that she has seen the major difference it makes when a family can set up and maintain a well-managed trust fund for a family member with a disability. It offers peace of mind and provides their loved one with a secure and comfortable life, even after the family has passed on.
Paula adds further that in medico-legal cases, where a person has become disabled due to medical negligence, any compensation awarded is usually placed into a trust. In these cases, one or more trustees are appointed to manage the funds and ensure that the person with a disability receives the full benefits, whether for medical care, housing, education, equipment or daily living expenses. This arrangement helps to prevent financial abuse or mismanagement.
Quality of Life
- Protection and Management of Assets –When a trust is formed, one or more trustees are appointed to manage the trust assets responsibly for the benefit of the beneficiaries. The trustee can be a trusted family member, but having an independent professional trustee on board helps to protect the beneficiary’s assets and income from mismanagement or exploitation
- Continuity of Care – A further estate planning benefit is that when a trust is set up by a financial carer before their death, there is no delay in the beneficiary receiving benefits when the carer passes away. If a trust is created in terms of the carer’s will, the financial provision for care will not begin immediately as the carer’s assets are on hold pending the distribution of the carer’s estate. Trust assets are separate from a carer’s estate and continue to provide support for a disabled beneficiary even during the carer’s estate administration.
- Customized Support for Quality of Life – With good management, a trust can improve the beneficiary’s quality of life by providing for education, housing, therapy, recreational activities, assistive technology and personal care attendants and facilities.
Estate Planning Benefits
- Long-term Financial Planning – A trust managed by qualified professionals ensures continuity of care, especially once caregivers are no longer able to provide support. With clear instructions on how the trust funds are to be used over the beneficiary’s lifetime, a trust can be structured to maximize the benefits for the beneficiary over the long term.
- Legal and Tax Benefits – Trusts offer legal protection from creditors, as well as estate planning and tax benefits. A trust set up for the sole benefit of a disabled person who is, due to the disability, unable to provide for themselves or manage their own financial affairs, is regarded as a Special Trust for tax purposes. This means that such a trust is taxed on the normal sliding scale for income tax or individuals, instead of at a flat rate like normal trusts. Further, special trusts are also granted further relief from capital gains tax in respect of certain exclusions and assets.
The future is uncertain and it is so important to plan proactively, especially when caring for a loved one with a disability. Establishing a trust for a disabled loved one can safeguard their long-term well-being and financial stability.
Marsh Fidelity is a specialist team of deceased estate and trust professionals based in KwaZulu-Natal. We specialize in family trust formations and management, deceased estate administration will drafting and estate planning. Our team aims to make an enduring difference by working with care and efficiency to provide the highest quality service to ensure that estates and trusts are run as effectively as possible.
Paula van Eeden is the Director and Movement Therapist at Imvula Therapy Centre, a local business focusing on individual therapeutic programmes and enhancing the abilities of persons with special needs. Paula has worked in the disability sector for 21 years and has encountered and supported individuals with a wide range of disabilities and various levels of need. Imvula Therapy Centre has been assisting people with disabilities for almost five years by travelling to client’s homes to provide much-needed therapy.
