Why Should a Parent Consider Setting Up a Special Trust for Their Children?
As a parent or guardian of a child with a disability, one of your biggest concerns is ensuring that they are well taken care of, both now and in the future. Setting up a special needs trust is one of the best ways to provide long-term financial security, preserve eligibility for government benefits, and manage funds for your child’s care and well-being. At Your Disability Tax, we understand the unique challenges you face, and we’re here to help you navigate the process of setting up a special needs trust, ensuring your loved one is always taken care of.
A special needs trust is designed to help manage and protect the financial assets of a person with a disability while maintaining their eligibility for essential government support programs, such as the SASSA disability grant. It’s a powerful tool that enables you to safeguard assets, provide for future needs, and ensure that your loved one’s financial and medical needs are met without jeopardizing their access to vital resources.
What is a Special Needs Trust?
A special needs trust is a legal arrangement where assets are placed in trust for the benefit of a person with a disability. The trust is managed by trustees, who are responsible for ensuring that the assets are used for the individual’s benefit in a way that does not affect their eligibility for government assistance programs. Unlike directly inheriting assets, which may disqualify an individual from benefits, a special needs trust keeps the assets out of the beneficiary’s name, ensuring they can continue receiving the financial aid they depend on.
The trust can be customized to meet the specific needs of the individual, whether that’s covering medical expenses, therapy costs, or other ongoing care needs. Additionally, it can include provisions for education, assistive devices, and even home modifications to ensure the best quality of life.
1. Protect Access to Government Benefits
Government benefits like the South African Social Security Agency (SASSA) disability grant or future support (housing, care facilities, etc.) are means-tested. If a child inherits assets directly, they might lose eligibility. A special needs trust:
- Keeps assets out of the child’s name
- Ensures they remain eligible for crucial support programs
2. Provide Long-Term Financial Security
Government benefits like the South African Social Security Agency (SASSA) disability grant or future support (housing, care facilities, etc.) are means-tested. If a child inherits assets directly, they might lose eligibility. A special needs trust:
- Keeps assets out of the child’s name
- Ensures they remain eligible for crucial support programs
3. Customisable to Your Child’s Needs
The trust can be tailored to cover:
- Assistive devices (wheelchairs, communication boards)
- Caregivers or nursing costs
- Travel expenses to medical or educational facilities
- Home modifications (ramps, rails, lifts)
These are often tax-deductible if structured properly.
4. Tax and Estate Planning Benefits
- Assets in the trust aren’t taxed in the child’s hands
- Parents can reduce estate duty by transferring assets to the trust
- Life insurance policies can be made payable to the trust—providing a tax-efficient legacy
Click here to see a tax guide regarding Special Trusts. Download link
5. Professional Management & Safeguards
You can appoint:
- Letter of wishes to guide trustees without legal constraints
- Trustees (family, friends, professionals)
- Independent auditors to ensure the funds are used in your child’s best interest
A special needs trust is not just about money—it’s about peace of mind. It’s a way for parents to say:
“Even when I’m no longer here, I’ve got you covered.”
Want to know more about special trusts?
At Your Disability Tax, we are here to help you navigate the process of setting up a special needs trust. Our team of Disability Tax Specialists can guide you through every step of the process, ensuring that you create a trust that meets your family’s unique needs while maximizing your tax benefits. Contact us today to book your free consultation and learn how we can help you plan for the future with confidence.