Home » Guide to estate planning for parents of a disabled child

Guide to estate planning for parents of a disabled child

Posted by Marcus McCarthy | 28 January 2018 | Estate Planning

As the parent of a disabled child I know that the biggest single worry of all parents in this position is how to protect their vulnerable child after they pass away. Most parents struggle to know what to do about this and a poorly drafted will creates more problems than it solves.

This is a complex area of law and it is essential for parents of disabled children to make proper wills and guardianships, to ensure that their disabled children will be properly protected and cared for after they die. It is even more critical if that child has an intellectual disability. The courts and newspapers are littered with unfortunate cases of disabled people in desperate situations.

Every circumstance is different but, in this article I have tried to share some of the information I have learned in my quest to ensure that my own child is safe and secure after I die.

What if you don’t have a Will?

Where there is no Will and no spouse to inherit (or an untrusted spouse), a disabled child may be entitled to a direct share of the parent’s estate, but the law does not have the flexibility to ensure that the disabled person’s share is protected for their maximum benefit and future security.  In addition, it will be extremely costly and potentially disastrous for the child should a court have to step in to sort things out.

This means that it is very important to ensure that there is a valid Will in place and it is very clear in setting out the interests of the child.

Providing for a Person with a Disability

There are no hard and fast rules about making adequate provision for disabled children and each individual circumstance varies depending on the level of disability and the child’s particular needs and capacities.  It is very important to consider what that child will need to be properly cared for and ensure their general health and wellbeing into the future.  A Will protecting a disabled child might include specific provision for:

  1. Physical needs
  2. Accommodation
  3. Support mechanisms
  4. Social support and interaction
  5. Hobbies and interest support
  6. Health considerations

Some parents make the mistake of only making a small provision for their disabled child.  They do this because they feel that their disabled child is already in a care facility or because the child has modest needs.  But is impossible to predict what their needs will be ten or thirty years after the parents die, or who will be around to protect them.  For example, the care facility may have closed down or its fees have risen beyond the child’s pension, or all the direct family has passed away.

Parents sometimes give all of their property to their non-disabled children and rely on them to look after their disabled sibling.  The danger of this approach is that:

  • the non-disabled children may die first, perhaps many years before the person with a disability, leaving them with nothing; or
  • siblings may not be the best choice to care for an adult disabled person.

In any event, when parents make a much greater provision for one child than another, the Supreme Court can vary the Will to even up the split and impose orders for the care of the disabled person.

On the other hand, it is not a good idea to leave property outright to a person with an intellectual disability, as they may not have enough understanding to look after their property or make Wills themselves in the event of their death.

The safe approach is to ensure a relatively even split of assets, but with respect to the disabled child’s portion that it be given in a testamentary trust and if possible, to gift some property to that child in that trust that will house them appropriately for their lifetime.


A trust is just a tool to hold and use property, of any kind, for the benefit of a particular person (the Beneficiary), without that person owning it directly.  It allows you to appoint certain people, called ‘trustees’, who are must always use that property always in the best interest of the beneficiary or for the purposes specified in the Will.

A trust provides an alternative to leaving property outright to your disabled child, who may have little capacity to manage it.  Setting up a trust under your Will allows the assets to be used for the benefit of the person with a disability in a very specific way.  This means that they won’t have to administer their own affairs or have unknown third party do so) and reduces the risk they will be left isolated, with nothing.

Without a trust in place, the disabled person may end up with property they don’t understand how to look after or manage. In fact the law prohibits direct transfer of property where there is no capacity to manage it.  In these circumstances the person with a disability may have an independent administrator appointed under the Guardianship Act Act who has legal authority to administer that person’s estate.  All of this is costly and difficult, so it is best just to get in place a Will with a testamentary trust to deal with the disabled child’s portion.

For example, if parents have three children and only one of them is disabled, they could, leave one-third of their property to each of their non-disabled children, and the other third could be left in trust to be used for the benefit of the disabled child.

It is important to remember that income of a trust under a Will is taxable (although special disability trusts are now available to minimise this).  This means that it may be better to use money to buy something which can be used by the person with a disability (for example, a car or a house) rather than have it earn interest.  The Will should also state what happens to the assets when the person with a disability dies.

Disabled Beneficiaries

A ‘beneficiary’ is simply a person who receives a gift or any other benefit under a Will.  If you leave something to your child under your Will, they are the beneficiary.  An intellectually disabled beneficiary might:

  • receive a gift of money or other property;
  • be allowed to live in the family home for as long as they want;
  • be entitled to the income earned by a ‘Trust Fund’ set up under the Will.

Most commonly, parents provide that the executors appointed in the Will have a wide discretion about how much money they will pay to or use for the benefit of the intellectually disabled beneficiary.  The job of the ‘executors’ or ‘trustees’ is to deal with the deceased person’s property as the Will directs.

An intellectually disabled beneficiary has the same rights as any other beneficiary.  These include rights to:

  • take executors to court if they have failed to comply with the Will;
  • reimbursement where executors have used money for purposes not allowed in the Will or where they have lost estate property through negligence;
  • ask the court to remove executors who are not doing their job properly;
  • ask the Registrar of the Probate Division of the Supreme Court to force executors to provide information about property income and expenditure.

The Trustees

The trustees will normally be the same people as the executors named in the Will.  The choice of trustees is very important because of the discretion they are given and the length of time that they will have to administer the estate.  Qualities to look for in trustees include:

  • empathy — an awareness of the disabled person’s needs and a desire to protect and help them;
  • business sense — knowledge of investments, income tax and social security benefits;
  • independence — trustees often will need to make difficult decisions about how property is to be used and sometimes it is good to have at least one trustee outside the direct family unit;
  • health & youth — they may have to act for decades; and
  • capacity – caring for a disabled person takes time & effort.

Generally it is best to include a mixture of the above qualities between 2 or more trustees.

Personally, I don’t think it is best to appoint only the non-disabled children as the trustees.  This is because when the disabled person dies their share normally goes to the non-disabled children or their families.  This places the other children in a difficult situation if they are the only trustees, because they know that whatever they do not spend on the person with a disability they end up getting themselves.  There is also a very obvious conflict of interest which can sometimes lead to problems.

It is always better (and in fact now mandatory) to have more than one trustee in the disability context. They might include a non-disabled child, an accountant or solicitor or even a trustee company, an ‘advocate’ of the person with a disability or a friend of the family who takes an interest in the person with a disability.

If parents have no suitable people to appoint, they can appoint a professional trustee, the Public Trustee or a private trustee company.  These organisations are well known, continue to exist indefinitely and are cautious and sensible about investing money.  Their disadvantage is that their services aren’t free and their involvement can be impersonal.  To an extent, the impersonal nature of their involvement can be partially overcome by including a direction in your Will requiring the trustees to consult with, for example, the disabled person and the persons or organisations providing day-to-day care for them.

It is extremely important that dual trustees be appointed and that a sensible mechanism is in place to replace any trustee that dies or becomes unable to perform that crucial role.  If they wish, Parents can set out in their Will how this is to be done.  Otherwise, the Trustee Act provides a mechanism for this.

The remuneration to be received by professional trustees should be arranged with the proposed trustees.  Practically speaking, professional trustees are more likely to do a better job if they are appropriately rewarded.  They may receive a percentage commission, a gift of a specified sum or the normal fees for an accountant or solicitor, for example.  Trustee companies normally charge a commission based on the initial value of the estate and a percentage of all income passing through the estate.  If nothing is said in the Will about remuneration, then the trustees can apply to the Supreme Court for a grant of commission.

Wills can be very specific about how much the trustees have to spend on the person with a disability and on what things, or it can give the trustees a very wide discretion.  Parents often simply decide to give trustees a very wide discretion to pay or use as much of the income and assets of the trust for the benefit of the disabled person as the trustees see fit.  Reasons for giving these broad discretions include:

  • they create maximum flexibility for the trustees to react to the changing needs and circumstances of the person with a disability;
  • they allow the trustees to remove or at least minimise the effect of the Will on the person with a disability’s social security benefits.

A disadvantage of giving such broad discretion is that it limits what can be done if the person with a disability, or a friend of the person with a disability, does not feel that the trustees are fairly treating the person with a disability.  This emphasises the importance of choosing suitable trustees.

Often trustees broad discretion can be guided by an addendum to the Will called a ‘Letter of Wishes’, which broadly outlines what the parents wish to achieve and provide for their child in their lifetime.

If a professional is to be appointed as an independent trustee, although not common, it is my considered view that senior lawyers should be preferred over all other professions for this role.  This is simply because it is the only profession governed by legislation that imposes ethical behavior and professional standards.  As such, there is a much greater incentive for lawyers, especially well established ones in reputable firms, to avoid any impropriety and ensure the trustee roles are performed properly, which is very much in the interests of the disabled child.  Obviously cost is a factor in this and only professionals with a good background and community standing should be considered for such roles.

Housing for Disabled Children

It is obviously a matter of great concern to parents to be able to provide a good standard of housing for their disabled child for on a long term basis.

If parents are in a position to leave a house for their disabled child this can also be done through a trust in the Will.  For example, a three bedroom house could be lived in by the disabled child and some boarders, who pay rent that could be used to pay for other needed facilities.  Sometimes a live-in ‘houseparent’ might be necessary, such as a sibling or designated carer.

If parents aren’t sure whether suitable care facilities will be required for the child in the future, they can direct their trustees to investigate and then be empowered to sell the house and hold the proceeds in trust for the person, to be used to fund care in an appropriate facility.

Sometimes parents might be able to give an organisation the use of a house in return for a promise to run the house as a group home for the disabled child and others.  In this situation the trustees could be given power to terminate the arrangement if the organisation did not keep its side of the bargain.

Parents can come together and empower their trustees to purchase a house to be occupied by the disabled child of each of them.  This can be achieved by setting up a company that own blocks of ‘company title’ home units.  Each person’s trust can own a share in the company and the share would entitle the person with a disability to live in the house.  If the person with a disability dies or moves out, the trustees can sell their share to someone else.

Testamentary Guardians

Testamentary guardians are people appointed to take over the parent’s role as guardians of their children. However, as with parents, their formal powers only apply until the person with a disability is 18. However, the role can continue in an informal sense after that age. Parents may declare that a named person perform this informal role as a balance to the formal roles of the trustees.

Centrelink Payments

The disability support pension is affected by a person with a disability’s income.  Income is defined in the Social Security Act 1991 (Cth) as ‘an income amount earned, derived or received by the person for the person’s own use or benefit’.  This would include someone who received benefit from a trust – which in this case would be your disabled child. A Special Disability Trust allows some exceptions to the standard position on this but are only available once the child reaches 16 years of age.  It may be a good idea to establish a Special Disability Trust at the same time as the Will.

As rules about income-stream products such as annuities and trusts are complex and constantly changing, parents or trustees should seek professional advice from an accountant or financial adviser.

Property Not Governed by a Will

It is important to remember that not all property will always be covered by a Will.  For example, life insurance policies and superannuation benefits often go to a person specified in the policy or specified to the superannuation fund.  However, if those funds are directed to the child, it is possible to initially contribute those funds to a trust with some beneficial tax considerations.


Peter is an intellectually disabled boy whose parents die leaving all of their estate to his able brother and sister.  Peter (or someone on his behalf) applies to the court for a variation of the Will.  The court would probably order that Peter receive a good sized share of the estate.  How big a share he would receive would depend on the circumstances but could even be more than his brother and sister, if his need is greater.  Even if Peter’s parents set up a $50,000 trust fund for him but gave the rest of their $300,000 estate to his siblings, the court would probably make the same orders.

If Peter’s parents divided their estate equally between the three children and appointed trustees to invest Peter’s share and to use the income as they see fit.  If the trustees are not making good decisions on Peter’s behalf, such as not funding the purchase or rental of a reasonable property for him to live in, Peter’s guardian can apply to the court to intervene and force the trustees to make the payment, or if there is a history of mismanagement, replace them.

Final Comment

Life with a disabled child is complex and drafting a Will to protect a disabled child can be complicated.  This means that they can be expensive.  Very few lawyers in that practice in Wills actually have any real expertise in disability law or personal experience dealing with a disabled child.  My advice is to always check that the solicitor you engage is specifically familiar with preparing disability based Wills and trusts before proceeding.

There is a lot of conflicting advice and variability of legal documents in this area.  Establishing suitable Wills for disabled children can be extremely difficult and expensive for parents already dealing with the extra costs of caring for their child.  We hope to publish a fully automated disability Will package through OpenLawyer very soon that will help parents through this difficult process simply and cost effectively.

You can’t control everything but parents of disabled children can do a lot to ensure the health and wellbeing of their kids after they have gone.  The biggest problem is finding the time to sit down and do it.

Marcus McCarthy, Principal
Nexus Law Group

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