Forman Financial Services

Trustee of a Special Disability Trust Explained

The Special Disability Trust (SDT) is a trust structure established to provide for a person with severe disability. The trust structure includes the trustee who becomes the legal owner of the trust. Whereby they control the trust assets.  The following is some information about who can be trustee, and what are there responsibilities.

Who can be the Trustee

With the except of the beneficiary or settlor, anyone can be a trustee as long as they meet the legislative requirements which are:.

  • be an Australian resident,
  • not have been disqualified at any time from managing corporations under the Corporations Act 2001,
  • have not been convicted of an offence of dishonest conduct against a law of the Commonwealth, state, territory or foreign country, and
  • have not been convicted of an offence under the Social Security Act 1991 or the Social Security (Administration) Act 1999 or the Veterans’ Entitlement Act 1986.

The trustee can be either an individual or a corporation.  If the trustee is a corporation the above requirements are required for a director of the trustee.

An individual, or a director of a trustee corporation


How many trustees are required?

Only one trustee is required if the trustee is a professional trustee (a professional trustee is either a trustee corporation or an Australian legal practitioner as defined in the Legal Profession Act 2004) who operates on an ‘arm’s length’ basis.

Otherwise, at least two trustees are necessary.

What are the trustee’s responsibilities?

The responsibility of a trustee is to act in the best interests of the beneficiary.  This must be in accordance with the terms of the trust, through provisions in the trust deed or will.

In brief, the duties of the trustee are:

  • to implement the trust in accordance with its terms,
  • they must consider with reasonable regularity whether to spend trust money or otherwise use the trust property for the benefit of the beneficiary,
  • to invest trust property prudently and in accordance with the directions contained in the trust,
  • they must avoid unnecessary expense or wastage of trust property,
  • if required, to seek professional advice (at the expense of the trust),
  • to keep a set of accounts and report these to the beneficiary when required
  • to provide information to the Department of Human Services or the Department of Veterans’ Affairs as required if the trust is relevant to the income support entitlements of the beneficiary,.

Any reasonable trust related expenses made by the trustee can be reimbursed from the trust.

The trustee has a legal obligation to look after the trust property.  They must invest it and use it wisely and carefully for the benefit of the beneficiary.

The trustee must:

  • keep proper accounts in respect of all receipts and payments made from trust fund and all dealings connected with the trust fund, and
  • prepare written financial statements showing the financial position of the trust at the end of that accounting period.
  • provide the financial statements of the trust and action audits when/if requested.

How is the trustee(s) changed?

They may resign by notice in writing given to the other trustee(s) and the appointor (if any). This takes effect upon notice being given.

The appointor has the authority to make changes to trustee(s) at any time by writing:

  • remove any trustee (other than a trustee appointed by the court) from office,
  • appoint a new or additional trustee, or
  • appoint a replacement trustee for any trustee who resigns as trustee or ceases to be trustee under any provision of these terms or trust law.

The appointor also has the power to resolve any deadlocks or conflict between the trustees, avoiding the need for court proceedings.

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