4.7.3.10 General Provisions for Trusts pre-01/01/2002

Effect of a trust (1.1.T.180)

The effect of a trust on an income support recipient's payment under the income and assets (1.1.A.290) tests depends on whether they:

  • are a beneficiary of the trusts assets OR income OR both,
  • have gifted assets or income to the trust,
  • have loaned assets to the trust, or
  • are a trustee ONLY.

Act reference: SSAct section 8(1)-'income'

Trustee of trust's assets

An income support recipient who is a trustee ONLY, derives no benefit from the trust, therefore, their pension or allowance entitlement is NOT affected. If a trustee receives salary or fees for administering the trust, however, the salary or fees are treated as income.

Gifted assets or income to a trust

Any outstanding loan balances are maintained as an asset. If assets have been gifted or sold to the trust, deprivation will need to be considered if adequate financial consideration (1.1.A.55) has not been received.

Act reference: SSAct section 1122 Loans

Loaned assets to a trust

Assets may become part of a trust fund by being:

  • loaned to the trust, or
  • sold to the trust at market value (1.1.M.40), with payment of the proceeds deferred.

The amount owing is maintained as an asset.

Beneficiary of a trust

Loans made by beneficiaries to a trust are financial investments and therefore subject to deeming.

Explanation: An income support recipient who is a beneficiary may be entitled to the income and assets of the trust now, or at some time in the future. The document that created the trust establishes the beneficiary's interest in the income and assets of the trust.

Example: Will or trust deed.

Last reviewed: 11 August 2014