Fair dinkum the LIHC cut off is about $49,000 for a couple with no dependent kids. In a trust you would need to make sure you are not the attributable individual for social security rules (a total loss of control). Therefore you would need to hand control of your trust fully to someone else (an adviser would not suffice).
Let's take an example. Ma and Pa had there last $1m in a trust. Somehow they managed to generate $50,000 in income. Billy boy, their son, just turned 18 and is doing arts at Uni. Idiot adviser told Ma & Pa to make Billy Boy the Trustee and sole appointer of the trust, so he could get a distribution of $16,000 (paying no tax and returning it to Ma & Pa)and Ma & Pa would pay no tax and get a LIHC.
Billy boy falls in with the wrong crowd at Uni and as he has sole control of the trust cashes the $1m and heads off to Amsterdam to test the local wares. Ma & Pa now have zero and a nervous financial adviser checks his disclosures and hopes to hell his PI is paid up. Without considering attribution, the risk of changing control etc, no adviser in their right mind would suggest a strategy that would leave the client so exposed to the potential massive loss of capital.
