Estate Planning for Your Relative with a Disability

By Halldor K. Bjarnason

Lawyer, Access Law Group

Is your child, sibling, or other relative one of the approximately 50,000 British Columbians receiving Disability Assistance – the provincial government’s support program for people with disabilities?  If so, your failure to properly write your will may seriously affect their ability to continue to receive assistance.

For people with significant disabilities (disabilities that render a person unable to hold regular, gainful employment) who depend on small disability pensions to survive, receiving a bequest from aging parents can mean the loss of the pension – often the person’s only means of support.  This leads to anguish and, ironically, even greater poverty.  Disability pensions in British Columbia are means-tested, making them conditional on the recipient having few liquid assets.

In British Columbia, if a person receiving Disability Assistance has more than $3000 in assets (with a few exceptions, such as a car, a principle residence, and a $5000 limit, plus $500 for each additional dependent, in the case of the recipient having dependents), they become ineligible for Disability Assistance. There are also rules about receiving unearned income when on Disability Assistance. However, both Canadian law and BC’s Employment and Assistance Act for People with Disabilities provide exceptions to these rules if the funds are held in trust.

A trust is an arrangement where a person (the “trustee”) holds the money for the exclusive use or benefit of another (the “beneficiary”). Courts in Canada have determined that money held in a discretionary trust (also called a “Henson Trust” or a “Supplemental Needs Trust”) for a person with a disability does not affect the person’s ability to receive their Assistance. In BC, if the funds from the trust are used to cover “disability related expenses”, without being given to the beneficiary as cash, they will have no impact on the beneficiary’s continued receipt of Disability Assistance.

As a result, it is crucial, when giving a bequest to a person receiving Disability Assistance, to plan your will so that their share flows into a discretionary trust. While there may be ways to resolve the problem if a person making a will forgets to place their disabled son or daughter’s share into a trust, these can be both expensive for, and stressful on, the person cut off of disability assistance.

For more information on this important topic, check out Wills, Trusts and Estate Planning course at PLAN