Episode 82: Leaving an Inheritance to a Person with Disabilities

If you would like to leave some money or assets to a loved one who is living with disabilities when you die, be sure to consider how receiving that inheritance might impact that person's other financial resources, such as social assistance benefits.

Henson trusts can protect access to social assistance benefits Every province and territory has its own specific laws and regulations addressing social assistance and support programs, and most have programs directed solely at persons with disabilities.

The benefits provided can include a monthly stipend, specialized or subsidized housing, and/or medical benefits. In order to qualify to receive this assistance, the person must show that he or she is "disabled", and that he or she is in "need", as defined in the applicable legislation. In general, a person will not be considered in "need", and therefore will not be eligible to receive disability social assistance, unless the person meets certain asset and/or income tests. If the person inherits a significant sum of money directly (as opposed to indirectly, as a beneficiary of a trust), the inheritance could disqualify the person from continued assistance.

In most provinces and territories, if an inheritance is payable to a trust for the person with disabilities instead of directly to that person, and the terms of the trust are sufficiently "discretionary", the assets within the trust will not be considered to be assets of the person with disabilities, and so will not affect his or her entitlement to government social assistance programs.

The trust may also be permitted to distribute up to certain annual amounts to the beneficiary without those distributions counting against his or her income limit.

As a result, if one of your intended beneficiaries is receiving social assistance benefits, it is usually best to leave assets to him or her through a fully discretionary trust, sometimes referred to as a Henson trust, instead of leaving assets directly to him or her.

This is a type of trust where the trustee (as designated in your will) manages the assets for the benefit of the beneficiary, but the assets are not legally owned by the beneficiary, and the trustee has the complete discretion to determine if, when and how much should be distributed to the beneficiary at any given time.

Book your FREE Retirement Planning Consultation and check out our master class on Retirement Planning for an in-depth look into our planning process here: https://value.schillerandassociates.com/retirement

Prefer to watch videos to get great information? Check out our YouTube Page.

Comment below with any questions or topics you'd like us to cover! And don't forget to subscribe for the latest updates.

Thanks for tuning in to Your Canadian Retirement Specialist!

Connect with Regan:

Facebook: https://www.facebook.com/yourcanadianretirementspecialist

LinkedIn: https://www.linkedin.com/in/schillerandassociates

Website: https://schillerandassociates.com/

Regan Schiller holds his Certified Financial Planner, Registered Retirement Consultant and Certified Life Underwriter designations. He is an Executive Financial Consultant licensed under Investors Group Securities Inc.

Disclaimer: https://www.morningstar.co.uk/uk/news/159098/do-low-volatility-etfs-deliver.aspx Mutual funds and investment products and services are offered through Investors Group Financial Services Inc. (in Québec, a Financial Services firm). Additional investment products and brokerage services are offered through Investors Group Securities Inc. (in Québec, a firm in Financial Planning). Investors Group Securities Inc. is a member of the Canadian Investor Protection Fund. Commissions, fees and expenses may be associated with mutual fund investments. Read the prospectus before investing. Mutual funds are not guaranteed, values change frequently, and past performance may not be repeated.

LIRA regulations vary provincially. For more information on LIRA in your area, please refer to your provincial government's website. Additional information on the Canada Pension Plan and Old Age Security can be found at:

www.canada.ca/en/services/benefits/publicpensions.html.

Music courtesy of LesFM: https://lesfm.net.