Providing For A Lifetime, Spring 2021 Version

FEDERAL BUDGET PROPOSES IMPROVEMENTS TO DISABILITY TAX CREDIT

Audrey Veltri, IG Wealth Management

April 2021
The 2021 Federal Budget announcement on April 19, 2021 was delivered by Canada’s Deputy Prime Minister and Minister of Finance Chrystia Freeland. The proposal unveiled a historic $101.5 billion dollars in new spending focused on many issues including extending pandemic supports, a national childcare plan, increases to minimum wage, an investment in climate change and green initiatives, and some much-needed changes to the Disability Tax Credit, DTC.
I couldn’t be happier. For years I have been advocating for changes to the federal Disability Tax Credit Program, particularly to the eligibility terms surrounding mental functions necessary for everyday life. And finally, some promising movement.
The details of the proposal are as follows.
    1. An update to the list of mental functions which would qualify for eligibility.
      Currently, under the category of metal functions necessary for everyday life, applicants must show a significant, prolonged and almost constant impairment in three areas; adaptive function, memory and problem solving/goal setting/judgment (taken together). These broad and uncertain categories have created challenges for many Canadians who are impacted by what can be referred to as neural diverse disabilities, or cognitive impairments. Diagnoses such as ASD, ADHD, FAS, and mental health conditions among others have historically faced challenges to fit their complex effects into these ambiguous boxes.
      Applications can be rejected or delayed for not meeting eligibility mainly due to improper wording. This results in appeals or request for more information letters to be sent to the applicants’ medical practitioner, creating additional administration efforts, time and cost.
      The new, more clinically relevant terms, more accurately describe and articulate the range of mental functions that are necessary for everyday life. The aim is to smooth out the application process, reducing delays, requests for more information and to improve overall access to those impacted by significant cognitive impairments.
      The proposed terms include:
      • attention
      • concentration
      • memory
      • judgement
      • perception of reality
      • problem solving
      • goal setting
      • regulation of behaviour and emotions
      • verbal and non-verbal comprehension
      • adaptive functioning
    2. Recognition of more activities in determining the amount of time spent on life-sustaining therapy and a reduction in the minimum required frequency of therapy to qualify for the DTC.
      This category of the DTC was designed to recognize that Canadians facing a life-threatening condition may require therapy which is essential to support vital function and that this therapy can result in significant impacts on their everyday living. This section of the form was another contestable area of the DTC application as the restrictive limits left many Canadians who were facing life threatening conditions or extreme medical fragility, without the support of the credit and its gateway programs.
      The current rules require that the therapy be delivered at least 3 times per week and that the weekly average time taken was at least 14 hours. The issue is some activities which are essential to the therapy are excluded in determining time spent receiving treatment. This includes activities related to dietary, exercise, restrictions, regimes (even if those restrictions or regimes are a factor in determining the daily dosage of medication), travel time, medical appointments, shopping for medication and recuperation after therapy. These activities which can be essential to the prescribed therapy can take a significant amount of time and can greatly impact the ability to engage freely and equitably in activities of daily life.
      To recognize that these aspects of therapy are essential and in fact do take time away from everyday normal life the budget proposes to:
      • allow reasonable time spent determining dietary intake and/or physical exertion to be considered when determining the dosage of daily medication
      • clarify that the exclusion of time for medical appointments does not apply to appointments to receive therapy or to determine the daily dosage of medication
      • allow reasonable time spent on activities that are directly related to the determination of the amount of; medical food or medical formula, or to limit intake of a compound that can be safely consumed as part of the therapy
      • the exclusion of time for recuperation after therapy does not apply to medically required recuperation
      • where an individual is incapable of performing their therapy on their own due to the impacts of their disability, the time reasonably required by another person to assist the individual in performing and supervising the therapy would be allowed to be counted.
      • the requirement that therapy be administered at least three times each week be reduced to two times each week.
The annual estimated costs of these changes over the next five years are provided in the chart below and total $376 million in the form of non-refundable tax credits to Canadians living with a severe disability or condition or the families and caregivers that support them.
Many Canadians living with a disability are in income brackets that are essentially non-taxable and, as the credit is non-refundable in nature, it does not provide financial relief to these individuals. The DTC does however act as a gateway providing access to other tax-related credits, benefits and measures. Most notably the Registered Disability Savings Plan, the Child Disability Benefit and the disability supplement to the Canada Workers Benefit.
These proposed changes are a step towards increasing financial security for Canadians living with a disability. In 2019 the Federal Disability Advisory Committee released a report on removing barriers and improving access to the DTC and RDSP. It contained 42 separate recommendations, so it would appear there is still more work to be done.

Cost of Proposed Tax Measures

*More detailed information can be found on the Government Of Canada Website. Annex 6 Tax Measures-Supplementary information. https://www.budget.gc.ca/2021/report-rapport/anx6-en.html#disability-tax-credit
If you or someone you care about has questions about this article or could benefit from disability supports and planning for the future, we are here to help.
Audrey Veltri|403.619.0410|audrey.veltri@ig.ca
IG Wealth Management_Audrey Veltri
We provide guidance to families supporting dependents with a disability. We ensure families have effective access to all available financial and government programs and implement strategies to ensure that we protect these supports through periods of transition and at all life stages. We create solutions so families can enjoy today, embrace tomorrow and secure a comfortable, safe and healthy future for the whole family.

Providing For A Lifetime, Winter 2021 Version

RDSP REDEMPTION RULES
How do you take the money out?
January 2021

Audrey Veltri, IG Wealth Management

RDSP’s are arguably the best method of saving and fortifying long-term financial security for persons living with a disability in Canada. The account created in 2008 is just over a decade old and we are only just beginning to see the positive impacts within the community. Awareness is beginning to cultivate and information on how to access and effectively structure contributions, grants and bonds is beginning to spread, albeit there is still much work to be done.
Naturally there is often a focus on how to fund the plan, but I find little attention is paid on how it will pay-out, be received and support the beneficiary. Beneficiaries, who in many cases, might not have the capacity to understand nor manage these payments. Therefore, it is important that when we establish these accounts, we also explore the short, mid and long-term outcomes and understand how this account will provide future support- because it comes with some rules, many rules in fact.
The first of which is the penalty for early redemptions which CRA calls a repayment obligation. It is quite severe. If you redeem funds within the ‘Assistance Holdback Amount’ (AHA) period, you could be required to pay back $3 of grants/bonds for every single dollar redeemed. The AHA period refers to a 10-year period in which any grants or bonds have been paid into the account.
Here is an example:
Sara has an RDSP which was opened in 2008, so its been open for 13 years. In each year her parents fully funded the plan with annual contributions of $1,500.00 which were matched with $3,500.00 in annual grants. She was not eligible for the bond. The total amount of grant in the account is $45,500.00 ($3,500 X 13). The Assistance Holdback amount is the value of all grants paid in the last 10-year period or $35,000.00 ($3,500 X 10). If in this year Sara needed some funds for a medical need and her parents took $3,000.00 from the RDSP to fund this need- they would cause a repayment obligation of $9,000.00 ($3 for each $1 they redeemed or $3,000.00 X $3 = $9000.00) In total they would create a $12,000.00 redemption from the RDSP to pay for a $3,000.00 bill.
So, while technically you are permitted to take funds from an RDSP at any time, it is not advisable to redeem funds until 10 years after the last dollar of bond or grant has been contributed. Therefore, it is important to structure your contributions, grants and bonds in such a manner that they agree with both the timing requirements and the financial needs of the beneficiary.
The next rule is called the 28-year rule. Once the beneficiary reaches the age of 28 and any year up until they are 59, they have the right to request a DAP, Disability Assistance Payment from their RDSP; without the consent of the holder. Essentially, a DAP is a one-time payment from an RDSP. This is something to be conscious of when a beneficiary is aware that they are the direct beneficiary of an RDSP, that funds are available to them, and they have ability to request them. It is also important to note that DAP’s requested by the beneficiary can also result in repayment obligations should they occur within the AHA period. To protect the RDSP from exposure to this rule, parents and caregivers should consider the defense benefits of legal and formal trusteeship orders.
Here is an example:
Eric has a neurological disability but is high-functioning and somewhat able to manage his finances. He becomes aware that his parents have an RDSP account for him and at age 29 he decides he wants to redeem some money. Without his parent’s consent Eric makes a request for a DAP in the amount of $4,000.00 for a brand-new gaming computer complete with desk and gaming chair. This $4,000.00 redemption occurs during a time when the AHA period is still in effect and thus causes a repayment obligation of $12,000.00 ($4,000 X $3). As a result, his gaming system actually cost him $16,000.00!
There are however restrictions on the total allowable amount of a DAP. These restrictions exist for all DAP’s, those requested by the beneficiary and/or the holder. The first rule for a DAP is that it would be disallowed should the redemption result in the RDSP value falling below the assistance holdback amount. If this happened, then the RDSP would not have sufficient funds to satisfy the repayment obligation. There is also a dollar-limit rule for a DAP this ensures that the total of all DAP’s requested in any one given year are below the greater of; the DAP formula or 10% of the fair market value of the RDSP at the beginning of the year.
When a beneficiary turns 60 the RDSP must begin to pay a minimum amount each year. This prescribed payment is called an LDAP or Lifetime Disability Assistance Payment. LDAP’s are regulated by a formula that is applied to the fair market value of the account at the beginning of each year. LDAP’s can be paid out at regular intervals, monthly, quarterly or annually. Once LDAP’s begin to pay out, they must continue until the RDSP is terminated or the beneficiary passes away.
There is an additional rule that is applied to LDAP payments if the RDSP is what CRA refers to as a PGAP, Primarily Government Assisted Plan. A PGAP occurs in a year when the total value of all government grant and bond payments is more that the total value of private contributions. If this is the case the total annual LDAP payment must not exceed the greater of; the LDAP formula and 10% of the account. For example, if you had an PGAP RDSP with a fair market value of $200,000.00 on January 1, the maximum dollar amount you could take out in that year would be around $20,000.00.
Now I must also tell you that, as with almost all rules, there are exceptions. Exceptions for the redemption rules exist if the RDSP is classified as a specified RDSP. While this is an article all in itself; to summarize a specified RDSP is when the beneficiary of the RDSP is experiencing a shortened life expectancy. Should this be the case special rules for taking the money out apply, with many of the above restrictions loosening.
As you can see RDSP’s can be complex. From applying for grants, funding the plan, to redeeming they require attention and planning to ensure they will adequately and effectively meet the needs of the beneficiary. But even with all the rules and regulations they truly are the best method of saving for a secure future and when structured and managed properly, they are an incredible solution to ensure the well-being of Canadians living with a disability.
If you or someone you care about has questions about this article or could benefit from disability supports and planning for the future, we are here to help.
Audrey Veltri|403.619.0410|audrey.veltri@ig.ca
IG Wealth Management_Audrey Veltri
We provide guidance to families supporting dependents with a disability. We ensure families have effective access to all available financial and government programs and implement strategies to ensure that we protect these supports through periods of transition and at all life stages. We create solutions so families can enjoy today, embrace tomorrow and secure a comfortable, safe and healthy future for the whole family.

Buds in Bloom: Turning Points … An introduction

Life is about Turning Points; moments that present a decision which changes your life forever.
One of mine began with the sound of a phone ringing. You see, my wife and I had tried to have children but were unable to do so. So we decided to open our home and adopt. That was the sound that began a new chapter in our lives over 12 years ago.
Funny how a little thing can become a much greater one without fanfare, without much ado, and yet the smile of a baby can change you in an instant. Before you know it, you’re a parent, a Dad, and you realize that you have no idea what you’re in for, and someone forgot to mention that kids don’t come with a manual, the hours are non-negotiable, and vacation only happens in the wee hours in the bathroom before the kid wakes up.
Then you’re told your child may have a “disability”, or a significant “challenge”, or whatever wording they use at the moment to say that you’ve been upgraded to the deluxe adventure free of charge. Ho boy.
But really, that is what you’ve signed up for, knowingly or not, you are now a Parent, and being a Parent means you are now Indiana Jones and your child is going to show you the secret temple in the jungle. How you get there is more important than what is waiting for you at the end of the trail. So let me begin with our adventure with Eddie when he began his preschool life.
You see, Eddie didn’t talk. At the age of three you’d expect to be inundated with questions about the sky, food demands, and why Auntie June smells like catnip. For Eddie it was more of an “Uhn” sound and lots of pointing. What this meant to us is confusion, using a Rosetta Stone to decipher the language and a frustrated 3 year old.
Now before I continue, I’d like to say while I’m the one who can tell a story, my beloved wife is the true adventurer in the family. She’s the one who speaks to the experts, the educators, and manages the overall logistics of our trek. She’s all that and really smart to boot. So when I say “We”, it is more her, and then I’m ensuring that her plans come to fruition. Still a team, but she’s doing more of the overall work, so let’s be real about who does what.
We decided that our son needed help, so she did the calling and we had the meetings, and then Eddie enrolled in a preschool program designed to assist children with learning skills that are currently out of reach. To say the program was effective would be an understatement. Within 3 weeks our son was talking! Words began to flow out of his mouth, and we began to notice his visible frustration steadily being replaced with questions, wonder, and understanding.
It was an excellent beginning to our journey to say the least.
He spent two years in that program, learning the basics about social interaction, positive expression, all the while showing the sensitive nature that would later win the hearts of anyone who took the time to know and understand him.
But I digress for a moment, you see, like any good story you need to add more characters to challenge our protagonist and Eddie’s adventure was no different. You see, a few months into his first year of preschool our journey arrived at another new crossroads that once again began with the ringing of a phone. Once again life gave us a new turning point in the form of a baby brother for Eddie.
And with that our journey was altered forever.
Next chapter, I’ll tell you the story of how Ricky changed our house and the new challenges he brought to us all.
Until then, take care of yourselves and be well.

Buds in Bloom: Turning Points Blog

Life is about Turning Points; moments that present a decision which changes your life forever.
One of mine began with the sound of a phone ringing. You see, my wife and I had tried to have children but were unable to do so. So we decided to open our home and adopt. That was the sound that began a new chapter in our lives over 12 years ago.
Funny how a little thing can become a much greater one without fanfare, without much ado, and yet the smile of a baby can change you in an instant. Before you know it, you’re a parent, a Dad, and you realize that you have no idea what you’re in for, and someone forgot to mention that kids don’t come with a manual, the hours are non-negotiable, and vacation only happens in the wee hours in the bathroom before the kid wakes up.
Then you’re told your child may have a “disability”, or a significant “challenge”, or whatever wording they use at the moment to say that you’ve been upgraded to the deluxe adventure free of charge. Ho boy.
But really, that is what you’ve signed up for, knowingly or not, you are now a Parent, and being a Parent means you are now Indiana Jones and your child is going to show you the secret temple in the jungle. How you get there is more important than what is waiting for you at the end of the trail. So let me begin with our adventure with Eddie when he began his preschool life.
You see, Eddie didn’t talk. At the age of three you’d expect to be inundated with questions about the sky, food demands, and why Auntie June smells like catnip. For Eddie it was more of an “Uhn” sound and lots of pointing. What this meant to us is confusion, using a Rosetta Stone to decipher the language and a frustrated 3 year old.
Now before I continue, I’d like to say while I’m the one who can tell a story, my beloved wife is the true adventurer in the family. She’s the one who speaks to the experts, the educators, and manages the overall logistics of our trek. She’s all that and really smart to boot. So when I say “We”, it is more her, and then I ensuring her plans come to fruition. Still a team, but she’s doing more of the overall work, so let’s be real about who does what.
We decided that our son needed help, so she did the calling and we had the meetings and then Eddie enrolled in a preschool program designed to assist children with learning skills that are currently out of reach. To say the program was effective would be an understatement. Within 3 weeks our son was talking! Words began to flow out of his mouth and we began to notice his visible frustration steadily being replaced with questions, wonder, and understanding.
It was an excellent beginning to our journey to say the least.
He spent two years in that program, learning the basics about social interaction, positive expression, all the while showing the sensitive nature that would later win the hearts of anyone who took the time to know and understand him.
But I digress for a moment, you see, like any good story you need to add more characters to challenge our protagonist and Eddie’s adventure was no different. You see, a few months into his first year of preschool our journey arrive at another new crossroads that once again began with the ringing of a phone. Once again life gave us a new turning point in the form of a baby brother for Eddie.
And with that our journey was altered forever.
Next chapter, I’ll tell you the story of how Ricky change our house and the new challenges he brought to us all.
Until then, take care of yourselves and be well.

Buds in Bloom: Turning Points … Sleep

To say Ricky changed the dynamics of our household is like saying huskies only shed a little bit. A serious understatement to say the least.
Ricky to Eddie is the Sun to the Moon; complete opposites in every way possible.
Eddie was a calm child who loved to play with his Lego in the same place for hours on end watching the TV. He would have a nap in the early afternoon, get up content and have something to eat while smiling at the dogs.
Ricky on the other hand couldn’t stay still for love or money. If he wasn’t trying to climb down the stairs at the tender age of 18 months in pursuit of the dogs, he was making a mess in the kitchen with Nestle Quick container. It was a serious time of adjustment. Another Turning Point. Ricky would have to be strapped into his high chair and fed by hand or the food would be all over the place.
And let us talk about bedtime for a moment.
When Eddie was ready for bed, we get him ready with the minimum of fuss, turn on his favourite bedtime music toy and off to sleep. Such was not the way with Ricky.
Ricky was the energizer bunny connected to the power grid; he just kept going and going. At first, we were slightly amused, but after several days of no sleep, early mornings, and late work days, our patience was coming to an end. We needed relief and a solution.
You see, Ricky’s sleep patterns were all messed up. He would get up at 6 A.M., play until 10 A.M., have a nap until noon, up for lunch and going non-stop until 10 or 11 P.M. at night. Then just for fun, he’d hop out of his crib for late night exercise. Energizer Bunny indeed.
So, my wife and I decided to try something new before we’d end up doing something we’d regret. Thank the stars for melatonin*. Now before you think this product is something you’d have to get a prescription for, it comes over the counter at your local pharmacy. Be warned, some kids can have nightmares when on it so as always when trying medications of any sort, monitor your children closely for adverse effects. For example, Eddie tended to have nightmares when we needed to use it for him early on, so we stopped once we found out about this little side effect.
It took 6 weeks to fully change Ricky’s sleep pattern; a great Turning Point for him and us as the stress levels in the house dropped dramatically. To this day, he is still a bundle of energy. We now know to put him in several of after school activities that help him calm down at bedtime.
With that I shall pause our story here and pick it up with more stories about our little family in the next instalment. Take care of yourselves and each other.
Nick Baane, Father of Eddie and Ricky
Thank you Nick Baane for this candid share. Sleep deprivation can be life threatening. Your story brings up an important topic to talk about. Here are a few evidence-based resources and suggestions of where to look for support resources in your geographic area.
Resources for Sleep: The evidence

Providing for a Lifetime, Fall 2020 Version

DISABILITY & COVID SUPPORTS

October 2020

Audrey Veltri, IG Wealth Management

Prior to the pandemic Canadians with disabilities and their families experienced drastically higher than average rates of underemployment, unemployment, and poverty. COVID has widened this gap and created an even larger financial burden for persons with disabilities and their families. The onset of COVID-19 has led to increased hardship in the healthcare system, the workplace, the community, and even in the home, due to limited access to disability supports.
In June 2020 the Federal Government announced $550 million in financial support to people with disabilities and their families as they navigate new costs and challenges due to COVID-19. This announcement is the largest investment in people with disabilities by the Federal Government since the Registered Disability Savings Plan (RDSP) in 2008.
One of the announcements included a one one-time, non-taxable and non-reportable payment of $600 to Canadians who are eligible for the Disability Tax Credit (DTC), including families that receive the Child Disability Amount. The requirement to receive this payment is to hold a valid DTC certificate and that the certificate was applied for prior to September 25, 2020. Provided you meet the listed requirements the payment will automatically be provided, and those eligible will start receiving payments October 30, 2020.
This highlights the shortcomings of using the Disability Tax Credit as a mechanism to recognize, allocate, and distribute funds to Canadians with disabilities. To qualify for the DTC, applicants must navigate a complex screening process and have a medical professional certify their disability status, this can be particularly arduous for individuals with intellectual disabilities. Furthermore, despite CRA attempts to limit the cost, the DTC evaluation process can carry substantial costs, making it inaccessible to those who need it most. Statistics reveal only 40% of eligible Canadians are receiving the credit, leaving 60% of Canadians living with a disability without the benefit payment. And depriving them from further financial support and programs which are accessible through the DTC, like the Registered Disability Savings Plan (RDSP).
A senate appointed committee released a report in 2019 containing over 40 recommendations to amend the DTC process, making it more accessible to people with disabilities. As of now, few recommendations have been implemented.
As Canada plans for a COVID recovery, persons with disabilities, their families and the organizations that support them look for ways to work with various levels of government to address the systemic inequity that exists across the country. And we hope for the opportunity to collaborate on initiatives that will promote financial security for all.
The credit dates back to 1944, created to address the needs of those with severe vision loss in Canada, and was later expanded to include individuals with severe disabilities.  During tax reform in the 1980s, it became a non-refundable credit, as it remains today.  Non-refundable status indicates that it will not generate a refund for its claimant, but rather it reduces tax owing.  If you are not in a taxable position, as many with severe disabilities are not, the application of the credit has seemingly no benefit to you.  However, the credit can be transferred to a caregiver, such as a parent, and be claimed.  The non-refundable status of the credit is one possible factor contributing to the lower utilization of the credit, particularly in adults with disabilities.  Many families are unaware of its transferable status, and more importantly unaware of the many other benefits aside from tax relief that it provides.
The DTC also serves as an entry point for other government programs, the Child Disability Benefit and the Registered Disability Saving Plan.  The CDB provides a monthly tax-free payment to eligible families supporting a disabled individual under age 18.  For the period of July 2019 to June 2020, there is the potential to receive up to $2,832 ($236.00 per month) for each child who is eligible for the DTC.  The RDSP offers up to $90,000 in government grants and bonds towards the long term financial security for persons with disabilities.  An acute lack of awareness surrounds these benefits and a greater gap exists in recognizing and understanding their affiliation with the DTC.
The application process for the DTC, which is administered through the CRA, is complex and cumbersome.  Eligibility criteria are unclear and fraught with subjectivity and there is an inherent lack of consistency in the assessment of eligibly.  This has led to confusion for health care professionals, families, caregivers, and people with disabilities themselves when considering their potential qualification and applying for the DTC.  The application process and eligibility criteria are main focus points for the Disability Advisory Committee which was recently reinstated in November of 2017.  In the DAC report released earlier this year, the committee made 41 recommendations to improve the DTC program.
I’d like to acknowledge that I feel fortunate to live in a country that has a program like the DTC which recognizes the potential financial impacts of living with a disability.  At the same time, I have experienced and frequently encounter many challenges in accessing this vital measure for Canadians with a disability.   There are wide-ranging concerns and potential solutions.  Clarifying eligibly criteria is a significant starting place for reducing barriers.  Decoupling the DTC from other benefits, such as the RDSP and switching administration of the program from the CRA to ESDC Employment and Social Development Canada have also been proposed by some policy groups. I have included links to the various policy papers available on the DTC, including the link to the Disability Advisory Committee’s recent report and recommendations.
If you are not currently eligible for the DTC and are uncertain whether this program could benefit you or someone you care about I encourage you to explore your options and the role the credit could play in strengthening your current situation and creating a secure future.
Resources:
https://www.canada.ca/en/services/benefits/covid19-emergency-benefits/one-time-payment-persons-disabilities.html
https://www.canada.ca/en/department-finance/economic-response-plan.html
https://www.canada.ca/content/dam/cra-arc/corp-info/aboutcra/dac/dac-report-en.pdf
If you or someone you care about has questions about this article or could benefit from disability supports and planning for the future, I am here to help.

IG Wealth Management_Audrey Veltri

We provide guidance to families supporting dependents with a disability and family stewards to ensure effective access to all financial programs and government supports. We implement strategies to protect these supports and guide families through periods of transition and at all life stages. We create solutions that transcend generations, so families can enjoy today, embrace tomorrow and secure a comfortable, safe and healthy future for the whole family.

Audrey Veltri    |    audrey.veltri@ig.ca    |   403.619.0410

Providing for a Lifetime

TRUSTS

April 2020

Audrey Veltri, IG Wealth Management & Amanda L.C. Bruni, Bruni Law

The spring of 2018 saw the passing of “An Act to Strengthen Financial Security for Persons with Disabilities” or more commonly referred to as ‘Bill 5’ or’ The Henson Trust Bill’. (This amended the Assured Income for the Severely Handicapped Act and Regulations.)
The amended legislation is now well underway and offers Albertans more confidence and the ability to plan without the fear of negatively impacting your loved one’s future eligibility for social assistance programs, such as AISH.
To begin this discussion let’s look at what a trust is? It is not a suitcase of money that is held with your lawyer or bank – nor is it some giant bank account from where the rich fund their lavish lifestyles. Think of it rather as a piece of paper which contains specific instructions for the disbursements of assets.
A trust is simply a legal arrangement between the Settlor, who establishes the trust over certain assets (the person giving the property or asset(s)), and the Trustee, who holds the property for the benefit of the Beneficiary (the person(s) who will benefit from the property). Trusts can be living trusts, established while an individual is alive, or testamentary trusts which are created under the terms of an individual’s Will that come into effect on the individual’s death. In the case of a discretionary Henson Trust, either may be applicable.
A Henson Trust is a discretionary trust characterized as an arrangement whereby the trustee is given absolute discretion regarding the use of the income and/or capital from the trust. The trustee has the discretion to make payments to the beneficiary and the beneficiary is unable to claim or demand payments from the trust. As such, the beneficiary has no vested interest in the trust and therefore the trust is not an ‘asset’ of the beneficiary. The trust will provide instructions to the Trustee as to how to use the funds for the benefit and/or protection of the beneficiary.
Another component to the discretionary trust is that it requires the designation of a residual beneficiary, a secondary person who will receive or benefit from the property in the future upon the death or change of circumstances of the primary beneficiary.
It is the above discussed features that provide its protective status for AISH purposes. To be eligible for AISH an applicant and their cohabiting partner must not have assets in excess of $100,000. Effective April 1, 2018, the amendments provide that the discretionary trust is an exempt asset such that the value of the capital of the discretionary trust will not count toward the $100,000. There is also no limit on the amount or value of the discretionary trust. The amendments also provide a one-year grace period permitting the AISH recipient time to move an inheritance or lump sum payment into a discretionary trust or other exempt asset.
AISH eligibility also requires that the income of an applicant and their cohabiting partner must not exceed a maximum amount. Income received from the trust will continue to be subject to eligibility limits under the AISH Act and Regulations.
So, what does this mean for families who want to provide for a disabled loved one? A proper discretionary trust allows for assets to be available for the benefit of a beneficiary with the intention of improving his or her quality of life and providing security for the future while at the same time ensuring government support and programs continue.
A discretionary trust can be a helpful tool for estate planning. If you have set up a trust as part of your estate, it is important to ensure that it best reflects the current state of the law. In some cases, the recent developments we have discussed may require updates to your estate planning documents. We are pleased to set a no obligation preliminary estate review.
This publication is not provided as legal advice but for information purposes only. Although a discretionary trust may be a useful tool in estate planning, it is always best to obtain advice from a legal advisor, financial planner and tax advisor to determine the suitability of a discretionary trust as part of your estate planning.
If you have any questions about this article or planning for your future, please connect.

Audrey Veltri|403.253.4840|audrey.veltri@ig.ca
IG Wealth Management_Audrey Veltri
We provide guidance to families supporting dependents with a disability. We ensure families have effective access to all available financial and government programs and implement strategies to ensure that we protect these supports through periods of transition and at all life stages. We create solutions so families can enjoy today, embrace tomorrow and secure a comfortable, safe and healthy future for the whole family.
Amanda L.C. Bruni|403.266.5664|abruni@brunilaw.com
Amanda Bruni Blogger
Amanda L.C. Bruni is the owner of Bruni Law, a two generation law firm located in the community of Marda Loop. Amanda and her firm have years of experience helping families plan for their future with a specific expertise with legal issues related to the protection and support of persons with disabilities and persons dealing with capacity issues. Bruni Law practices in the areas of estate planning as well as guardianship and trusteeship applications.