Providing For Disabled Beneficiaries
UNABASHED PLUG: On January 17, 2007 I will be speaking as part of the Hull and Hull Breakfast Series Seminars. (For information, please see our website.). I am presenting a paper entitled “The Ontario Disability Support Program: What Every Estate Solicitor Needs to Know”.
As a lead up to that presentation (and to take advantage of the research done to prepare the paper), I thought I would spend some of my blog time this week discussing some of the issues to be considered were a disabled beneficiary is involved.
When one is planning an estate that involves a disabled beneficiary, special considerations must be taken into account. Obviously, the disabled beneficiary has special needs. The testator must discuss his or her hopes and goals in providing for the disabled beneficiary with the planner in order to ensure that these needs are, to the extent possible, facilitated. In addition, the estate planner must ensure that the benefits sought to be bestowed upon the disabled beneficiary are maximized.
The estate planner must ensure that these issues are fully canvassed. The estate planner must make efforts to ensure that a proper level of comfort is established with the client, as many clients are reluctant to discuss particulars of a disabled child. Further, the client may not be aware of the significance of the disability on his or her own estate plan.
Specifically, when considering an estate plan involving a disabled beneficiary, any bequests should be considered in light of the relevant social assistance legislation.
In Ontario, a program called the Ontario Disability Support Program exists. This program provides benefits to disabled Ontarians who meet certain financial and medical eligibility requirements. Once qualified, the ODSP recipient is entitled to income supplements of up to $979 per month. In addition, and often more importantly, the recipient is entitled to drug and dental benefits. Over the course of the disabled person’s lifetime, these benefits can be substantial.
In planning one’s estate, one must keep the financial eligibility requirements in mind so as to not inadvertently disqualify a disabled beneficiary from receiving ODSP or similar benefits. A bequest to a disabled beneficiary who is also an ODSP recipient may have the unintended effect of putting that beneficiary over the asset or income thresholds, resulting in a disqualification or suspension of benefits. This disqualification or suspension of benefits might continue until the bequest to the disabled beneficiary is used up. Thus, such a request might not substantially assist the disabled beneficiary, and may not be the best use of the testator’s resources.
There are a number of mechanisms or structures that can be put in place that would see to assisting a disabled beneficiary while not disqualifying that beneficiary from receiving the social assistance benefits. These include the use of a “Henson Trust”, or the gifting or bequesting of property that will not be included in the calculation of the disabled person’s assets. In this week’s blogs, I will discuss some of these mechanisms.
Have a great day.