Tag: benefits

09 Jul

ODSP – How long do you have to put an inheritance into a trust before it counts against your asset limit?

Stuart Clark Estate Planning Tags: , , , , , , , , , , , 0 Comments

Yesterday I blogged about the potential for an individual who receives benefits from the Ontario Disability Support Program (“ODSP”) to place up to $100,000.00 from an inheritance they receive into a trust for their benefit without such funds counting against the maximum asset limit they are allowed to have to continue to qualify for ODSP. Although the use of such a trust can work as an effective tool to help insulate an ODSP recipient from the risk that an inheritance they receive could disqualify them from ODSP, as there is a deadline by which such a trust can be established it is important that ODSP recipient acts quickly to create the trust.

As noted in my blog yesterday, the ability for an ODSP recipient to establish a trust so that any inheritance would not count against their asset limit is governed by the Ontario Disability Support Program Act (the “Act“) as well as O.Reg. 222/98 (the “Regulation”). Although neither the Act nor the Regulation establish a deadline by which such a trust needs to be established, the Government of Ontario has released Policy Directive 4.7 which states that ODSP recipients may be given up to six months from receiving their inheritance to establish the trust. From the perspective of the Government of Ontario, if the ODSP recipient does not put the funds into the trust within six months of receiving the inheritance, the funds will begin to count against their maximum asset limit. As a result, if after the six month deadline the trust has not been created and the inherited funds push the ODSP recipient over the maximum asset limit they will lose their benefits.

Although the Government of Ontario appears firm in their position that an ODSP recipient has a maximum of six months to place any inheritance into a trust before the funds will count against their asset limit, it should be noted that as neither the Act nor the Regulation provide for any deadline by which the trust must be established that some people have argued that the six month deadline proposed by the Ministry should not be considered law and can be extended. Such an argument was raised before the Ontario Social Benefits Tribunal in 1711-09594 (Re), 2018 ONSBT 5888, wherein the Tribunal ultimately agreed to extend the deadline for a trust to be established to ten months after an ODSP recipient’s benefits had initially been terminated for going over the asset limit for not creating the trust within six months. In coming to such a decision the Tribunal states:

(8) Section 28(1) does not specify a time period within which an inheritance must be converted into a trust in order for it to qualify as an exempt asset.

(9) The Tribunal finds that in the absence of specific guidance in the legislation, it is to be inferred that an ODSP recipient should be given a “reasonable” amount of time to establish a trust and thereby exempt inheritance funds from his or her asset calculation. What is “reasonable” will in turn be determined by the circumstances present in each individual case. Such an interpretation allows effect to be given to section 28(1)19 and is in keeping with the purposes of the Act.” [emphasis added]

Although decisions such as 1711-09594 (Re) show that the six month deadline to establish the trust can be extended by the Tribunal to allow an ODSP recipient a “reasonable” amount of time to establish the trust before the inherited funds will count against the asset limit, as the Government of Ontario continues to reference the six month deadline in Policy Directive 4.7 for the trust to be established it is likely wise to continue to consider the deadline for the trust to be established to be six months.

Thank you for reading.

Stuart Clark

08 Jul

ODSP – Can you put inherited funds into a trust after receiving the funds and still qualify?

Stuart Clark Estate Planning Tags: , , , , , , , , , , , , , , 0 Comments

The use of planning tools such as a “Henson Trust” is an often discussed topic in the estate law world for what can be done to allow an individual who receives benefits from the Ontario Disability Support Property (“ODSP”) to receive an inheritance from an estate without losing their benefits. Although the Henson Trust can be an effective tool to allow an individual to receive an inheritance from an estate while not losing their benefits, as a central tenant of the Henson Trust is that the inherited funds do not “vest” in the beneficiary until the trustee makes a distribution in their favour (thereby allowing funds in the trust not to count against the asset limit provided for by ODSP before they are distributed), a beneficiary and/or Estate Trustee cannot create a Henson Trust after the testator has died as the inherited funds have typically already “vested” in the beneficiary and therefore would count against the asset limits for ODSP. As a result, if a beneficiary who receives an interest in an estate is also an ODSP recipient (and the Will did not use a tool such as a Henson Trust to ensure the inherited funds do not count against the ODSP qualification criteria), there is the risk that the beneficiary could lose their ODSP benefits as a result of the inherited funds putting them offside the ODSP qualification criteria.

Although advance planning is always preferable when dealing with a situation in which a potential beneficiary receives ODSP, sometimes for whatever reason a testator does not take steps prior to their death to ensure that their estate plan includes tools such as a Henson Trust that would allow the beneficiary to receive the inheritance as well as continue to receive their benefits from ODSP. Should this occur, although the options available after the testator’s death are more limited to the beneficiary, there remain certain remedial steps that could be taken by the beneficiary to help to insulate them against the risk that their newly inherited funds would disqualify them from ODSP.

The general parameters for who is entitled to ODSP and how it is to be administered is governed by the Ontario Disability Support Program Act (the “Act“), section 5(1) of which provides that the government through regulation is to establish a maximum “asset limit” for an individual who receives ODSP. The regulation that establishes the asset limit is O.Reg. 222/98 (the “Regulation”), section 27(1) of which sets $40,000.00 as the current maximum “asset limit” for an individual who receives ODSP (although such an asset limit is potentially higher if the individual has a spouse or dependants).

As a result of section 5(1) of the Act in collaboration with section 27(1) of the Regulation, if an ODSP recipient’s total assets exceed the $40,000.00 maximum asset limit after receiving their inheritance they would likely lose their ODSP benefits. To this respect, if the potential inheritance the beneficiary/ODSP recipient is to receive is significant, there is the very real risk that if no steps are taken to help to insulate the inheritance from counting against the asset limit the beneficiary would lose their ODSP benefits.

Although section 27(1) of the Regulation provides that the ODSP recipient’s assets may not exceed the maximum threshold, section 28(1) of the Regulation lists certain assets and/or interests which are deemed not to be included in the calculation of an ODSP recipient’s assets. These “non-counting” assets potentially include a trust that is established by a beneficiary with funds that they inherit from an estate. Specifically, item 19 of section 28(1) of the Regulation provides that the following would not count against the asset limit:

Subject to subsection (3), the person’s beneficial interest in assets held in one or more trusts and available to be used for maintenance if the capital of the trusts is derived from an inheritance or from the proceeds of a life insurance policy.

Section 28(3) of the Regulation then further provides:

The total amount allowed under paragraphs 19 and 20 of subsection (1) shall not exceed $100,000.

As a result of section 28(1)19 of the Regulation in conjunction with section 28(3), if an ODSP recipient receives an inheritance or the proceeds of a life insurance policy they are allowed to put up to $100,000.00 of such funds into a trust to be held for their benefit without such funds counting against their asset limit for ODSP. As a result, if the inheritance that the ODSP recipient is to receive is $100,000.00 or less (or close to $100,000.00 such that any excess over $100,000.00 would not put them offside the asset limit), the potential option of putting the inheritance into a trust for the benefit of the ODSP recipient may be available to help insulate the inherited funds from counting against the asset limit.

If a beneficiary/ODSP recipient would like to explore the possibility of establishing such a trust after death they should speak with a lawyer to ensure that the trust is drafted in compliance with ODSP requirements.

Thank you for reading.

Stuart Clark

05 Jun

Employment – with benefits

Suzana Popovic-Montag Estate & Trust, Estate Litigation, Estate Planning, Uncategorized Tags: , , 0 Comments

If you use news headlines as a guide, it would seem that group benefits at work – health, dental, chiropractic and more – are getting a bad rap, and benefits fraud is the reason.

While the vast majority of employees make legitimate benefits claims, the bad apples get all of the publicity. One of the worst in recent years was the fraud involving the Toronto Transit Commission, which was linked to more than 220 employees who have either been fired or resigned.

In many cases of fraud, service providers collude with benefits plan members to get money out of the plan. So, they claim for orthotics that are never delivered, or claim for prescription glasses but receive designer sunglasses, or submit a receipt for a therapeutic massage when they actually received a sexual massage from a massage parlour.

The chill effect

The trouble with fraud, and all of the warnings about “don’t abuse your plan” is that it can create a chill effect on those who want to use the “health services” part of their plan (in-person treatments and therapies) for legitimate reasons. People can feel that using these benefits outside of an emergency situation equates to taking advantage of their plan. So, they don’t get their knee checked by a chiropractor, or get a back massage for their lower back pain, or get the orthotics they need to prevent problems down the road.

And the most underused benefit area, according to Canada’s largest provider of group benefits, Sun Life Financial, is for psychological services. For Canadian employers with 50 or more employees, 88% of employees make at least one prescription drug claim in a year but only 5% make a claim for psychological services. This is despite the fact that mental health issues are a leading cause of short and long-term disability claims. You can read the full report here.

Think prevention: Make use of your plan

My point is a simple one: employers want employees to take the prevention steps needed to stay healthy. It’s beneficial for both the employee and the business. Yes, there are short-term costs for preventative treatments, but these short-term costs can avoid larger long-term costs, such as multi-year disability leaves. This is especially true for mental health issues.

All to say, if you’re lucky enough to have a benefits plan, don’t wait for an emergency to learn about the preventative treatments available to you. From dental check ups, to mental health therapy, to chiropractic adjustments, there are subsidized treatment options available to help you stay healthy and productive.

Enjoy the rest of your day!
Suzana Popovic-Montag

01 Mar

Impact of Physician-Assisted Death on Estate and Insurance Planning

Nick Esterbauer Beneficiary Designations, Elder Law Insurance Issues, Estate Planning, Ethical Issues, Health / Medical, RRSPs/Insurance Policies Tags: , , , , , , , , , , , , 0 Comments

For many Canadians, one or more life insurance policies represent an important component of an estate plan.  If a policy cannot be honoured as a result of the cause of the insured’s death, this may completely frustrate his or her testamentary wishes.

The terms of life insurance policies typically address the issue of whether a beneficiary will be entitled to the insurance proceeds in the event that an individual commits suicide.  Policy terms typically include a restriction as to the payout of the policy if the insured dies by his or her own hands within a certain of number of years from the date on which the policy is taken out (most often two years).

With the decriminalization of physician-assisted death, there was initially some concern regarding whether medical assistance in dying would be distinguished from suicide for the purposes of life insurance.  The preamble to the related federal legislation, however, distinguishes between the act of suicide and obtaining medical assistance in dying.

As mentioned by Suzana Popovic-Montag in a recent blog entry, the Canadian Life and Health Insurance Association suggested in 2016 that, if a Canadian follows the legislated process for obtaining medial assistance in dying, life insurance providers will pay out on policies that are less than two years old.  Since then, the Medical Assistance in Dying Statute Law Amendment Act, 2017 has come into force to provide protection and clarity for Ontario patients and their families.  This legislation has resulted in amendments to various provincial legislation, including the Excellent Care for All Act, 2010, a new section of which now reads as follows:

…the fact that a person received medical assistance in dying may not be invoked as a reason to deny a right or refuse a benefit or any other sum which would otherwise be provided under a contract or statute…unless an express contrary intention appears in the statute.

The amendments provided for within the legislation introduced by the Ontario government represent an important step in the recognition of physician-assisted death as a right that is distinguishable from the act of suicide.  They also confirm the right of individuals who access medical assistance in dying to benefit their survivors with life insurance policies or other benefits.

Thank you for reading,

Nick Esterbauer

 

Other blog posts that may be of interest:

05 Oct

Maximizing Tax Benefits for Charitable Giving

Ian Hull Estate Planning Tags: , , , , , , , , 0 Comments

I recently tweeted this article from the Financial Post, which discusses different methods of charitable giving and the tax benefits associated with each method.

With respect to inter vivos charitable gifts, the methods include:

  • A one-time gift using cash, cheque or credit card;
  • Gifting publicly traded securities;
  • A one-time gift using flow-through shares; and
  • Gifting real estate or private shares.

One-time gifts using cash, cheque or credit card, which are familiar to most individuals, are the most common type of gift and are often gifts of smaller amounts. The other type of one-time gift, which makes more sense for larger gifts, is a gift of “flow-through shares”. These are a particular type of stock involved in materials or energy exploration that qualify for significant government credits. This option is better for individuals comfortable with advanced tax strategies and high taxable incomes. The two remaining inter vivos methods of gifting publicly traded securities, private shares, or real estate, are best for large gifts and result in tax benefits with respect to capital gains.

With respect to testamentary giving, the article discusses leaving money in a will, leaving money through an insurance policy, and donating RRSPs and RRIFs. Gifting money to charities via a bequest in a will is familiar to many individuals. However, there are often more tax-efficient ways to give, since money in your estate has been fully taxed and probated along the way.

The other methods of testamentary giving discussed are less common. Leaving money through an insurance policy involves paying premiums on a policy for which a charity is the beneficiary, and receiving a tax receipt on the payment of that premium. This method is said to often deliver a higher rate of return than investing and leaving money to a charity in your will. It also has the benefit of providing certainty with respect to the amount you will be donating to the charity. Donating your RRSPs or RRIFs has a benefit in that, often, the taxes on an RRSP or RRIF may be the largest tax liability on an estate. By donating the balance of the RRSPs or RRIFs, you can effectively use a charitable gift to cancel out the tax.

If charitable giving is something that you consider important, consider gifting in a tax-efficient way so as to gain a benefit yourself, and to provide even more of a benefit to your chosen charity.

Thanks for reading.

Ian Hull

17 Apr

Hull on Estates #328 – Rights of Spouses

Hull & Hull LLP Hull on Estates, Podcasts, Show Notes, Show Notes Tags: , , , , , , , , , , , , , , , , , , 0 Comments

Listen to: Hull on Estates #328 – Rights of Spouses

Today on Hull on Estates, Natalia Angelini and Moira Visoiu discuss the Ontario Court of Appeal’s decision in Carrigan v. Carrigan Estate.  A link to the case can be found here.   

If you have any questions, please e-mail us at hull.lawyers@gmail.com or leave a comment on our blog page.

Click here for more information on Natalia Angelini.

Click here for more information on Moira Visoiu. 

29 Apr

Issues in Estate Administration: Tax Filing – Hull on Estate and Succession Planning Podcast #110

Hull & Hull LLP Hull on Estate and Succession Planning, Podcasts Tags: , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , 0 Comments

Listen to Issues in Estate Administration: Tax Filing.

This week on Hull on Estate and Succession Planning, Ian and Suzana discuss tax issues surrounding the administration of an estate.

Comments? Send us an email at hullandhull@gmail.com, call us on the comment line at 206-457-1985, or leave us a comment on the Hull on Estates and Succession Planning blog.

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