Public Consultation on Discretionary Trusts
March 28, 2017
Public Consultation on Discretionary Trusts
Important Public Consultation for Every Parent of a Child with Developmental or Other Disabilities
Every parent of a child with developmental disabilities worries about what will happen to their son or daughter when they are no longer alive.
If you are the parent of a child with developmental disabilities, you want to ensure your child has the best possible life and by law you are also required,
to the degree you are able and to as great or greater a degree than your children without disabilities, to provide for that child in your Will. Yet in every province but Alberta, parents can create a Discretionary Trust (also known as a Henson Trust) as a means of providing for their child with disabilities after they pass away. A Discretionary Trust is created through a Will and comes into effect on the passing of the parents. Parents should at least have the peace of mind in knowing whatever funds, property or other assets they are able to leave will not be clawed back by government or otherwise reduce their child’s benefits. In Alberta the AISH (Assured Income for the Severely Handicapped)Legislation identifies a Discretionary Trust as an asset and
income from the Trust as income to be counted against AISH. If the Trust results in the individual’s total assets being over a $100,000 then they can lose their AISH benefits . Or the income from the Trust can result in the individual’s monthly AISH income being reduced. Instead of benefiting from what parents are able to leave so that their son or daughter could have a little better life, the government requires the individual to become poorer,
in effect to reduce the value of the Trust, before their AISH can resume
at all or in its entirety.
A Discretionary Trust means that funds or assets left to the child with disabilities are managed by a Trustee named by the parents in their Wills and thus the funds/assets do not go directly to the child with disabilities
as only the Trustee(s) can disburse the funds . A Discretionary Trust is created when the individual with developmental disabilities cannot wisely or readily manage their own money very well. The Trustee is responsible for disbursing the funds/assets in the best interests of the individual with disabilities – in effect using their discretion.
For years Inclusion Alberta, on behalf of the thousands of Alberta families who have children with developmental disabilities, has been trying to get the AISH Legislation changed so that parents can have a little more peace of mind and their sons and daughters a better life by ensuring Discretionary Trusts created by parents will not be clawed back or used to otherwise harm the interests of the person with developmental disabilities. Discretionary Trusts may not be ideal in all circumstances but they are one option that ought to be open to parents as they are in other provinces, particularly if both the total value of the Trust and/or any income generated from the Trust is exempt as an asset and income under AISH.
Fortunately, NDP MLA Brian Malkinson from Calgary-Currie has listened to those of his constituents who are parents of children with disabilities on this issue. He is holding consultations (see details below) to hear from more Albertans on their desire to have the AISH legislation changed so that Discretionary Trusts will be an exempt asset under AISH
and hopefully any income from the Trust . Much like an RDSP (Registered Disability Savings Plan) where both the value of the RDSP and any income from the RDSP are both exempt and not clawed back . He is planning to introduce a Private Member’s Bill this fall to have the AISH Legislation amended. Inclusion Alberta has spoken with Brian to indicate our support and our desire to further participate in the development of the needed AISH Amendment.
Most Private Member’s Bills are not successful, however, Inclusion Alberta is very pleased to have recently learned that the government caucus will support Brian’s Private Member’s Bill. Nevertheless, while MLA Malkinson’s leadership is to be commended, Inclusion Alberta is of the view that the government should have listened, acted and led by proposing a government Bill to amend AISH and provide for the protection of Discretionary Trusts. Even with government support a Private Member’s Bill has less chance of passing due to differences in procedure than a government Bill. Inclusion Alberta will be meeting with the leaders of the other Alberta parties to seek their support for this change, thus ensuring it will be even more likely that this Private Member’s Bill will succeed.
Consultations are not really needed given parents have wanted this for years and time would be better spent working in partnership with Inclusion Alberta, our lawyers and others to draft the best legislation possible to enable parents to provide for their children with disabilities on their passing. Nevertheless, we are strongly encouraging as many people as possible to participate in MLA Brian Malkinson’s consultations to ensure our voice is heard and that this opportunity is not lost.
As the consultations are currently only being held at this time in Calgary and Edmonton and we want to ensure all party support, Inclusion Alberta is advising everyone to contact their own MLA (click this link to find your MLA) to indicate their support for this change to the AISH Legislation.
In a future email we will outline what we believe would be possible wording for the needed AISH Amendment.
The first consultations are being held as follows and you can email your intention to attend to firstname.lastname@example.org or by calling 403-246-4794.
Thursday March 30, 2017
2:00 – 4:00 PM
Alexander Calhoun Library
3223 – 14 St. SW
Wednesday April 5, 2017
10:00 AM – 2:00 PM
9820 – 107 St. NW
Chief Executive Officer