How should I provide for a disabled person?

If a beneficiary does not have the capacity to manage his financial affairs, it may be appropriate to leave your property to that person by way of a trust, rather than outright.

In addition a beneficiary who is mentally or physically disabled may be entitled to receive financial or other government assistance. It may be that the gift in a Will can be structured with a discretionary trust which will benefit the individual without eroding the benefits he or she may be entitled to receive from government.

In a typical discretionary trust the Trustee is given the absolute authority (discretion) to decide how much of the income and how much of the capital, if any, will be paid to the beneficiary and at what time. Because the beneficiary cannot require the payment of the income or capital from the trust, as the law currently stand the trust is not considered to be of any value to the beneficiary in calculating the beneficiary’s assets under, for example, the Employment and Assistance for Persons with Disabilities Act. Also, because the Trustee will pay out only what the beneficiary needs, the beneficiary will not accumulate excess assets which could result in a loss of the disability pension.

The Voice of CP has a useful manual for disability trusts either created in Wills or during one’s lifetime: Click here