Trusts

Effective: July 20, 2011

Among other things, trusts provide a way for some clients and their families to safeguard assets for meeting disability-related costs now and in the future while remaining eligible for assistance.

The following client types may transfer certain kinds of assets (real property or personal property) into a discretionary trust or a non-discretionary trust, under certain conditions, without affecting eligibility for assistance:

• Clients who have the persons with disabilities (PWD) designation;
• A client who resides in a private hospital or a special care facility (other than a drug or alcohol treatment centre);
• Clients or applicants awaiting a PWD adjudication decision or completing a PWD Application form [for more information, see Related Links - Designation Application].

Note: Throughout this topic, “client” will refer to both recipients and applicants.

Income assistance clients, other than those who reside in a private hospital or a special care facility, could have a discretionary trust that would not be considered an asset in certain narrow circumstances.  [For more information, see Policy – Income Assistance Clients and Trusts.]

Effective: October 1, 2012

A trust is a legal relationship where someone (the trustee) holds the legal interest in (legally owns) money or other assets for someone else’s benefit (that person is called the “beneficiary”). The legal relationship is often, but not always, described in a written agreement, or in a will. There can be more than one trustee, and multiple beneficiaries, or there may be only one of each.

There are two basic types of trusts: “discretionary” and “non-discretionary.” The distinction is important, because they are treated differently under BC Employment and Assistance legislation.

Discretionary trust: a trust in which the trustee has absolute authority over payment of capital and income from the trust.  In other words, the trustee has complete authority to decide whether to provide trust funds to the beneficiary, or to spend trust funds on their behalf.

• The ministry generally does not consider a discretionary trust to be an asset, provided the beneficiary has no legal right to end the trust and take the capital.  Because such a trust is not considered an asset, there is no limit to the value of assets that can be held in a discretionary trust.
• If the beneficiary has a legal right to collapse the trust and gain control of the assets, the ministry considers the trust to be an asset.  Such a trust is considered to be a collapsible discretionary trust.

Non-discretionary trust: A trust in which the trustee does not have absolute authority over payments of capital and income from the trust.  The beneficiary may have some control, or the trustee may be required to make certain payments.

1. A non-discretionary trust is considered an exempt asset for eligible clients so long as the value of all capital contributions over time does not exceed $200,000.
2. Any return on investment generated by the trust can grow the value of the trust beyond $200,000 [see Policy - Return on Investment in a Trust for more information].
3. Capital contributions in excess of $200,000 are not exempt as an asset unless special approval is given by the minister. 
4. The minister can approve capital contributions in excess of $200,000 if the minister is satisfied that the lifetime disability-related costs of the beneficiary will exceed $200,000 [see Procedures – Lifetime Maximum].

Note:  Trust capital is the total of all contributions made to a trust.  Trust income is any return on investment generated from capital contributions within a trust.

A Registered Disability Savings Plan (RDSP) is a registered matched savings plan specific for people with disabilities.  An RDSP is not a trust but is an alternative tool for safeguarding and growing assets now and for the future.  [see Related Links – Assets & Exemptions]

Effective: December 1, 2015

Income assistance clients, other than those who reside in a private hospital or a special care facility (other than a drug or alcohol treatment centre), could have a discretionary trust provided they have no way of collapsing the trust and gaining control of the assets. This is because a discretionary trust is not considered an asset.  However, whether they can have such a trust also depends on how, when, and by whom the trust was set up.  For example, these clients may not be eligible for assistance if the trust was set up with capital that was within that client’s control, within two years before their date of application for assistance or while in receipt of assistance.  Further considerations include the underlying purpose of the contribution to the trust, and the purpose of the trust itself. A legal opinion must be sought by the ministry through the Strategic Policy and Legislation Branch (SPLB) regarding such a contribution to a trust before making an eligibility decision. [See Procedures]

Examples:

• A third party sets up a discretionary trust using their own resources, naming the client as beneficiary.  The client cannot collapse the trust and gain control of the assets. In this case, the existence of the trust alone does not impact the client’s eligibility for assistance.
• During the two years prior to applying for income assistance, a client receives some property and transfers it to a discretionary trust. The client cannot end this trust and take the capital. Depending on all the circumstances in this case, the client may not be eligible for assistance because of s. 13 of the EAPWD Act or s. 14 of the EA Act.  In some cases it may be determined that the client disposed of real property or personal property in order to reduce assets by transferring them into a trust. 

Effective: July 20, 2011

A trust is generally set up by transferring assets to someone to hold for the benefit of another person.  Similarly, a trust can also be set up by a person declaring assets they own are owned for the benefit of another person. The fundamental concept of a trust is that the legal ownership of the asset (essentially, the authority to manage or dispose of the asset) is separated from the beneficial ownership (the right to benefit from the asset).

There are many ways to set up a trust.  Two common trust arrangements are:

• The recipient/applicant or another party chooses someone to be a trustee, or to be a co-trustee with the client, to manage the trust.  The client and the trustee sign a trust document showing all the terms under which the assets have been transferred to the trustee, to be held in trust.  This type of trust is an inter vivos trust because the creator of the trust is still alive.
• A person creates a trust in their will. The trust becomes effective when that person dies, because the deceased person’s assets are automatically transferred to their executor and trustee, so they can carry out the instructions in the will. Thus, a separate trust agreement is not needed to put this trust into effect.  This type of trust is a testamentary trust, because it is created through a person’s last will and testament.

A trust document itself is not enough to create a trust. The legal title to the asset in trust must be transferred to the trustee to make the trust effective.

Ministry staff must not provide recommendations or advice regarding whether a trust or other personal arrangement is right for a recipient/applicant. The ministry cannot give legal or investment advice to clients, and can only provide information regarding how an arrangement a client has already made affects their eligibility. If a trust is claimed by a client, a legal opinion must be sought by the ministry through the Strategic Policy and Legislation Branch (SPLB) before making an eligibility decision.

Ministry staff use a Request for Trust Legal Opinion (HR2999) and send any other relevant documents to SPLB to determine whether the trust is valid, whether the trust is to be considered an asset, and if it is exempt.

[For more information, see Additional Resources – Trusts, Committeeships and Structured Settlements: Documentation Guidelines for Clients.]

Effective: December 1, 2015

If an eligible client receives earned income or unearned income (such as CPP disability payments, money from a trust, or investment income from assets held outside a trust), it is considered income in the month received even if the income is redirected, or received and transferred, into a trust.  Certain income exemptions apply [see Related Links – Income Treatment & Exemptions]. Unless deemed by the legislation to be unearned income by definition, transfers of assets are not treated as income [see Related Links – Assets & Exemptions].

Eligible clients may choose to transfer newly received income or assets to a trust or Registered Disability Savings Plan (RDSP) to avoid being over the asset limit in subsequent months [see Related Links – Assets & Exemptions].  If under $200,000 the asset(s) can be transferred into a trust. If the value of the asset(s) exceeds $200,000 the client should get legal advice, and they MAY be able to use a trust. For example, a possible concern is disposal of real property or personal property to reduce assets (section 13 of the EAPWD Act and section 12 of the EA Act). Whether or not this provision applies will depend on the circumstances of each case.

Ministry staff must not provide recommendations or advice regarding whether a trust or other personal arrangement is right for a recipient/applicant. The ministry cannot give legal or investment advice to clients, and can only provide information regarding how an arrangement a client has already made affects their eligibility. If a trust is claimed by a client, a legal opinion must be sought by the ministry through the Strategic Policy and Legislation Branch (SPLB) before making an eligibility decision.

If an asset passes directly into a trust or RDSP and the recipient/applicant did not receive the asset directly, then the asset is not considered income in the month received.  For example, if a relative chooses to make regular deposits of money directly into a trust for the client, those deposits will not be considered income in the month received.  Note that this is different than when a client has an entitlement to an asset, but directs the person holding the asset (the transferor) to transfer the asset into trust instead of paying the client directly. In such a case, it is the client and not the transferor who has chosen to transfer the asset in the trust. Accordingly, the ministry treats this situation the same as if the client actually received the asset before it was transferred to the trust.

A legal opinion must be sought by the ministry through SPLB when ministry staff require advice regarding how to categorize a transfer of income or assets and, generally, whenever there may be a trust involved, before making an eligibility decision.

If an eligible client transfers an exempt asset into an exempt trust, for example, a residential property that serves as the client’s primary residence, or a transfer from a personal RDSP, the asset remains exempt and does not impact eligibility for assistance.  Likewise, funds rolled into an exempt trust from a deceased parent’s RRSP or Registered Retirement Income Fund are not considered income in the month received. 

If an eligible client does not have an exempt trust or RDSP and the client wishes to transfer an asset to a trust or RDSP, the ministry allows the client up to three months to do so (the first month being the month in which the asset is received). During this time, the ministry will exempt assets intended for the trust or RDSP.  If, after three months, the client has not set up a trust or RDSP, the client’s circumstances will be reassessed.  If the client provides documentation (from a financial institution or lawyer) proving they are making reasonable efforts to establish an RDSP or trust, and the delay is beyond their control, the exemption for the asset may be extended on a month-by-month basis.  The client must provide documentation each month for which an extension is requested.  The exemption ceases to apply if the ministry becomes aware of information that indicates that a client does not intend to contribute the asset or a portion of the asset to a trust or RDSP.

Expenditures from an asset intended for a trust or RDSP will be exempt only so long as they are spent on “disability-related costs” [see Policy – Trust Payments].  However, if the client does not receive assistance for a month because of excess income in the month received, expenditures from the asset intended for a trust or RDSP are not restricted during this month (short of transactions making  s. 13 of the EAPWD Act or s. 14 of the EA Act applicable). 

Assets Reported Late or Discovered by Review or Investigation:  Clients found to be ineligible for assistance as a result of reporting assets at a later date, or for failing to report assets (either before or after the client began receiving assistance) which were subsequently discovered as a result of a review or investigation, may reapply for assistance when they no longer have the assets, or when they transfer the assets into a trust [see Policy – Eligibility and Trusts].  If they choose to set up a trust, this must be done before they will be eligible for assistance (i.e., unlike clients who report assets, non-reporters are not eligible while they are setting up the trust).  In such cases, ministry staff will expedite the review of the trust and the client will remain ineligible for assistance until the trust has been reviewed and determined to be valid and an exempt asset.

Exception:

If an asset described above (over the asset limit that is reported at a later date or following a review or investigation that has uncovered the asset which was not reported) is being held within an existing trust, the client remains eligible for assistance and the trust should be immediately reviewed. 

Amended Trusts:  Clients found to be ineligible following a review of a trust may in some cases amend the terms of the trust. Ministry staff cannot advise whether a client can or should amend a trust. If the client chooses to amend a trust, ministry staff will expedite the review of the amended trust, and the client remains ineligible for assistance unless and until the trust has been reviewed and determined to be valid and an exempt asset.

Effective: December 1, 2015

Payments from both discretionary and non-discretionary trusts are considered unearned income subject to exemptions for certain trust payments.  Exemptions apply only to persons with disabilities (PWD) clients, PWD applicants and clients who reside in a private hospital or a special care facility (other than a drug or alcohol treatment centre); there are no trust payment exemptions for other clients or non-PWD members of a family unit.  Trust payments are fully exempt for eligible clients when used for:

• Acquiring a place of residence for the client,
• A contribution to a Registered Education Savings Plan,
• A contribution to an Registered Disability Savings Plan (RDSP), or
• Disability-related costs:

Notes: There is no income exemption for return on investment outside of a trust or RDSP.

Generally, disability assistance clients are not required to use assets from a trust to pay for items that may be provided by the ministry.  For example, if a PWD client meets all eligibility criteria to be provided a wheelchair, their trust would not be considered an available resource and they would be eligible to receive the wheelchair.  Assets from a trust can be used to pay for upgrades to items beyond what may be provided by the ministry.  

If an individual who is not a ministry client with a non-discretionary trust applies for a health supplement under life-threatening health need, they are required to use assets from their trust before being considered for a supplement under life-threatening health need. 

Trust payments are separate from RDSP payments.  RDSPs are not subject to trust payments guidelines.

Note on fees:  Trust payments for investment commissions, or administration and legal fees required to operate a trust (for example, tax payments or payments to trustees) are not payments to the beneficiary.

Preferred Beneficiary Election

A preferred beneficiary election allows a trustee to allocate trust income to the client on the client’s tax return, without actually paying the income to the client. The client’s income tax return will show that they have received income, but since the client doesn’t receive any money, it cannot be included in the client’s income for the purpose of calculating the client’s eligibility for assistance.  This is not the same as income paid on behalf of the client to a third party.  Staff are to obtain verification of a preferred beneficiary election from the client or trustee in order to exclude it.

Ministry staff have no authority to direct a client or a trustee regarding how they must use a trust, nor may they provide suggestions or advice as to how to use a trust; staff apply the Act, regulations and ministry policy to determine how the client and trustee have used their trust as it relates to determining eligibility for assistance.

Effective: October 1, 2012

A structured settlement is an agreement to pay damages to a plaintiff in a lawsuit, but by periodic payments rather than as a lump sum.  To be considered a structured settlement under this policy, the settlement agreement:

• must have been in relation to a claim for damages in respect of personal injury or death, and
•  must require the defendant to make periodic payments directly to the person for a fixed term or the life of the person through the purchase of a single premium annuity contract that is not assignable, commutable or transferable. 

If a settlement does not meet all of these criteria, it is not a structured settlement.  These annuities are not assets.  Some structured settlements require payments to be made into an actual trust, in which case the trust will determine how the arrangement is treated. 

Payments received under structured settlements are treated the same as payments from trusts.  The same trust payment income exemptions apply, regardless of whether the payment originated in a trust, or came from a structured settlement annuity.

If a client receives a structured settlement and does not have the persons with disabilities (PWD) designation or is not a person receiving accommodation or care in a private hospital or a special care facility, the underlying annuity will not be considered their asset.  However, there are no exemptions for payments under a structured settlement for these clients, so any payments under a structured settlement to a client who is neither a PWD nor a resident in a special care facility will be treated as unearned income.  

If the structured settlement is set up to make payments into a trust, the payments may or may not be considered income; a legal opinion is required.

A legal opinion must be sought by the ministry through the Strategic Policy and Legislation Branch (SPLB) when structured settlements are reported, before making an eligibility decision.

Structured Settlement Reporting:  Clients who are the beneficiary of structured settlement annuity payments are required to keep records of the following and make the records available for inspection at the request of the minister:

• the settlement agreement, including the table of payments to be made to the person
• documentation showing the ownership of the underlying annuity

Each year the ministry needs the following information:

• all payments made to or on behalf of the person under the structured settlement and what the money was used for

In addition, clients are required to report structured settlement annuity payments on their monthly report, as the payments may affect their eligibility.

Effective: July 13, 2016

A committeeship is an arrangement where the Public Guardian and Trustee (PGT), a private individual, or a trust company is granted the authority to manage the affairs of an adult who is incapable of managing their own affairs.  Under BC Employment and Assistance legislation, a patient’s own real property and personal property, which is controlled by a committee, is treated by the ministry as if held in a discretionary trust for the adult; accordingly, it is not required to be held in an actual trust in order to not be considered an asset.  A third party can still set up a trust for a patient. A patient would also generally continue to be the beneficiary of a trust that existed prior to their incapacity.  Such actual trusts are considered on their terms, and in light of the patient’s inability to manage their affairs.

A legal opinion must be sought by the ministry through the Strategic Policy and Legislation Branch (SPLB) in the case of a committeeship, to confirm the status of the committeeship as well as to determine how to apply the trust asset exemptions before making an eligibility decision. In seeking a legal opinion, it is important to include documentation showing who holds title to the assets in question and, if there is an actual trust, documentation showing that the property is held in trust and confirming the terms of any trust arrangement.  Documentation should also include a copy of the court order or certificate of incapacity creating the committeeship. 

The PGT provides assistance to adults who need support for financial and personal decision making. In that role, the PGT acts as the client’s representative, no different from any other client advocate, committee or trustee. As such, a legal opinion must be sought by the ministry through SPLB for all arrangements involving the PGT before making an eligibility decision.

Payments made by the committee from assets held by the client are not considered as income and do not impact eligibility for assistance. If, however, a payment is made by the committee from an actual trust, trust payment policy applies [see Policy – Trust Payments].

For example, if a committee makes a payment from a client’s bank account (such as for rent, transportation, a medical device, etc.), it is a payment from a client’s own money and not income. The committee is spending the client’s money on the client’s behalf – therefore, the client’s support and shelter assistance is not impacted. If however, any of these payments are made by the committee from an actual trust, the payments are unearned income and trust payment policy applies and each payment may or may not be exempt according to trust policy.

[For more information on documentation required, including for committees involving the PGT, see Additional Resources – Trusts, Committeeships and Structured Settlements: Documentation Guidelines for Clients.]

Effective: December 1, 2015

Clients are required to report all trust changes and activity that may affect their eligibility on their monthly report. Clients are not required to regularly report trust balances. 

The ministry has the authority to ask for information regarding a trust at any time, and trustees must keep accounts and be prepared to produce documentation on request regarding activity in the trust. Each year the ministry needs all of the following information about a trust:

• how much money was disbursed from the trust to or on behalf of the client
• whether there were any changes to the trustees
• whether any new money was deposited to the trust

An updated legal opinion must be sought by the ministry through the Strategic Policy and Legislation Branch (SPLB) when a change in trustee or amendment to the terms of the trust is reported, before making an eligibility decision.

Effective: July 20, 2011

Exempt trusts held for clients with the persons with disabilities designation or persons in a private hospital or a special care facility (other than a drug or alcohol treatment centre) are subject to random annual audits. Audits will match reported trust activities with actual trust documentation to ensure accurate accounting of the trust.

Trustees holding exempt trusts for clients need to keep a record of all activity relating to the trust.

Effective: December 1, 2015

Income generated from return on investment within a trust can either be kept in the trust or paid out to the client, depending on how the trust is set up. 

While non-discretionary trusts have a maximum contribution limit, the value of the trust can exceed the contribution limit through return on investment. This means that the trust remains exempt regardless of whether the income generated in it brings the value of the trust over $200,000.  Income accrued in a trust is not considered to be a capital contribution.

For example, if a client sets up a non-discretionary trust with a $199,000 contribution and income generated on that amount brings the value of the trust to $210,000, the entire value of this trust would still be considered an exempt asset.

If the income is paid out to the client through a trust payment, it does not matter whether the payments are made from capital, income or mixed capital and income. The entire payment is from a trust, and therefore income attributable to the client [see Policy - Trust Payments].

Note on topping a trust back up: If a client contributes $200,000 (or their approved lifetime maximum) to a non-discretionary trust, draws down the value of the trust, and subsequently makes further contributions to it, the additional contribution is not exempt.  For example, a client withdraws $10,000 from their trust that they set up with $200,000.  After the $10,000 withdrawal, the client contributes $5,000 of fresh capital.  In this example, the $5,000 contribution is considered a non-exempt asset since the client has now contributed a total $205,000 to their trust – more than their lifetime maximum. 

Note that it is only “new” contributions to the trust that count toward the exemption limit in the calculation; if the trust earns income that is simply kept by the trust and accumulated as trust capital, such capital has not been “contributed” to the trust for the purpose of this calculation.   

Note on investment properties: Real property may be held within a trust.  If the trust owns the property, rental income the property generates is income to the trust, like any other investment income.  It is not a capital contribution nor is it the client’s income.  Assuming the trust is exempt, this income is exempt because it is income earned by the trust, not the client. If the income accumulates, it does not count as a capital contribution by the client.  

Effective: July 20, 2011

While not a common situation, a recipient/applicant can be a trustee of a trust where another person is the beneficiary.  (A client can also be a co-trustee of a trust where the client is the beneficiary.)

If a client is a trustee of a trust where another person is the beneficiary, the assets in the trust and income generated in the trust are not considered to be the client’s asset; however, a number of issues can still arise in this situation. A legal opinion must be sought by the ministry through the Strategic Policy and Legislation Branch (SPLB) in every case where the client claims they are a trustee, or otherwise claims to be holding property for the benefit of another person, before making an eligibility decision. 

Effective: July 20, 2011

Due to the legal complexity of trusts, the Strategic Policy and Legislation Branch (SPLB) must be consulted and provided with documentation in all cases.  This includes the case where a recipient/applicant claims a trust but it does not appear to meet the requirements; the ministry must nevertheless forward it for a legal opinion through SPLB.

 SPLB consults with lawyers at the Legal Services Branch of the Ministry of Attorney General (AG). After receiving legal advice from AG,  SPLB makes an eligibility decision and advises the field office.  The field office then provides a letter to the client advising of the decision and the basis for it.

Effective: December 1, 2015

• Recipient/applicant declares newly received income or assets that cause them to exceed their family unit’s general assets exemption, typically a lump sum of money or a property received or to be received or declares a trust  
• Staff determine if the asset will impact eligibility for assistance. Note that, for any managed investment portfolio, the EAW should ask for the set up documentation for the account to determine whether it may have been set up under a declaration of trust. If the document suggests that may be the case, the matter should be sent as a trust query at this stage, in order to be able to assess whether it will impact eligibility
• For those clients with the persons with disabilities (PWD) designation, clients residing in a private hospital or a special care facility (other than a drug or alcohol treatment centre) or those clients or applicants awaiting a PWD adjudication decision or completing a PWD Application form, staff must inform them of the trust program and the Registered Disability Savings Plan (RDSP) exemption and refer them to the “Disability Assistance and Trusts” booklet and Trusts, Committeeships and Structured Settlements: Documentation Guidelines for Clients [see Additional Resources]
• Staff document in the system the date the recipient/applicant was informed of the trust program and referred to the “Disability Assistance and Trusts” booklet [see Additional Resources]
• It is recommended the recipient/applicant get legal advice regarding their best course of action.  Although the EAW must advise of potentially available options, such as transferring money into a trust or RDSP, the EAW must not make a recommendation about what course of action the recipient/applicant should take [see Policy – Types of Trusts, and see Related Links – Assets & Exemptions]
• While staff must not provide legal advice to clients/applicants, staff must inform eligible clients/applicants of the following:
  • if the value of the asset is under $200,000 the asset can be transferred into a trust. Alternatively, the recipient/applicant may wish to spend the asset to purchase an exempt asset such as a primary place of residence or a vehicle. Placing money within an RDSP is also an option. While staff must advise of options, staff must also be clear that it is entirely up to the client whether they do any of these things, or pursue any other course of action. Staff cannot suggest any of these options as a preferential course of action, and the ministry can only make a decision based on what the client has decided to do. Staff should recommend that the client seek legal advice
  • if the value of the assets exceeds $200,000 the client should get legal advice, and they MAY be able to use a trust.  Placing money within an RDSP is also an option

Staff must not provide recommendations or advice regarding whether a trust or other personal arrangement is right for a recipient/applicant.  The ministry cannot give legal or investment advice to a recipient/applicant, and can only provide information regarding how an arrangement the client has already made affects their eligibility. A legal opinion must be sought by the ministry through the Strategic Policy and Legislation Branch (SPLB) if a trust is claimed by the client before an eligibility decision is made.

Effective: December 1, 2015

• Staff explain the following: 
  • If the recipient has a newly received asset that causes them to exceed the general asset exemption for their family unit, the recipient’s asset may make them ineligible. Among their options, if a recipient is eligible to do so, they may wish to consider the trust program or Registered Disability Savings Plan (RDSP), and should get legal and/or financial advice 
  • If taking advantage of the trust program, the recipient has three months to set up a trust or RDSP (with the first month being the month in which the income or asset is received). Assets will be considered income in the first month (subject to applicable exemptions), but will not be considered an asset during those three months. During that period, the ministry will exempt assets intended for the trust or RDSP that exceed the PWD asset limit [see Related Links - Assets & Exemptions]
• If an asset passes directly into a trust or RDSP and the recipient never receives the asset, then the asset is not considered income in the month received [see Policy – Transferring Income or Assets into a Trust]
• After three months eligibility is reassessed (recipient should be given a date upon which eligibility will be reassessed), based on whether a trust or RDSP was set up
• If a trust or RDSP is set up, the recipient remains eligible by policy, pending review of their trust by the ministry.  If there is a problem with the trust, the recipient will be advised, and any impact on eligibility will be from the date of being advised of a problem
• If a trust or RDSP is not set up, the recipient’s circumstances are reassessed before any further assistance is provided in the fourth month.  If the recipient provides documentation from a financial institution to prove they are making reasonable efforts to establish an RDSP or trust, and the delay is beyond their control, the exemption for the asset may be extended on a month-by-month basis.  The recipient must provide documentation each month for which an extension is requested. The exemption ceases to apply, if the ministry becomes aware of information that indicates that a recipient does not intend to contribute the asset or a portion of the asset to a trust or RDSP.

Example: 

A single PWD recipient receives a $200,000 inheritance.  It is considered exempt income in the month received, so the recipient remains eligible for assistance.  The recipient indicates that they intend to contribute the entire $200,000 to an RDSP but needs time to apply for the Disability Tax Credit and set up an RDSP. 

After two months, the RDSP is set up and the recipient contributes $60,000.  The recipient indicates to the ministry that they wish to keep the remaining funds in their bank account to purchase household items.  Since the ministry is now aware that the recipient does not intend to contribute all the funds to a trust or RDSP, the amount in the recipient’s bank account is no longer exempt and may impact the recipient’s eligibility. The recipient will remain eligible for assistance only if they are under the general asset limit for their family unit.

Effective: October 1, 2012

• Create a service request (SR) in the system Type: Ongoing Eligibility, Sub-Type: Trusts
• Attach all related documents to the SR and make any appropriate notes
• Profile the SR to office 0G4
• Notify the Strategic Policy and Legislation Branch (SPLB) of the trust query via email [see Contacts]

If a recipient/applicant faces a hardship during the review period, queries can be upgraded to a higher priority. In the comments section of the HR2999, note that the query is “urgent” and provide a brief justification for the priority review.

Note: SRs may remain open for several months awaiting legal opinion.

Trusts

• Gathers trust documentation from recipient/applicant which may include:
  • Trust document and documentation supporting that the trust property has been transferred from the settlor (the person who settles the assets in trust for the benefit of beneficiaries) to the trustee 
  • If the recipient/applicant advises there is no formal trust document, the worker should request from the client any documents relating to the trust, and a written description of the understanding between the client and trustee regarding the arrangement. If the client is unable to provide a written description, they can be accommodated by providing the information verbally to the worker, who will record the information in writing
• Completes Request for Trust Legal Opinion (HR2999) and forwards it with documentation to SPLB

Categorizing a Transfer of Income or Assets

• Gathers trust documentation from recipient/applicant 
• Completes Request for Trust Legal Opinion (HR2999) and in the comments portion notes that the query is “urgent” due to current eligibility concern; specifically notes a request for assistance in determining whether transfer of income or assets is income in the month received

Structured Settlements

• Gathers the settlement agreement, including the table of payments to be made to the person; documentation showing the ownership of the underlying annuity; any related court orders; and any other relevant documents from recipient/applicant
• Completes Request for Trust Legal Opinion (HR2999) and forwards it with documentation to SPLB

Lifetime Maximum Trust Contributions

• Requests to increase the lifetime maximum shown in Rate Table: Assets [see Rate Tables] should be forwarded to SPLB.  The client should submit relevant evidence and an explanation of the special circumstances and specific projected costs that will result in lifetime disability-related costs exceeding the lifetime maximum. Amounts contributed over the approved maximum will be considered an asset in excess and may result in ineligibility
• Staff should note in the comments that the query includes a request to increase the exemption. Requests to increase the exemption will not be processed unless the client has an approved non-discretionary trust on file (though staff can submit trust documents for initial review at the same time as a request for exemption, the request for exemption will not be reviewed until the legal opinion has been provided)
• Completes Request for Trust Legal Opinion (HR2999) and forwards it with documentation to SPLB

Committees

• A legal opinion must be sought by the ministry through SPLB to confirm the terms of a committeeship as well as to determine how the trust asset exemptions apply before making an eligibility decision
• Gathers a copy of the court order or certificate of incapacity creating the committeeship, documentation showing who holds title to the assets in question and, if there is an actual trust, documentation showing that the property is held in trust and confirming the terms of any trust arrangement Staff must confirm the status of the committeeship as well as determine how to apply the trust asset exemptions  
• The Public Guardian and Trustee (PGT), when acting as committee of the estate for a recipient/applicant, represents the client and is in no different position from any other personal representative. However, with regards to funds held in the PGT pooled trust, the ministry is satisfied with written confirmation of the value of assets they hold, rather than a financial statement
• Completes Request for Trust Legal Opinion (HR2999) and forwards it with documentation to SPLB

Assets Reported Late or Discovered by a Review or Investigation

Recipient/Applicant Currently Ineligible for Assistance

Includes the following situations:

• Applicant not yet a recipient of assistance
• Client found to be ineligible as a result of reporting assets over the asset limit at a later date or, following a review or investigation that has uncovered assets which were not reported, and has subsequently transferred these assets into a trust.
  
  Priority of Trust Query: 
   
  • Complete the comments portion of the Request for Trust Legal Opinion (HR2999) by indicating that the query is “urgent” and that the client continues to be ineligible for assistance until the trust has been reviewed and determined to be valid and an exempt asset.

Client Currently Eligible for Assistance

Note:  If an asset over the asset limit is held in trust and is reported at a later date or is not reported and is uncovered following a review or investigation, the client remains eligible for assistance and the trust should be immediately reviewed.

Priority of Trust Query:

• In the comments portion of the HR2999, note that the query is “urgent.”

Amended Trusts

Recipient/Applicant Currently Ineligible for Assistance

Includes the following situation:

• Client found to be ineligible as a result of the review of a trust, and has subsequently amended the terms of the trust.
  ​Priority of Trust Query: 
  • Complete the comments portion of the Request for Trust Legal Opinion (HR2999) by indicating that the query is “urgent” and the client remains ineligible for assistance until the trust has been reviewed and determined to be valid and an exempt asset.

Effective: July 20, 2011

• Acts as liaison between the Ministry of Attorney General (AG) and the field office for trusts and any follow up queries
• Sends requests for clarification, or notification that the query has been sent to AG  for review, to the field office and the EAW who initiated the request
• Enters comments in the system with the anticipated timeline for receiving a legal opinion
• Makes eligibility decision after considering the documentation provided, and  (AG)  legal opinion
• Emails the legal opinion provided by AG  to the field office and the EAW who initiated the request, and advises of the eligibility decision. The legal opinions are subject to solicitor-client privilege; in this context, the “client” refers to the Ministry of Social Development and Poverty Reduction and not a recipient of or applicant for assistance. As such, the documents cannot be released to anyone other than ministry personnel without the express written consent of lawyers at AG
  • SPLB provides a ministry decision letter for release to the client or committee

Effective: July 20, 2011

• Logs the details of the decision in the system
• Places a copy of the privileged legal opinion on the service request (SR); ensuring it is not released outside of the ministry without express written consent of lawyers at the Ministry of Attorney General
• Places a copy of the ministry decision letter for release to the client on the SR
• Informs the client of the ministry decision by providing the client with the ministry decision letter advising of the ministry decision and the basis for it
• For non-discretionary trusts and for collapsible discretionary trusts, enters the amount of the contributions to the trust to date in the non-discretionary trust total field on the Income (INC) screen [see System Instructions]
• If ministry decision results in ineligibility, explains the reasons for the denial and notifies the applicant of the decision.  Clearly indicates the client’s/applicant’s right to reconsideration and encloses a reconsideration and appeal brochure.  Sends copies of the decision letter to the client
• Notifies client of legislation about reporting, auditing, payments, contributions, changes, etc. [see Policy – Trust Reporting Requirements]

Effective: October 1, 2012

It is the responsibility of the client to advise the ministry of changes in circumstances, including trusts and changes to trusts – see s. 11 of the EAPWD Act, and s. 29 EAPWD Regulation for timing of trust report.