Disability Trusts

In British Columbia, a person in receipt of disability benefits under the Employment and Assistance for Persons with Disabilities Act may lose all or some of their entitlement to funding when they inherit assets, receive settlements or awards from lawsuits or obtain funds from other sources. One method of maintaining benefits entitlement is to place such funds into a trust.

Under the Act, a recipient may place up to $100,000 in a non-discretionary trust. This type of trust allows the recipient to act as his or her own trustee. Benefits will not be lost so long as the recipient adheres to the strict guidelines for use of these funds as set out in the Act.

If a recipient under the Act becomes entitled to more than $100,000, a discretionary trust can be established. The recipient cannot be the trustee of this type of trust and the trustee will have full discretion as to when assets will be paid to the beneficiary and in what amounts. Payments must still be made in accordance with the strict guidelines set out in the Act.

There is no clear legislative provision allowing funds to be passed to a trust simply to avoid being viewed as personal assets of the disability benefits recipient. However, this practice has been widely accepted by the Ministry responsible for administering the Act, under certain circumstances. Therefore, legal advice is critical if you are about to receive an inheritance or settle a lawsuit.

Structuring the receipt and transfer of funds properly can mean the difference between maintaining benefits entitlement and having monthly subsidies cut or withdrawn altogether.