Thursday, September 28, 2006

Disability Trust Fund

Frank’s going to be getting a tidy sum of cash soon – or will he?

He received a letter from a lawyer in Ontario informing him that in a few months he will receive a cheque for about $20,000 from the estate of his old Uncle Donald, who passed away earlier this year.

That’s more money than Frank’s ever had at one time, so naturally he’s pretty excited. But he’s also a little worried.

“You see,” he says, “I’m on disability income assistance, and my financial worker says that when I get the money I’ll be bumped off assistance because I’ll have too much in assets to qualify.”

Since Frank has chronic fatigue syndrome and is legally blind, his employment prospects are extremely limited, so he would have to use the inheritance money to live on. Assuming that he lives on the same budget as he does now, the money will be gone in about two years. Then he’ll have to apply to go on income assistance again, according to his financial worker. When Frank thinks about it, he figures the net result is the same as if he never got an inheritance at all. “It’s like the government just takes the money! Uncle Donald never would have wanted that!”

Frank called the estate lawyer, who couldn’t help him, but suggested that he call legal aid here in B.C. Frank called Legal Aid’s general number, and the receptionist gave him the LawLINE number.

So, is his financial worker right? Can they bump him off income assistance?

“Yes,” I say, “they can and they will. But there may be a way to avoid that and still get the benefit of your inheritance. Tell me, Frank, are you getting benefits under the ‘persons with disabilities’ class, or the lower, ‘persons with persistent multiple barriers’ class?”

“Persons with disabilities,” he says.

“In that case,” I say “I have a solution for you. It’s called a ‘disability trust.’”

I explain that a “trust” is a legal arrangement in which legal control of money or other property is given to one or more “trustees” who must use the money or property for purposes that benefit one or more ”beneficiaries.” Frank can set up a trust with the inheritance money, which then can be used for certain education, medical and care expenses, and various other things that promote his independence. All this while still receiving monthly income assistance.

However, I caution him, the rules and procedures that must be followed to set up and run a trust are too complicated for me to explain over the phone. I recommend that he see a lawyer that specializes in trusts. How can he afford to hire a lawyer? Simple. The legal fees can come out of the inheritance money.

To find a lawyer, he can ask family and friends for recommendations, check the phone book, or use the Canadian Bar Association’s lawyer referral service. To use the referral service, he simply contacts them at a toll-free number, tells them he wants to see a trusts lawyer, and they will give him the name and contact information for one or more trust lawyers in his area with whom he can make an appointment. The charge is $25 for a half an hour meeting. At the end of the meeting, he can hire the lawyer or not, as he chooses.

Finally, I advise him to get started on this right away so that the disability trust is ready when the inheritance money comes, and there is no interruption of his income assistance payments.

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