Under the Employment and Assistance for Persons With Disabilities Regulation, B.C. Reg. 265/2002 (Regulations), a disabled person’s eligibility for government disability assistance (Eligibility) is dependent on several factors, including the assets they hold, their income, their receipt of cash gifts, and the expenditure of trust money held on their behalf. On December 1st, 2015, changes to the Regulations came into force, making it significantly easier for individuals with persons with disabilities (PWD) designation in British Columbia to receive financial support from their families and other sources without putting their Eligibility at risk.
The Old Regulatory Framework
Previously, an individual in British Columbia receiving disability assistance could only hold $5,000 of non-exempt assets ($10,000 for a couple where both persons have PWD designation) before losing their Eligibility under the Regulations (Asset Limits). Furthermore, only one time cash gifts were exempt from income for an individual with PWD designation in determining their Eligibility. This meant families could not provide regular payments to a person with PWD designation to assist them with their expenses, without potentially jeopardizing the person’s Eligibility.
With low Asset Limits and only one-time cash gifts permitted, it was very difficult for persons with disabilities to receive financial support from their families or other sources while continuing to receive government disability benefits. For estate planning purposes, these restrictions meant that the only way a person could leave any kind of substantial gift to a person with PWD designation without impacting their Eligibility was through the creation of a trust. However, even the support that could be provided through non-discretionary trusts was limited, as there is a lifetime cap of $200,000 that could be contributed to non-discretionary trusts for the person with PWD designation and only $8,000 could be spent annually on costs to promote a disabled person’s independence from a non-discretionary trust. As a whole, the previous regulatory framework meant that families of persons with PWD designation had to choose between financially supporting their disabled family member and ensuring that the disabled person’s Eligibility remained intact.
The New Regulations
Under the new Regulations, the Asset Limits in British Columbia have been raised to $100,000 for individuals with PWD designation and to $200,000 for couples where both individuals have PWD designation, and the restrictions on receiving cash gifts have been removed. This means that persons with disabilities can receive financial support throughout their lifetimes and receive smaller inheritance gifts outright without any impact on their Eligibility. Further, although the $200,000 lifetime cap on non-discretionary trusts for persons with PWD designation was kept in the new Regulations, the $8,000 cap on annual spending for independence-promoting costs from non-discretionary trusts has been eliminated in British Columbia. These changes make it significantly easier for families to support their disabled family members both in life and in death, and eliminate barriers to the financial stability of persons with disabilities throughout the province.
It should be noted, however, that even with increased Asset Limits, the creation of trusts may still be necessary to preserve a disabled person’s Eligibility. For instance, if an inheritance gift will be large enough that the person with PWD designation receiving the gift will have assets that exceed the Asset Limit, then a gift of up to $200,000 could be made in a non-discretionary trust. Furthermore, if an inheritance gift will be large enough to exceed the Asset Limits and the $200,000 non-discretionary trust limit, then a testator should consider creating a completely discretionary trust, often referred to as a “Henson trust”, in order to preserve the person with PWD designation’s Eligibility.
The author would like to thank Vancouver student-at-law, Emily McClintock, for her significant contributions to this article.