March 13, 2024

Author: Christina Hassan

Estate planning is a vital process for everyone, but it takes on added significance when you have loved ones with disabilities or special needs. Creating a comprehensive plan that addresses their unique circumstances is crucial for ensuring their long-term financial security and well-being. Below are some considerations and strategies for estate planning for individuals with special needs dependents.

Navigating Challenges: Special Needs Estate Planning in Alberta

Caring for a loved one with disabilities or special needs in Alberta comes with its own set of challenges. From accessing specialized medical care to navigating government benefit programs like Assured Income for the Severely Handicapped (AISH) or Persons with Developmental Disabilities (PDD) or Registered Disability Savings Plans (RDSP), or the Disability Tax Credit (DTC), there are numerous factors to consider when planning for their future. Additionally, individuals with special needs may require ongoing support services, housing accommodations, and financial assistance to maintain their quality of life.

Key Components of a Special Needs Estate Plan:

1. A Henson Trust: Also known as a special needs trust or a lifetime discretionary trust, a Henson Trust is drafted into your Will.  It is a critical tool for protecting assets while ensuring that your loved one remains eligible for government benefits. Funds held in the trust can be used to supplement their needs without jeopardizing their eligibility for assistance programs like AISH.
2. Choosing the Right Trustee: Selecting a trustee is one of the most important decisions to make when setting up a Henson Trust. This individual or corporate trustee will be responsible for managing the trust and making distributions on behalf of your loved one. Consider someone who understands the unique needs of your dependent and can fulfill the trustee’s duties with care and diligence.
3. Letter of Intent: A letter of intent provides valuable guidance to caregivers and trustees about your loved one’s care preferences, routines, and personal history. While not legally binding, this document can help ensure continuity of care and support for your dependent.
4. Guardianship and Trusteeship Applications: Depending on the severity of your loved one’s disabilities, you may need to apply for guardianship and trusteeship through the Court of Kings Bench of Alberta. These legal arrangements grant you the authority to make decisions on behalf of your dependent related to personal matters (guardianship) and financial affairs (trusteeship). These applications also allow you to name alternate Guardians and Trustees, allowing a smooth transition of care should you be unable to care for your loved one.
5. Beneficiary Designations: Review and update beneficiary designations on retirement accounts, life insurance policies, and other assets to ensure they align with your estate plan. Naming your Estate as the beneficiary will ensure that all funds make up a part of your Will. This ensures that every gift given to your dependant will flow into the Henson Trust in your Will which helps avoid unintended consequences and preserves eligibility for government benefits.

Additional Considerations: Beneficiary Designations, Taxes, and Regular Updates

Tax Planning: Consider the tax implications of your estate plan, including any potential rollovers that may affect the distribution of assets to your dependent.

Regular Reviews and Updates: Estate planning is not a one-time event. Regularly review and update your plan to reflect changes in your loved one’s needs, your financial situation, and relevant laws or regulations.

The Importance of Consulting with an Estate Planning Lawyer for Special Needs Dependents

Estate planning for individuals with special needs dependents requires careful consideration and specialized expertise. Take the time to consult with an experienced estate planning lawyer who can help you navigate the complexities of planning for the future of your special needs dependent. Proper planning creates peace of mind knowing that your loved one’s needs will be met, and their quality of life preserved.