On April 25, 2018, the Supreme Court of Canada heard a case that asks whether money held in a trust affects eligibility for social programs, even if the recipient cannot access that money. In this case, a person referred to as “S.A.” was denied a rent subsidy in Vancouver social housing because of inheritance monies that are held in trust.
Why this case is important
These kinds of trusts play a very important role for low-income persons with disabilities. They allow family members to make arrangements to ensure that after their death, their loved ones with disabilities will be supported while at the same time maintaining access to much needed social services and housing.
HALCO and the Income Security Advocacy Centre (ISAC) intervened as a coalition to try to make sure the Court’s decision does not have a negative impact on people who rely on social programs in Ontario.
In Ontario, a social assistance recipient who inherits money may still be eligible for financial support depending on the social assistance asset-related rules.
When money is in a Henson trust, which is a type of absolute discretionary trust, the person in charge of the trust (the “trustee”) has control over when, how and if the money is paid out to the recipient. If money is paid to the social assistance recipient, it may be counted as “income” and deducted from their benefits at that time. (Some money paid out is exempt as income; for more information about this and other social assistance issues, please visit the Income Security section of our website: www.halco.org/areas-of-law/income-security) But any money still in the trust is not considered an “asset” because the recipient has no right to demand payment from it and therefore has no certain access to it. The trustee plays an important role in making sure that the recipient does not lose the important supports they get from government programs.
S.A.’s trust and what the Supreme Court must decide
In S.A.’s case, the Vancouver social housing program wanted to treat the inheritance as an asset even though it was being held in an absolute discretionary trust. When S.A. refused to provide information about the value of the trust, her application to re-new her rent subsidy was denied. The Supreme Court will have to decide whether a social program can treat an “absolute discretionary trust” as an asset, which may affect the way Henson trusts are treated by social assistance programs in Ontario and elsewhere.
The HALCO/ISAC Coalition argued that Henson trusts should not be considered an asset and access to social assistance must be preserved. To read our legal argument, click here: www.halco.org/wp-content/uploads/2018/05/Trusts-SCCFactum2018Apr.pdf.
We express our appreciation and thanks to Ewa Krajewska, Borden Ladner Gervais LLP, for co-counselling with us on this matter.