What is Bill 5?
On June 11, 2018, Bill 5 (An Act to Strengthen Financial Security for Persons with Disabilities, SA 2018 c12) was passed in the Alberta Legislature.
Bill 5 amended the Assured Income for the Severely Handicapped Act, adding a category of assets that would be exempt from eligibility calculations under the Alberta’s Assured Income for the Severely Handicapped (“AISH”) program.
What is the significance of Bill 5?
While estate planning for family members and dependants is not new in Alberta, estate plans with AISH recipients has, in the past, undoubtedly required special attention and strategic planning to determine how much, and in what format, gifts and inheritances should be transferred.
Under the old rules, assets held in trust for a recipient of AISH benefits were included in that individual’s asset calculations (this also included assets held in trust for a recipient’s spouse). This meant that being named as a beneficiary of a family trust or a testamentary trust could affect that individual’s AISH benefits eligibility, regardless of whether funds or assets were actually ever transferred to the individual. Henson trusts (a type of discretionary trust used commonly used for individuals who receive government disability benefits) were recognized as being excluded from asset calculation in a majority of provinces in Canada, except for Alberta.
Bill 5 amends the AISH legislation so that a dependant’s interest (or their spouse’s interest) in a trust as a beneficiary is excluded from the calculation of assets for determining AISH benefit eligibility. This is a welcome change for parents and family members who want to leave a gift or an inheritance to dependants without having to prematurely direct how and in what quantity the gift or inheritance is to take. While trust income that is actually paid to the individual is still counted towards their benefit eligibility, this change means that parents and family members can better incorporate and utilize Henson trusts in their estate plan for beneficiaries who are entitled to AISH benefits.
Does Bill 5 change my Estate Plan?
Ultimately, Bill 5 and the amended AISH legislation gives parents and family members more freedom to structure their estate plan in a way that allows the beneficiary to receive both AISH entitlements and an inheritance.
Whether Bill 5 affects your current plan will depend on what you currently have in place. As with all estate planning, it is a good idea to have a review at regular intervals, to ensure that the documents and structures still reflect your wishes, and to determine whether any changes in legislation or common-law otherwise affect your plan. If you have any questions about how the new legislation or common-law may change what you have in place, or know that your plan requires changes, our Wills & Estates department is happy to help.