On Friday, January 25, 2019, the Supreme Court of Canada released a very important decision for:

1. people with disabilities who have or will inherit money;
2. people who are leaving money to people with disabilities; and
3. housing providers which calculate rent subsidies.

In a decision referred to as S.A. v. Metro Vancouver Housing, the Supreme Court decided that the money left for SA in a Henson Trust is not considered an asset for the purposes of determining eligibility for Metro Vancouver Housing Corporation (MVHC) rental subsidy.

SA is a long‑term tenant of MVHC.  She is unable to work because of a disability; instead, she receives benefits from the BC assistance plan equivalent to the Ontario Disability Support Plan (ODSP).  SA also receives a housing subsidy.

In 2012, SA’s father died and left her share of the will in something called a Henson Trust.

What is a Henson Trust?  A Henson Trust is usually used by parents of a disabled person make sure that after they die, their child will not be cut off from disability benefits because they have too much money.  The money is left in a Henson Trust with trustees who decide how the money is used.  That is, if you are the beneficiary of a Henson Trust, the trustees, not you, have absolute discretion about how to use the money that’s been left to you.

SA’s Henson Trust was controlled by two co‑trustees: SA and her sister.  The terms for the Henson Trust said that the co‑trustees have the discretion to pay as much of the money in the trust to SA as they together “decide is necessary or advisable for the care, maintenance, education, or benefit of [SA]”.  Among other things, the trust document also said that if anything remains in the Trust when SA dies, that amount is to pass to whomever SA decided in her will and that if she failed to say in a will who should inherit it, it would go to whomever would get her estate if she had no will.

As with any housing provider determining subsidy, MVHC requires SA to disclose her assets each year to make sure she is eligible.  On the form SA said she didn’t have assets greater than $25,000 that would affect her eligibility for housing subsidy because it was in a trust.  MVHC asked for more information which she declined to give and so they moved her to market rent.

SA took her landlord to the Supreme Court of BC which agreed that she should have to disclose details of the trust.  She appealed that decision to the BC Court of Appeal which ruled that the Henson trust should be considered SA’s asset for determining subsidy.

In Friday’s decision, the Supreme Court said that because SA is “unable to compel the Trustees to make any distributions to her or for her benefit, and is prevented from unilaterally collapsing the Trust …, S.A.’s interest in the Trust is entirely contingent upon the exercise of the Trustees’ discretion. …. [T]his interest is therefore not something she can use to pay the monthly rent that she owes MVHC…” (see para 49 of the decision).  The judges did not see the fact that she is a co‑trustee as relevant since she could not act alone but would have to do so with the other trustee.  (see para 54 of the decision)

The court cautions us against concluding that the money in a Henson Trust will never be considered as an asset.  “The eligibility criteria associated with any social assistance program must be analyzed on their own terms to determine whether and, if so, how an interest in a Henson trust factors into any applicable means test.” (see para 55 of the decision)

If you have a question about how to construct a will to best protect someone in your life who needs support, please contact us.

And if you don’t have a will, we can help you too!

Filed in: Housing

Tags: Disabilities, Henson trusts, Rent subsidy, Supreme Court of Canada