Trusts

Summary

This practice describes how to leave money/property to beneficiaries with intellectual disabilities without them having to worry about the responsibility of looking after it in their lifetime.

Issue addressed

It addresses the issue of financial planning and property management for persons with intellectual disabilities, when the parents can and want to leave them assets.

Background information

CANADA –  designed to support extra costs incurred by people with disabilities (care, accommodation etc.).

UK – organisations, including Mencap UK, offer professional advice in the framework of UN CRPD.

Description of practice

A trust is a binding arrangement under which a person gives money or property ‘upon trust’ to another person or persons, who are known as ‘trustees’.
Trustees manage the assets of the trust, by investing the money or maintaining a property, make payments to beneficiaries and prepare accounts for the money and property and pay any tax that is due.
The money put in a trust is not taken into account with regards to state funding.

AUSTRALIA – trust must meet requirements through independent audits and annual financial statements having provided accommodation and care needs of the beneficiary. Beneficiary of trust must meet strict eligibility criteria (severe disability). Trustee able to pay for medical expenses (including for private health funds) and pay maintenance expenses of trust-property assets. $11,000 per financial year can be spent on non-care/accommodation related services (but must fit legislative requirements of a Special Disability Trust).

CANADA – can be held by more than one trustee who must be described in written agreement or will. Discretionary trusts give entire authority of expenditure and funds to trustee unless $200,000 of beneficiary’s previous finances are held by trust. Non-discretionary trusts allow some involvement of beneficiary. Any capital over $200,000 will be considered an asset by government and taxed accordingly. Set up by transferring property to be held by another person. Can also be set up in will to be activated after death. Breakdown of trust expenditure, income and items included in each must be declared to government to determine taxable and non-taxable items. Over $8,000 a year on independence-based costs will be deducted from disability assistance payments.

UK – legal arrangement requiring a ‘trustee’ to be made legally responsible for assets. Described as being used when someone ‘cannot handle their affairs as they are incapacitated’. Trustee takes full responsibility for trusts on a daily basis but must meet requirements of pre-arranged ‘trust deed’ (in this case for healthcare and support). Similar to Canadian case, discretionary and non-discretionary trusts can be arranged.

Analysis

Like for microboards, the trustees have control over the trust fund, not the person with intellectual disability. How the money will be spent is being decided by the person who sets up the fund. While we look critically at this model which is not fully in compliance with the principle of the CRPD and self-determination, it is an interesting mechanism for families who have assets. It can avoid a guardianship measure and the family can dedicate its finances and property to their son or daughter with intellectual disabilities.

The choice of trustees will of course be crucial in how the trustee will work with the person who need support.
Non-discretionary trust funds, such as the examples in Canada and the UK, allow for the person with an intellectual disability to have influence, albeit limited, over the way in which trust money is spent. The examples of strict guidelines on expenditure, particularly in Australia and Canada, offer protection to beneficiary but still do not offer control. In UK, organisations such as Mencap UK offer support for trusts for a beneficiary with an intellectual disability. The limit on expenditure on independence-based costs in Canada does not comply with the CRPD guidelines on legal capacity and autonomy. However, services offered, particularly by Mencap UK, facilitate independent living of the beneficiary.

We believe that trust funds can be a good mechanism to allow financial planning if the person is empowered and involved in the decision-making and control over his/her finances.

Further reading

You can read more on the following pages:

http://www.mencap.org.uk/what-we-do/wills-and-trusts
http://www.humanservices.gov.au/customer/services/centrelink/special-disability-trusts https://www.dss.gov.au/our-responsibilities/disability-and-carers/program-services/special-disability-trusts http://www.eia.gov.bc.ca/publicat/pdf/DisabilitiesTrusts.pdf

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