1. What Does Alberta Law Say?

2. A Will Is the Foundation of the Estate Plan

3. Trusts May Provide Greater Protection

4. Choosing the Right Trustee

5. Government Benefits Should Be Considered

6. Estate Planning Should Reflect Changing Needs

7. How the Process Works

8. Common Mistakes

9. Costs and Considerations

10. When Should You Speak With an Estate Lawyer?

11. How Bridgestone Law Can Help

Introduction

Estate planning is about more than deciding who will inherit your assets, it is also about ensuring your loved ones are protected long after you are gone. When a beneficiary has a disability, thoughtful estate planning becomes especially important because a simple gift or inheritance may have unintended legal or financial consequences. A carefully structured estate plan can help provide long-term financial security while preserving the beneficiary's quality of life and access to important supports.

Many families assume they can simply leave assets directly to a child or other loved one with a disability through their will. In some situations, however, a direct inheritance may affect the beneficiary's eligibility for certain government assistance programs or place the responsibility of managing significant assets on someone who may require ongoing support. As a result, estate planning for beneficiaries with disabilities often involves additional considerations beyond a standard will.

Depending on the family's circumstances, planning strategies may include discretionary trusts, such as a Henson trust, carefully drafted wills, beneficiary designations, powers of attorney, and personal directives. The appropriate approach will depend on the beneficiary's individual needs, the family's financial circumstances, and the long-term objectives of the estate plan.

Understanding the unique legal and practical issues involved in planning for a beneficiary with a disability can help families make informed decisions, reduce the likelihood of future disputes, and ensure that financial support is available in a way that protects both the beneficiary's interests and the legacy you wish to leave.

What Does Alberta Law Say?

In Alberta, individuals generally have the freedom to decide who will inherit their estate and how their assets will be distributed. However, when a beneficiary has a disability, careful estate planning is often necessary to ensure that an inheritance provides long-term financial security without creating unintended consequences.

A direct gift is not always the best solution. Depending on the beneficiary's circumstances, receiving assets outright may affect their ability to manage those assets independently or impact eligibility for certain government assistance programs. For this reason, many families consider additional planning strategies designed to protect both the beneficiary and the inheritance.

A Will Is the Foundation of the Estate Plan

A properly drafted will allows you to decide:

• who will inherit your assets;

• how and when beneficiaries will receive their inheritance;

• who will act as executor;

• whether a trust should be established; and

• who will manage assets held for a beneficiary.

For beneficiaries with disabilities, a carefully drafted will often includes provisions specifically designed to address their long-term needs.

Trusts May Provide Greater Protection

In many situations, leaving assets in a trust rather than directly to the beneficiary may provide greater flexibility and protection.

Depending on the family's circumstances, a trust may:

• provide ongoing financial support;

• allow assets to be professionally managed;

• protect vulnerable beneficiaries;

• preserve flexibility in making distributions; and

• help coordinate with available government benefit programs.

One commonly discussed planning tool in Alberta is a Henson trust, which is a fully discretionary trust designed, in appropriate circumstances, to help preserve a beneficiary's eligibility for certain disability-related government benefits while still providing financial support. Whether a Henson trust is appropriate depends on the individual's circumstances and should be considered with legal advice.

Choosing the Right Trustee

If a trust is established, selecting the trustee is one of the most important decisions in the estate planning process.

A trustee may be responsible for:

• managing investments;

• making discretionary distributions;

• maintaining financial records;

• acting in the beneficiary's best interests;

• complying with the terms of the trust; and

• administering the trust over many years.

The trustee should be someone who is trustworthy, financially responsible, and capable of managing the ongoing responsibilities involved.

Government Benefits Should Be Considered

Many individuals with disabilities receive financial assistance or support through provincial or federal programs.

Because eligibility rules may vary depending on the program and individual circumstances, estate planning should consider how an inheritance could affect those benefits.

Carefully structured planning may help maximize the long-term support available to the beneficiary while avoiding unintended consequences.

Estate Planning Should Reflect Changing Needs

The needs of a beneficiary with a disability may change over time.

An estate plan should be reviewed regularly following significant life events, including:

• changes in health or care requirements;

• changes to government benefit programs;

• changes in family circumstances;

• significant increases or decreases in wealth;

• the death or incapacity of a trustee or executor; or

• changes in Alberta law.

Regular reviews help ensure that the estate plan continues to meet the beneficiary's needs and reflects the family's long-term objectives.

Because every beneficiary's circumstances are unique, estate planning for a person with a disability should be tailored to their individual needs. A carefully prepared estate plan can provide financial security, protect vulnerable beneficiaries, reduce the risk of future disputes, and help ensure that your wishes are carried out in the most effective way possible.

How the Process Works

Step 1: Assess the Beneficiary's Needs

The first step is understanding the beneficiary's current and future circumstances.

Every person's needs are different, and estate planning should take into account factors such as:

• their level of independence;

• current and anticipated care needs;

• financial management abilities;

• eligibility for government assistance programs;

• housing arrangements; and

• long-term support requirements.

This assessment helps determine the most appropriate estate planning strategy.

Step 2: Review Your Existing Estate Plan

Once the beneficiary's needs have been identified, your existing estate planning documents should be reviewed.

This typically includes:

• your will;

• beneficiary designations;

• existing trusts;

• powers of attorney;

• personal directives; and

• ownership of significant assets.

Many standard estate plans do not adequately address the unique considerations involved in providing for a beneficiary with a disability.

Step 3: Develop an Appropriate Planning Strategy

Working with an estate planning lawyer, you can develop a strategy that reflects both your family's goals and the beneficiary's long-term needs.

Depending on the circumstances, this may include:

• preparing a new will;

• establishing a discretionary trust, such as a Henson trust where appropriate;

• appointing suitable trustees;

• updating beneficiary designations;

• coordinating registered plans and insurance proceeds; or

• reviewing tax and financial planning considerations.

Rather than relying on a single planning tool, a coordinated estate plan is often the most effective approach.

Step 4: Select the Right Trustee

If a trust is created, choosing the trustee is one of the most important decisions.

The trustee may be responsible for:

• managing trust investments;

• making discretionary payments;

• maintaining financial records;

• communicating with the beneficiary and family members;

• complying with the terms of the trust; and

• administering the trust over many years.

Many families choose someone who understands the beneficiary's needs and is capable of responsibly managing complex financial and legal obligations.

Step 5: Review the Plan Regularly

Estate planning for a beneficiary with a disability should evolve as circumstances change.

Regular reviews are recommended following events such as:

• changes in the beneficiary's health or care requirements;

• amendments to government benefit programs;

• changes in family relationships;

• significant changes in wealth;

• the appointment or retirement of trustees; or

• changes in Alberta law.

Periodic reviews help ensure the estate plan continues to provide the intended protection and financial security.

Practical Examples

Example One: Establishing a Henson Trust

Lisa wants to leave a substantial inheritance to her adult son, who has a developmental disability and receives disability-related government benefits.

Rather than leaving the inheritance directly to him, Lisa works with her estate planning lawyer to establish a properly drafted Henson trust. A trusted family member is appointed as trustee to manage the funds and make discretionary distributions based on her son's needs.

This approach helps provide long-term financial support while taking into account the rules governing government assistance.

Example Two: Updating an Outdated Estate Plan

David prepared his will many years before his daughter was diagnosed with a permanent disability.

After reviewing his estate plan, he updates his will, appoints an appropriate trustee, and restructures his estate planning documents to better reflect his daughter's future care and financial needs.

By planning proactively, David helps ensure his estate will continue supporting his daughter well into the future.

Example Three: Planning for Long-Term Care

Maria and her husband are concerned about who will manage their son's inheritance if both parents pass away.

Working with an estate planning lawyer, they establish a trust, appoint experienced trustees, and create a coordinated estate plan that addresses both financial management and long-term care considerations.

As a result, their estate plan provides greater certainty for their son while reducing the likelihood of future family disagreements or court involvement.

Common Mistakes

Leaving an Inheritance Directly to the Beneficiary

One of the most common estate planning mistakes is leaving assets directly to a beneficiary with a disability without considering the long-term consequences.

Depending on the individual's circumstances, a direct inheritance may:

• affect eligibility for certain government assistance programs;

• require the beneficiary to manage significant assets independently; or

• expose the inheritance to unnecessary financial risks.

For many families, a carefully structured trust may provide greater flexibility and protection.

Failing to Review Government Benefit Implications

Many people are unaware that an inheritance may affect eligibility for certain disability-related government programs.

Because eligibility rules can change and vary depending on the individual's circumstances, estate planning should take these considerations into account before finalizing a will or trust.

Obtaining legal advice can help ensure the estate plan supports the beneficiary without creating unintended consequences.

Choosing the Wrong Trustee

Selecting a trustee based solely on family relationships rather than ability is another common mistake.

A trustee may be responsible for administering a trust for many years, making financial decisions, maintaining records, and acting in the beneficiary's best interests.

The trustee should be someone who is:

• trustworthy;

• financially responsible;

• organized;

• willing to serve; and

• capable of managing long-term legal and financial responsibilities.

Failing to Update the Estate Plan

Estate planning should evolve as circumstances change.

Families sometimes prepare an estate plan when a child is young and never revisit it despite significant changes in:

• the beneficiary's health;

• government benefit programs;

• family relationships;

• financial circumstances; or

• applicable laws.

Regular reviews help ensure the estate plan continues to meet the beneficiary's needs.

Assuming a Standard Will Is Sufficient

A standard will may not adequately address the unique needs of a beneficiary with a disability.

Additional planning tools, such as discretionary trusts, carefully selected trustees, updated beneficiary designations, and coordinated financial planning, may be necessary to achieve the family's objectives.

Comprehensive planning often provides greater protection than relying on a single document.

Costs and Considerations

Estate planning for a beneficiary with a disability is often more detailed than a standard estate plan because it involves balancing long-term financial security with the beneficiary's personal needs and, where applicable, consideration of government benefit programs.

Depending on your circumstances, costs may include:

• preparing or updating a will;

• establishing a discretionary trust, such as a Henson trust where appropriate;

• drafting trustee provisions;

• updating beneficiary designations;

• reviewing powers of attorney and personal directives;

• obtaining tax or financial planning advice where appropriate; and

• ongoing trust administration after death.

The complexity of the estate plan will often depend on:

• the beneficiary's support needs;

• the value and nature of the estate;

• whether government assistance programs are involved;

• the anticipated duration of the trust;

• the number of beneficiaries; and

• the family's long-term planning objectives.

Although specialized estate planning may involve additional legal costs, it can help protect vulnerable beneficiaries, reduce the likelihood of future disputes, and provide greater confidence that your wishes will be carried out effectively.

When Should You Speak With an Estate Lawyer?

Professional legal advice may be particularly valuable if:

• you have a child or other loved one with a disability;

• you are considering establishing a Henson trust;

• you want to preserve eligibility for disability-related government benefits;

• you need to appoint a trustee for a long-term trust;

• your existing will does not address a beneficiary's disability;

• your family or financial circumstances have changed; or

• you have not reviewed your estate plan in several years.

An experienced estate planning lawyer can help you develop a strategy that protects your beneficiary, coordinates your estate planning documents, and reflects your family's long-term goals.

How Bridgestone Law Can Help

Planning for a beneficiary with a disability requires thoughtful legal advice and a long-term perspective. A carefully prepared estate plan can provide financial security, protect vulnerable beneficiaries, and help preserve access to important government benefits where appropriate. By coordinating wills, trusts, beneficiary designations, and other estate planning tools, families can create a plan that reflects their wishes while supporting their loved one's future needs.

Bridgestone Law assists individuals and families throughout Calgary and Alberta with wills, trusts, Henson trusts, estate planning, probate, and estate administration. Whether you are planning for a child with a disability, updating an existing estate plan, or exploring the benefits of a discretionary trust, our experienced estate planning lawyers can provide practical guidance tailored to your family's unique circumstances.