The purpose of this column is NOT to advise people on their legal affairs or concerns, but to provide basic information for discussion with their own legal counsel.
Written by Ruth Magnusson, Lawyer, Straith and Company
Following is a discussion of 3 common questions raised by caregivers of adult dependants. Caregivers may include spouses, children, parents, or any person caring for an adult.
1.Who will take care of the adult after I am gone?
Unfortunately, the law does not permit testators to appoint legal guardians for dependents 19 or older regardless of degree of mental incapacity or dependency. A testator may, in a will, express his or her wishes for the care of an adult, but such wishes are not legally binding. A caregiver can sometimes make prior, contractual arrangements to place the dependant adult with a care facility, or with relatives or another family. Or, the caregiver could arrange for committeeship to be assumed by another individual, or if necessary, by the Public Guardian and Trustee of British Columbia, under the Patients Property Act of B.C. These suggestions would, of course, be accomplished outside the will, but would be part of overall testamentary planning.
2.Who will manage the adult’s money after I am gone?
Money to be gifted can be set up to be held in trust. One or more trustees will be named in a will to manage funds which may be used to purchase food, lodging, clothing, medical care and equipment, etc. Trustees need to be competent and conscientious people, for they are discharging a very important trust. If the adult already has money or assets in his or her name and no one other than the testator has power of attorney, it may be necessary to arrange for a court appointed committee to manage funds.
3.Will a gift in my will affect the adult’s disability benefits?
In B.C. disabled persons may receive a pension from the government if they meet certain criteria. These include limits on the value of assets owned by him or her. Generally, a person cannot have more than $3,000 in savings. Also, income received by a person in any month may reduce, or eliminate, the pension payment for that particular month. To ensure the assets of an adult do not exceed the specified limit, it has been common for many years for testators to set up a “discretionary trust”. The adult is a beneficiary of the trust. The adult does not have the right to spend funds held in a discretionary trust. Whether or not money will be spent depends entirely upon the discretion of the trustee. Because of this, the money in trust is not considered an “asset”.
About four years ago B.C. amended its rules to provide that a “non-discretionary” trust of up to $100,000.00 may be also held for a pension recipient without being counted as an “asset”. Certain payments from both discretionary and non-discretionary trusts are considered “exempt”, in that they will not be counted as income to disqualify the recipient from monthly pension benefits. Other payments are not exempt, and must be planned carefully so they are not counted as income. Both discretionary and non-discretionary trusts can be set up in a will. These are called “testamentary” trusts and receive preferential tax treatment over trusts set up during a caregiver’s lifetime.
This review has been very brief. There may be other problems, and other solutions, not covered here. Please see an experienced lawyer if you need to plan for the care of a dependent adult.
By Ruth Magnusson, Legal Considerations in Caregiving in “Network News”, Vol. 14, No. 6, March 2001