Creating a will crucial for parents of child with disability

By Patricia MacInnis, AdvocateDaily.com Senior Editor

Many people avoid making a will not solely due to procrastination but from a morbid aversion that, in doing so, there’s a sense they’re one step closer to acknowledging their own mortality, says Ottawa estate planning and disabilities lawyer Kenneth Pope.

That prospect can be especially daunting for parents who have a child with a disability, says Pope, founder and principal of K. C. Pope Law.

“Dying without having a will in place can be very untidy because it leads to an intestacy, inheritance by succession law, inheritance subject to matrimonial claims or spousal priority interest, so it’s much better to have a will,” he tells AdvocateDaily.com. “Not having one will likely involve a probate application, as well as probate and legal fees, which can be very expensive.”

The Canadian Press reports that more than half of all Canadians haven’t made a will and that many people have misconceptions about how their estate will be distributed in such a scenario.

More alarming, says Pope, is the fact that very few parents of a child with special needs have Henson Trust provisions in their wills, something that will serve to protect the child’s share of the inheritance.

“Of those who do have some kind of trust arrangement, often the distribution of the residue of the trust is cloudy or open to argument. About half are simple, but correct Henson Trusts, which we typically find have small flaws such as no younger/similar age-alternate trustee or a clause allowing the first trustee the power to replace themselves later.”

If the surviving parent dies intestate, the children inherit everything directly by succession law, but there can be complications in settling the estate, depending on its size and complexity, Pope says.

“If a child with disabilities is a minor, all minor inheritances are paid into the court and managed by the Office of the Children’s Lawyer until the child turns 18 — at which point they are paid out entirely to the new adult,” he says. “If the person is not competent, then the money sits there until someone applies to become their legal guardian. If it is paid out in a lump sum when the person with disabilities turns 18, it can equally be at risk in the hands of the ‘competent’ young adult.”

In cases where there is a surviving parent, that person will have a preferred spousal claim ($200,000) or a division of the matrimonial assets claim (half) on an intestacy, and the remainder would be divided among the parent and the children equally, Pope says.

“If there is no will and obviously no Henson Trust for the special needs child, the inheritance stands to disentitle the child from Ontario Disability Support Program (ODSP) benefits,” he says. “If there is a will and a direct inheritance to the child with special needs, the same result occurs.

“This is a common occurrence in my practice — we get that call several times a week. I’ve had clients contact me with the initial distribution cheque in their back pocket. They know it will disqualify them from receiving benefits, but they don’t know what to do. Loss of benefits also includes loss of drug coverage,” Pope says.

More often these days, he says he’s encountering intestacies with larger estates.

“It may be that the only major asset is their home, but that house is quite valuable. Ten years ago, the property was worth much less than at the time of death,” so they may not have thought of going through the trouble to create a will.

Pope says sometimes the person dies intestate because they couldn’t think of an appropriate executor, but once they’re gone, someone has to come forward to settle the estate.

“If it’s a small estate, will an executor’s fee of five per cent be enough to motivate someone to step into the breach? Logically it would be one or more of the heirs, but if that’s the case, why weren’t they appointed in a will? Does it mean that the estate goes to more distant cousins outside of Canada, that there’s no Canadian family? This can be a very awkward situation,” he says.

— with files from The Canadian Press

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