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Sunday, May 12, 2019

Henson trusts upheld by the Supreme Court of Canada

For a number of years, we lawyers have been using a specific type of trust known as a "Henson trust" when doing estate planning that involves a disabled adult.

A Henson trust is a fully discretionary trust. In other words, the person for whom the money is held does not have the legal right to demand anything from the trust. The trustee has full control over when - and, most importantly, IF - any funds are paid from the trust to the beneficiary. This type of trust is key because a disabled person who receives provincial government disability benefits will not be cut off from those benefits because of the Henson trust. Most other types of trusts would result in the person losing those benefits.

You can see how this could be problematic for the disabled person and extremely stressful for the parents of that disabled person who are trying to ensure the future care of their child. Most provinces have quite low thresholds for assets and will not provide benefits to anyone whose assets exceed those limits. This isn't a problem if you have millions of dollars to leave your child; you know his or her needs will be met without the provincial benefits. But most of us aren't in that situation.

Let's say, for example, that Betty is a disabled adult. She is allowed to own $10,000 before losing her support benefits. Her parents pass away and leave her $75,000. Betty now has more than the limit so she loses her benefits. She's allowed to own a home without losing benefits, but her inheritance isn't enough for that. She lives on her $75,000 until it is gone. Then what? Now Betty has to re-apply and re-qualify for the benefits. This could mean a gap in her income until benefits are approved, and if she does not have an adult guardian to replace her deceased parents, this could be very difficult.

If the same $75,000 had been held in a Henson Trust, the funds could have lasted for years, supplying Betty with everything from new winter boots to haircuts to more help around the house.

Recently there has been some good news about Henson trusts. They have finally been considered by the Supreme Court of Canada and upheld as being valid trusts that do not interfere with provincial benefits. This will come as a relief to parents who have set up these trusts in their wills but who worry that one day the trust might be challenged and fall apart. Now we have one less thing to worry about.

To read a recent story about this in the Globe and Mail, click here. To read the Supreme Court of Canada case itself (S.A. vs. Metro Vancouver Housing Corp), click here.

Tuesday, May 7, 2019

Free Wills Month 2019

It's that time of year again. It's Free Wills Month, an event sponsored by the Canadian Cancer Society. We are participating again this time around. Last year we did more than 40 free wills for folks over 55 who would have found it difficult to pay for wills, even though they have a house or other asset to pass on. It's our way of supporting the important work done by this charity, and of giving back to our community.

This event happens across the country, so check your local papers for ads in your area.

Tuesday, April 30, 2019

The rise of grey divorce and disinheritance

I've just read a really interesting and informative article on that discusses the fact that a lot of people in their "grey" years are re-marrying. Many do so without giving any consideration to their children's inheritance and how their re-marriage might affect that. This article gives a list of solid tips for things individuals can do - or at least think about - before re-marrying. It's also a good list to read if one of your parents is re-marrying. Click here to read it.

Thursday, April 25, 2019

Being right doesn't matter if you can't prove it

In my latest post on the Mensa Canada blog, I discussed why I always refer to a "legal system" and not a "justice system". My theory is that it matters what we call it, because talking about a "justice system" makes people think that good always wins over bad. Talking about a "legal system" makes it clear that it's not about who is good or bad, but about what evidence exists. Check it out here. You don't have to be a member to read the blog.

Wednesday, April 17, 2019

Long-hidden Kafka works could emerge after decade-long legal battle over estate

I've come across an article about the estate of the German author, Franz Kafka, that is as bizarre as Kafka's own stories. I remember being fascinated by "The Trial" by Kafka years ago and thinking that real life legal cases could never be as strange. Perhaps I was wrong.

This is a real-life tale of executors who didn't do anything they were supposed to do and who were affected by world events no less than World War II. Kafka asked his executor, Max Brod, to burn any works he left behind, but instead Brod published at least 3 of the works (including "The Trial").  A few years later, Brod fled Germany for Israel when the Nazis took over, and smuggled out several of Kafka's unpublished works.

When Brod died, he left Kafka's works in the hands of Esther Hoffe with instructions to transfer them to an academic institution. Hoffe was no better at following instructions than Brod had been. Hoffe kept the papers hidden for 40 years, except for the ones she sold for literally millions of dollars. When Hoffe died in 2008, she left the papers to her two children. The children have since passed away and Hoffe's grandchildren are trying to keep the collection.

There is a battle, not surprisingly, over the ownership of the papers, the contents of which are unknown. The government seized the collection, saying that they are cultural assets. It's important to remember that when Brod published Kafka's novels, Kafka became a hugely influential voice. His books were all about "everyman" characters who became embroiled in bizarre or baffling legal processes. There is speculation as to whether the stash of papers contains unseen novels or endings to some existing works that are currently unfinished. When you consider that a German literature archive paid $1,800,000 for the manuscript of "The Trial", you start to see how much money is at stake.

A court in Zurich, Switzerland, has ruled that the contents of the boxes holding the collection may now be opened and the contents shipped to the Israeli National Library.

Is the world better off because Kafka's executor ignored his instructions? Yes, I think so. But nobody could say that the estate or the beneficiaries are better off.

To read a more in-depth article at the Globe and Mail about this battle, click here.

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