Worried about the financial security and capacity of a loved
one who has a mental illness?
An honest conversation with your trust professional or estate lawyer
can put your mind at ease.
May 29, 2020
Having a mental illness may or may
not impede a person’s ability to manage their finances and their life. If your
loved one needs support to manage their affairs, Concentra Trust can help.
According to the Canadian Institute for Health Information, “Each year, 1 in
5 Canadians experiences a mental health concern, making it a leading cause of
disability in Canada.” Whether it is yourself, a colleague, friend or family
member, Canadians regularly come face to face with mental illnesses affecting an
individual’s mental health.
Many articles have been written about potential estate and incapacity
planning solutions that may be available to support individuals encountering
cognitive impairment issues involving dementia. What is less discussed are the
somewhat parallel estate, trust and substitute decision-making options that may
be available to those who experience intermittent vulnerabilities and capacity
concerns stemming from mental illnesses such as schizophrenia, anxiety or
depression. Concentra Trust can offer extensive experience as executor, trustee
and attorney to support a diverse range of circumstances where a loved one or
family member experiences a mental illness. Our estate and trust specialists
welcome the opportunity to speak with you about your unique situation and offer
options to consider.
The severity and permanence of the
Depending on the situation, the estate plan may require flexibility.
Having a mental illness may or may not impede an individual’s ability to
manage their finances. Notwithstanding, some possible estate planning
options to consider may include a power of attorney or trust.
A power of attorney for property can be drafted such that it acts as a
complementary tool for certain circumstances where additional supports would be
helpful. An illustration may be where symptoms are presenting to an extent where
it is impeding an individual’s ability to complete daily activities such as
paying bills, managing a budget, or monitoring investments.
Establishing a trust to hold and protect assets may also be an option to
consider. If a trust is included in the plan, perhaps the terms and conditions
can be crafted so there is sufficient flexibility for the trustee to terminate
the trust if the beneficiary becomes capable of managing their finances without
undue influence from others.
If the situation or symptoms increase in severity and permanence, and a trust
has been established, it may raise the question of whether the individual may
become eligible for the Disability Tax Credit (“DTC”) or provincial social
benefits. If certain conditions are satisfied, it may be possible the trust will
be characterized as a disability trust, referred to as an absolute discretion or
Henson trust. If the individual is eligible for the DTC, the trust may elect to
be a Qualified Disability Trust that will have graduated tax rates rather than
being taxed at the highest marginal tax rate.
Selecting an appropriate trustee will ensure that any provincial asset and
income restrictions and CRA income tax elections are adhered to. Concentra Trust
has significant practical knowledge and is well positioned to help you navigate
through these issues.
Creating estate and incapacity
Although there may be some common overlapping concerns and they may draw from
a similar range of estate planning solutions, mental illnesses may also differ
from neurodegenerative diseases, such as dementia, in terms of whether an
individual may have the legal capacity to develop their own estate and
incapacity plan. Being diagnosed with a mental illness or dementia, depending on
the stage, does not preclude an individual from executing a Will, trust
agreement, power of attorney or a health or personal directive if the estate
lawyer determines he has sufficient capacity. This is, however, a complex and
nuanced topic, which should be discussed with the drafting lawyer to determine
the appropriate options and processes to consider.
It is also important to recognize that an individual’s mental health is
affected by more than their illness or diagnosis. Having a comprehensive estate
and incapacity plan can go a long way in reassuring an individual that
assistance and support will be there when he needs it, thus reducing uncertainty
about the future. Not only can having a plan help on the financial front, it can
be a critical component that contributes to improving an individual’s mental
well-being. Concentra Trust has the experience to work with you and your
professional advisors to develop a customized estate and incapacity plan, which
is tailored to your particular circumstances and priorities.
Concentra Trust, a national trust company, has been serving clients,
corporations and communities for more than 65 years with tailored estate and
trust solutions designed to preserve and transition wealth to future
generations. We are well versed in navigating the intricacies of estate planning
and administration and our experts have the skill to support all aspects of the
process. Given our passion for trust governance, our unbiased advice and
guidance, and our inclusive leadership culture and co-operative values, we
provide exceptional client service.
For more information, contact:
1.800.788.6311 | firstname.lastname@example.org