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Posted by on Feb 2017 in All Stories, Member Support | 0 comments

Member support question: Inheritance

Question:

My tenant told me she was going to get an inheritance. Now she has told me that she’ll be getting $600 a month from it. Under the Housing Services Act, is this excluded or not?

Answer:

Whether or not it’s excluded depends on why it’s coming to her in monthly payments.  You will have to ask the tenant to provide more information.  Was the inheritance used to purchase an annuity?  Is it part of a trust?

If the tenant at any point received the inheritance in a lump sum, that lump sum amount would be excluded.  Money earned on the lump sum is included income unless the lump sum went entirely into an RRSP, which is also excluded.  So the following would be included income:

  • Earnings from investments
  • Income from a trust
  • Income from an annuity
  • Interest from a savings account

If your tenant is receiving income from a trust but has a disability, you should ask them for more information. Trust income derived from an inheritance or life insurance that is owned by a disabled person is exempt up to $100,000.  Money drawn from the trust for that person’s maintenance can be included in RGI calculations.  However, if the money is drawn for disability related items, education or training it is excluded.

 

Henson trusts, otherwise known as absolute discretion trusts are not legally an asset of the disabled person.  They are set up so that the trustee has absolute discretion over the funds.  The person for whom the trust is intended cannot dictate what they draw from the fund.  If the disabled person receives a payment from the trust, it may be treated as income unless it is intended for disability related items, education or training.

Generally the best way to find out the nature of your tenant’s $600/month income is to speak with them about it.  It could be coming to them in a number of different ways, most of which are included income.

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