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Worried about the financial security and capacity of a loved one who has a mental illness?

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 mental illness

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 plans

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 | executorease@concentra.ca

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