AISH Financial Thresholds - Henson Trust Lawyer

Neufeld Legal P.C. can be reached by telephone at 403-400-4092 or email Chris@NeufeldLegal.com

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With such an important support program as Alberta's Assured Income for the Severely Handicapped (AISH), it's income-testing and asset-testing processes for qualification (or disqualification) is a key concern for a parent with a disabled child, to avoid disqualification from AISH through the improper transference of one's inheritence (a portion thereof) to that particular disabled beneficiary. As such, it is important for those parents and grandparents to properly consider the estate planning strategies and legal instruments that would enable those individuals to continue receiving much needed benefits and support for the remainder of their life, while not exceeding the financial thresholds (income and assets) established for qualifying for AISH:

Income-Testing from AISH

AISH looks at the income the disabled individual and their spouse or partner have when considering financial eligibility. This information is typically what’s reported on their income tax and their spouse or partner’s income tax forms. While the disabled beneficiary must report all sources of household income, some income types are exempt and won’t affect their monthly benefit amount, others may be partially exempt or not exempt. If income is partially or not exempt, that amount will be subtracted from the AISH monthly living allowance. The disabled beneficiary's personal situation will determine if they get the full monthly allowance or a reduced payment.

Exempt Income

Some income is exempt – this means it is not counted. Exempt income does not affect the disabled beneficiary's AISH monthly living allowance. It includes:

  • cash gifts

  • income tax refunds

  • income for the benefit of a dependent child under

    • a child support agreement

    • the Child, Youth and Family Enhancement Act

  • benefits their spouse or partner receives through AISH or the Alberta Seniors and Housing Ministry

  • Registered Disability Savings Plan (RDSP) payments

  • Registered Retirement Savings Plan (RRSP) payments

  • funding for education at a school or educational institute that is recognized under the Income Tax Act (Canada), such as:

    • a scholarship

    • a bursary

    • Educational Assistance Payments (EAPs) paid to a beneficiary under a Registered Education Savings Plan (RESP)

    • an employment insurance grant for education or training

    • a grant to start a business

    • an artist grant

  • an award or prize for an outstanding academic or community achievement

  • honoraria

  • death benefits

  • money for home repairs or renovations from the Government of Canada, Government of Alberta or from a community service organization

  • money from rent supplement programs provided by the Government of Alberta or by an organization that administers rent subsidies on behalf of the provincial government such as the Capital Region Housing Corporation and Calgary Housing Company

  • an income exemption amount on money received for a one-time cost of living increase from the Government of Canada

Non-Exempt Income

Some income is non-exempt – this means it is counted at full value when determining AISH benefits. Non-exempt income is subtracted dollar-for-dollar from the disabled beneficiary's AISH monthly living allowance. It includes the disabled beneficiary's income from:

  • spousal support payments

  • Canada Pension Plan Disability benefit (CPP-D)

  • Canada Pension Plan Retirement pension (CPP-R)

  • Canada Pension Plan Survivor’s pension (CPP-S)

  • Canada Pension Plan children’s benefits

  • Employment Insurance (EI) income

  • Old Age Security allowance for Survivor (OAS-S)

  • regular or lump-sum payments from previous employment pension programs such as military pensions, provincial pension plans, retirement compensation arrangements, etc.

  • Treaty Indian pension income

  • pension-related annuities

  • sponsorship value (the amount of support an immigrant’s sponsor provides)

  • Workers’ Compensation Board (WCB) benefits

Partially Exempt Income

Some income is partially exempt – this means it is counted at part of its value when determining AISH benefits. Partially exempt income may affect the amount of AISH monthly living allowance the disabled beneficiary gets. It includes:

  • income paid to the disabled beneficiary by their employer, such as:

    • wages

    • a retirement allowance

    • a training allowance

    • commission

    • awards or prizes for employment achievement

    • deferred profit sharing

    • long-term disability where their employer pays the disabled beneficiary premiums

    • northern living allowance

    • severance pay

    • sheltered workshop income

    • Treaty Indian employment income

    • business or commission income

  • self-employment income from:

    • the disabled individual's business

    • working as a designated professional, such as an accountant, doctor, engineer, etc.

    • commissions

    • farming

    • fishing

  • passive business income from:

    • interest

    • dividends

    • capital gains

    • investments

    • a trust

    • rental income

    • mineral or oil royalties

    • land lease for oil exploration

    • a limited or non-active partnership

  • income the disabled individual's spouse or partner receives from:

    • spousal support payments

    • Alberta Seniors Benefit

    • Canada Pension Plan Disability benefit (CPP-D)

    • Canada Pension Plan Retirement pension (CPP-R)

    • Canada Pension Plan Survivor’s pension (CPP-S)

    • Canada Pension Plan children’s benefits

    • Employment Insurance (EI) benefits

    • Old Age Security allowance (OAS)

    • Old Age Security allowance for Survivor (OAS-S)

    • Guaranteed Income Supplement (GIS)

    • regular or lump-sum payments from previous employment pension programs like military pensions, provincial pension plans, retirement compensation arrangements, etc.

    • Treaty Indian pension income

    • pension-related annuities

    • sponsorship value (the amount of support an immigrant’s sponsor provides)

    • Workers’ Compensation Board (WCB) benefits

Single and Family Income Exemptions

AISH uses single and family income exemption amounts to determine how much AISH living allowance the disabled beneficiary will get when they and their spouse or partner have income from employment, self-employment, passive business and/or pension income. The single income exemption amounts are for:

  • a single applicant or AISH client.

  • a couple, with no dependent children, who are both eligible for AISH.

In this case each partner or spouse receives the single exemption. The family exemption amounts are for:

  • a single applicant or AISH client with dependent children.

  • a couple, with or without dependent children, when only one spouse or partner is eligible for AISH. In this case the income of each partner or spouse is combined and the couple or family receives the familyexemption.

  • a couple, with dependent children, who are both eligible for AISH. In this case one spouse or partner receives the family exemption and one receives the single exemption. The exemption given to each spouse or partner is determined so the family receives the maximum AISH living allowance.

Employment and AISH

AISH recipients are encouraged to work as much as they are able. AISH looks at all the income the disabled individual and their spouse or partner have and subtract allowable Canada revenue agency employment deductions like CPP and EI. Then, depending on the disabled beneficiary's situation, AISH will figure out how much AISH living allowance the disabled beneficiary will get by using either the single income exemption amounts or the family income exemption amounts. There are three steps to figure out your AISH monthly living allowance:

  • Step 1. Use the single or family income exemption amounts that apply to the disabled beneficiary's situation to figure out their income exemption amount.

  • Step 2. Subtract the disabled beneficiary's income exemption amount from their monthly take home pay after deductions.

  • Step 3. Subtract the amount the disabled beneficiary gets in Step 2 from the maximum AISH monthly living allowance to get their AISH monthly living allowance.

Asset-Testing from AISH

Assets are items of value like cash, investments, property and vehicles that the disabled beneficiary or their spouse or partner have. AISH looks at the assets the disabled beneficiary and their spouse or partner have when determining if they are eligible for AISH. AISH does not consider assets their parents or dependent children have. All assets must be reported to AISH. Some may affect the disabled beneficiary's eligibility for AISH benefits and others may not. The disabled beneficiary needs to provide documents that show the current value of their assets, such as:

  • bank statements

  • property assessments

  • quarterly statements

  • income tax returns

  • annual financial statements

  • trust documents

Exempt Assets

Some assets are exempt – this means they are not counted. Exempt assets do not affect the disabled beneficiary's eligibility for AISH benefits. They include:

  • the main home or quarter section where the disabled beneficiary lives, or where their spouse or partner, or dependent children live if the disabled beneficiary is in a health care facility or institution

  • a main vehicle that is not used for recreational purposes

  • a vehicle adapted for a disability that either the disabled beneficiary, their spouse or partner, or dependent children have

  • a Locked-in Retirement Account (LIRA)

  • a Locked-in Retirement Income Fund (LRIF)

  • a Life Income Fund (LIF)

  • a Registered Disability Savings Plan (RDSP)

  • clothing

  • reasonable household items

  • a pre-paid funeral

  • a trust

  • assets held by a trustee in a bankruptcy proceeding

  • a non-commutable annuity purchased on or before February 1, 2002

  • money received from specific Government of Canada or Government of Alberta payments, or assets purchased with that money (note: Interest earned on this money is not exempt)

Non-Exempt Assets

Some assets as non-exempt – this means they are counted. Non-exempt assets affect the disabled beneficiary's eligibility for AISH benefits. The total market value of all the non-exempt assets cannot be worth more than $100,000 when added together in order for the disabled beneficiary to be eligible for AISH. If the disabled beneficiary or their spouse or partner have a written agreement showing outstanding debt on an exempt asset, AISH will reduce the market value of that asset by the amount of debt they owe. Non-exempt assets include:

  • chequing or savings accounts

  • cash and uncashed cheques

  • Guaranteed Investment Certificates (GICs)

  • term deposits

  • Registered Retirement Income Funds (RRIFs)

  • annuities

  • Registered Education Savings Plans (RESPs)

  • Tax-free Savings Accounts (TFSAs)

  • stocks

  • bonds such as Canada Savings Bonds, other government bonds, strip bonds and corporate bonds

  • mutual funds

  • cash value of life insurance

  • shares

  • a loan owed to the disabled beneficiary or their spouse

  • business or farm assets to earn an income such as:

    • a commercial farm

    • business property such as a shop, vehicles and equipment/span>

    • farm land, buildings, crops, livestock, machinery, vehicles and equipment

    • a home-based business

    • rental property

  • a recreational property or home

  • recreational vehicles

Temporary asset exemption

When the disabled beneficiary receives money that AISH does not consider income, the disabled beneficiary has 365 days to invest it in an exempt asset listed above or it will be counted as a non-exempt asset. This money may include:

  • an inheritance

  • a gift

  • funds from selling the main home or quarter section where the disabled beneficiary lived and that AISH already considered exempt

  • funds from selling the disabled beneficiary's main or adapted vehicle that AISH already considered exempt

  • funds from an insurance pay-out to cover damages to, or loss of, the disabled beneficiary's main home or vehicle that AISH already considered exempt

One of the more prominent estate planning strategies when there are disabled children or grandchildren is the Henson Trust, which is utilized to provide financially for a person with an ongoing physical or mental disability, whether during your lifetime or after your death, given the planning considerations that must be taken to ensure that the person’s entitlement to Alberta disability related income support and other benefits are not inadvertently jeopardized. Alberta's disability related income support programs and benefits are income and asset tested, meaning that individuals cannot own certain assets or earn or receive income in excess of specified amounts. If these income and asset thresholds are exceeded, the person may be disqualified or ineligible to receive income support and other benefits until the excess assets are depleted, hence the need for appropriate legal planning arrangements, such as a Henson Trust.

A Henson Trust is a trust (most frequently forming part of a parent's or grandparent's Will) that provides the trustees with the absolute discretion to distribute income and capital from the trust to the beneficiary as they see fit. The trustees have full control as to when, if and how much income or capital is to be paid to the beneficiary. The beneficiary of a Henson Trust has no vested interest in the income or capital of the trust. This means that they cannot claim or demand payments from the trust and, consequently, they are not considered to own the trust assets. Henson Trusts are subject to provincial legislation and regulations.

A Henson Trust can be set up as an inter vivos trust (established during your lifetime) or as a testamentary trust (established on death under the terms of your Will). A Henson Trust must be planned in advance as it cannot be settled by the beneficiary. There is no limit on the amount of assets that can be settled into or contributed to a Henson Trust. There may, however, be limits with regards to the distributions that can be made from a Henson Trust to the disabled beneficiary without affecting the beneficiary’s eligibility for income support and benefits. The usefulness of a Henson Trust may therefore be limited by provincial regulations which restrict the distributions that a beneficiary can receive from a Henson Trust without impacting the beneficiary’s income support .

Contact our law firm today to learn how our legal team can help you plan for the future or deal with the legal demands associated with the passing of a loved one. Contact our law firm at 403-400-4092 or via email at Chris@NeufeldLegal.com to schedule a confidential initial consultation.


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