Fact checked by Wills, Probate and Estate Lawyer Tim Louis

For many British Columbians living with a disability, estate planning feels like a separate issue from managing disability benefits. In reality, the two are tightly connected — and when they’re not planned together, families can face painful and expensive surprises.

An inheritance set up the wrong way can cause someone to lose access to provincial or long-term disability benefits. A trust drafted without the right language can leave loved ones unprotected. Even a simple oversight in a will may put years of financial security at risk.

That’s why it’s so important to understand how estate planning with disability in BC works in practice. At Tim Louis & Company, we have decades of experience helping clients protect disability benefits while also securing their legacy. By bridging disability law and estate planning, two areas of law that are rarely addressed together, we give families peace of mind and practical strategies that hold up when they’re needed most.

This article explains how disability trusts in BC, wills, and probate rules interact with LTD benefits and government supports. Our goal is to help you see the risks, understand your options, and take steps that protect both your benefits and your estate.

Why Estate Planning Is Different with Disability

Estate planning takes on an extra layer of complexity when a beneficiary receives disability benefits. Not all programs treat inheritances the same way:

• Persons with Disabilities (PWD) benefits are asset-tested. If a beneficiary inherits money outright, they may lose eligibility because their assets now exceed the allowable limit.
• CPP Disability (CPP-D) and private Long-Term Disability (LTD) are not asset-tested. An inheritance itself will not disqualify someone from these programs. However, if the inheritance generates ongoing income — such as bank interest, dividends, or rental income — that income may be counted and could reduce monthly benefits.

This distinction is why families often turn to Henson Trusts and other planning tools. These trusts ensure that inheritances are structured in a way that protects PWD eligibility and avoids unintended reductions in CPP-D or LTD payments.

Key Challenges Families Face

Families planning for a loved one with a disability face several challenges:

• Protecting PWD eligibility: Even a modest inheritance left outright can cause a beneficiary to lose PWD benefits because of strict asset limits.
• Avoiding CPP-D and LTD reductions: While inheritances themselves do not affect eligibility, the income they generate (interest, dividends, rental proceeds) may reduce payments. Structuring assets through a trust can prevent these unintended consequences.
• Managing long-term financial security: Beyond eligibility, families must also ensure that assets are managed responsibly, disputes are minimized, and the beneficiary’s dignity and independence are preserved.

By addressing these challenges in advance, families can safeguard both financial stability and benefit continuity for their loved ones.

Learn more on our Long-Term Disability Service Page.

Strategies for Protecting Disability Benefits in Estate Planning

The good news is that with the right planning, families in BC can protect disability benefits while also ensuring a secure estate plan. Some of the most effective strategies include:

1. Prescribed Disability Trusts (PDTs) and Discretionary Trusts
   By placing assets into a PDT or discretionary trust, families can ensure a disabled beneficiary inherits without losing access to benefits. These trusts are specifically designed to preserve eligibility for PWD, CPP-D, and LTD benefits while still providing flexibility and financial stability.
2. Naming Alternate Trustees
   A common mistake in estate planning is naming only one trustee without a backup. For families with a disabled beneficiary, naming alternate trustees provides continuity and prevents situations where a trust is left unmanaged.
3. Coordinating LTD Settlements
   If a person is receiving a long-term disability settlement, it’s critical to align that settlement with estate planning. Without coordination, a settlement might be treated as income or improperly distributed through a will, jeopardizing benefit eligibility.
4. Case Law Anchors

• Fidler v. Sun Life (2006 SCC 30): Canada’s Supreme Court confirmed that invisible illnesses like chronic fatigue and fibromyalgia qualify for disability benefits. This precedent reinforces the importance of protecting LTD settlements in estate planning.
• BC Human Rights Tribunal rulings: Employers and institutions have a duty to accommodate disability-related needs — a principle that extends to protecting vulnerable beneficiaries in estate contexts.

Intersection of Probate and Disability

For people living with disabilities, probate is rarely just “paperwork.” It can spill directly into day-to-day life, influencing income, housing, and even peace of mind.

Probate delays create more than inconvenience — they can feel like financial limbo. A disabled heir waiting months for court approval may suddenly struggle with medication costs, rent deadlines, or supportive care. One client described it as “living on pause, wondering each week if the funds you counted on will actually arrive.”

Family disputes around wills add another layer of risk. Arguments over trusts, guardianship, or allocations often escalate into estate litigation. For disabled heirs, these conflicts can mean further delays and uncertainty, stretching out what was supposed to be a straightforward transition of support.

The psychological stress of probate is also profound. Beneficiaries already coping with chronic illness or disability may find the uncertainty overwhelming — anxiety builds when financial stability depends on court timelines outside their control. This is why proactive estate planning matters: it shields disabled heirs from unnecessary conflict and delay.

Learn more about how our team helps families navigate these challenges: Probate Services

Evidence Families Need to Prepare

When disability and estate planning overlap, the strongest protection comes from strong documentation. Families in BC should begin gathering:

• Disability Benefit Documents
  Copies of PWD approvals, CPP-D decisions, and LTD insurance policies. These form the foundation of demonstrating ongoing eligibility and financial reliance.
• Medical Reports
  Physician, specialist, and psychological assessments confirming the nature of the disability. Courts and trustees alike rely on medical clarity when interpreting obligations.
• Symptom Journals
  Especially for invisible illnesses like chronic pain, fatigue, or depression, daily records provide real-world evidence of how a condition affects everyday life.
• Trustee Statements / Family Agreements
  Written agreements or letters of intent help ensure everyone — from trustees to family members — understands the plan and will respect the beneficiary’s needs.