Investment Executive
By James Langton
February 12th, 2025
Court rules against woman who sought to have $1.8-million inheritance placed in fully discretionary trust to avoid losing disability benefits
A British Columbia court has ruled against a woman who sought to revise her mother’s will to have her $1.8-million inheritance placed into a discretionary trust, in an effort to preserve her disability benefits. The Supreme Court of B.C. denied an application from Kathryn Elizabeth Damgaard that sought to vary her mother’s will, which shared her estate equally between her three children, with each to receive at least $1.8 million.
According to the court’s decision, Damgaard — who is unable to work, lives in social housing, and relies on disability benefits to fund her living expenses — asked the court to vary her mother’s will to put her share of the estate into a fully discretionary trust, known as a Henson trust, in order to preserve her access to disability benefits and social housing.
“If I receive a direct distribution from my mother’s estate, it will jeopardize my disability benefits and my eligibility for social housing,” court filings on her behalf noted. By putting those assets into a trust — which would give trustees absolute discretion over the distribution of the trust’s assets, meaning that her interest in those assets is considered to be zero — she sought to preserve her eligibility for benefits.
The court said that to grant an application to vary a will, it must be satisfied that the will didn’t “make adequate provision for the maintenance or support” of the beneficiary.
In this case, Damgaard argued that, “by failing to put her interest into a Henson trust to preserve her benefits, the deceased did not make adequate provision for her maintenance and support.” The court said that, while there’s no question that the deceased could have required that her disabled daughter’s inheritance be placed into a Henson trust, “the question is whether she breached her moral obligation by not doing so.”
