Lawson Lundell LLP
June 25th, 2025
A Costly Gift: What the Damgaard Case Teaches Us About Estate Planning for a Loved One With a Disability
For families with a loved one receiving disability assistance, an inheritance can have unintended and damaging consequences. A well-intentioned gift can disrupt eligibility for essential government benefits, often outweighing any short-term financial gain. Just as important, the courts may be unwilling to correct these outcomes after the fact.
The recent BC Supreme Court decision in Damgaard v. Damgaard Estate, underscores the importance of careful, proactive estate planning where a beneficiary is receiving disability assistance as a Person with Disabilities (PWD).
The Damgaard Case: Equal Shares, Unequal Outcomes
In Damgaard, the testator divided her estate, valued at approximately $5.4 million, equally among her three adult children under her Will. One of her daughters who had PWD status resided in social housing and relied on disability assistance, stood to lose those supports following her outright inheritance, though the Court noted it was not definitively established that she would lose her housing supports.
She brought a wills variation claim under section 60 of the Wills, Estates and Succession Act (WESA). Importantly, her challenge was not about the amount she received, which was the same as her siblings, but rather about the manner in which it was provided. She argued that an outright gift, rather than a discretionary Henson Trust, did not make adequate provision for her maintenance and support given her disability and resulting loss of benefits.
The Court dismissed the claim, noting several factors: (1) she received an equal share; (2) the inheritance was substantial; (3) the evidence that she would necessarily lose housing or supports was limited; and (4) the testator did not breach her moral obligations to her daughter at the time of her death.
Families planning for a loved one with PWD status must act strategically to avoid unintentionally jeopardizing essential supports.
The Damgaard decision is a stark reminder that the court will not rewrite a Will to shield a beneficiary from harmful consequences stemming from poor structuring, unless it amounts to a failure to meet the testator’s legal and moral obligations to the claimant.
