The applicant sought a variation of an initial order requiring the assignment of one-half of a pre-retirement death benefit to Shelly Ann Marie Cotnam.
The variation was requested because the direct assignment of funds into an RRSP would cause Shelly to lose federal disability benefits and future Registered Disability Savings Plan (RDSP) grants.
The applicant proposed directing the funds back into the deceased's estate to be held in a Henson Trust.
The court agreed that the direct assignment would unfairly interfere with Shelly's benefits but was not prepared to impose a significant tax burden on the respondent for a gross sum payment.
The court ordered that the amounts should not be assigned directly to Shelly and suggested alternative methods, such as assignment to a designated trustee to manage funds to avoid benefit impact, or, if not possible, directing the net-of-tax monies to the existing Henson Trust or Shelly's RDSP to the extent of available space.
