Liquid assets comprise everything owned by an adult or a family in MONEY or in an equivalent form, and the value of the ASSETS that the adult or family can convert into money in the SHORT TERM. If a liquid asset can be converted only in the long term, it is considered in the aggregate value of property.
However, the following are not considered liquid assets:
- Qualifying shares for becoming a member of a co-operative.
These amounts are required for becoming a member of a co-operative and a member cannot withdraw them until he or she decides to end membership in the co-operative (for example, a common share, called a “qualifying share”, needed to open an account in a caisse populaire, workers’ or producers’ co-operative, housing co-operative, etc.). The qualifying share of a caisse populaire amounts to $5 per account. The amount of shares exceeding $5, or 10 $ for a joint account. The amount of these shares which exceed these amounts is included in the liquid assets. Some co-operatives REQUIRE that their members buy preferred shares; in these cases, since the preferred shares are the qualifying shares, they are not considered to be liquid assets;
- Invested funds arising from a trust.
The Civil Code of Quebec provides that the patrimony of a trust is autonomous, separate from that of the trustee, the constituent or the beneficiary (e.g. sums deposited in a differed profit sharing plan, DPSP, before they become payable).
- The amount of employment-insurance received at the end of the month and paid for the following month.
- The amount cumulated in a separate account for the payment of municipal taxes, when this obligation is recorded in the mortgage agreement or when the financial institution certifies that the client cannot use this amount for other ends.
- The capital accumulated by a client, if this amount is the result of sums he received for operating a shelter, a foster home or a group home, if he is equally held to the costs associated with his responsibilities.
The officer observes that a recipient in charge of a foster home (3 sheltered persons) is assisted as a single adult with an allowance for temporary limited capacity for employment, owns, on March 31, liquid assets amounting to $3000. Questioned on the origin of this capital, the recipient declares to the officer that the major portion of this allowance originates from the MSSS and states it.
Unless we can demonstrate that these liquid assets originate from another source, the officer will need to acknowledge that the recipient owns liquid assets not exceeding $1500 as it is possible that the major portion of this capital does not arise from savings made from the employment assistance benefit.
In addition to what is owned in cash or in an equivalent form, liquid assets comprise:
FUNDS THAT A FINANCIAL INSTITUTION HOLDS ON DEPOSIT:
This refers to current or savings accounts, deposits normally with a term of 30 days or that may be called before their due date, although there may be a penalty, if the beneficiary can FREELY DISPOSE of the funds.
The monies deposited in a current or savings account are DEEMED TO BELONG to the holder of the account. In the case of joint accounts, the total amount deposited in the account is taken into consideration for each account holder if each of them can freely dispose of the entire amount.
Where the deposit originates from a conditional donation or a succession in which a term is specified in which to deliver the assets, the monies thus "frozen" are not considered liquid assets until the condition has been fulfilled or the term for delivery has expired. These amounts are not considered to belong to the beneficiary since he or she cannot dispose of them freely until the condition has been fulfilled OR the term has expired (for example, an individual inherits $100,000 at 18, but the will specifies that he cannot receive the money until he turns 20. The person applies for assistance at 19. This money is not considered liquid assets until the person turns 20 and can freely dispose of the money).
A term deposit, regardless of its term, is considered to be a liquid asset if the deposit is MADE OR RENEWED when the recipient has been admitted to a last resort financial assistance program.
This also applies to a deposit made before applying for assistance in such a way as to make the adult or family eligible for that program.
SECURITIES THAT CAN BE CONVERTED INTO CASH AT ANY TIME:
A security is any certificate, title or other document attesting to an interest in the capital, assets, earnings or profits of a business corporation (company) and the bonds, notes, debentures, shares and shares or bonds issued by a municipal or school corporation, a Crown corporation or a government.
The liquidity of these securities lies in the fact that they can be CONVERTED INTO CASH AT ANY TIME (government savings bonds are probably the most common situation) on the market where they are listed (market on which they are traded, for example, capital stock in the mutual insurance group).
DEBTS REPAYABLE IMMEDIATELY
- This refers to any sum of money that an adult or family may require someone else to pay under a judgment, contract or legal obligation, the AMOUNT OF WHICH IS DETERMINED.
- However, the debt must be liquid and payable, that is, the AMOUNT must be KNOWN and the TERM must have EXPIRED. The beneficiary must be able to obtain repayment immediately.
- Often, the existence of an obligation is known, but it is not LIQUIDATED, that is, the amount remains to be determined. That amount will become certain when a court has ruled on it.
- On the other hand, a debt the amount of which is known may be DISPUTED by the debtor; such a dispute means that it is not liquid. Obviously, the dispute must be established by the existence of legal proceedings.
- A debt that is not repayable is considered a property.
ANY ASSETS NEGOTIABLE AT SIGHT:
These include any cheque or promissory note or any other bill or security that obliges a person to PAY TO THE BEARER, on presentation, a sum of money that is determined or may be determined. With the exception of cheques, this type of asset is not normally in common use by individuals; rather, it is used primarily in certain types of commercial transactions.
CAPITALIZED ANNUITIES
CAPITALIZED ANNUITIES, regardless of their origin, are also considered liquid assets (income replacement benefit from the SAAQ, pension from the CSST, etc.).
DEMUTUALIZATION INCOME
In 1999, the Insurance Companies Act was amended to allow mutual life insurance companies to demutualize, i.e. convert into companies with common shares. Demutualization namely implies the reallocation of the mutual’s accrued benefits to policyholders. Benefits are in the form of either a one time lump sum cash payment or shares in the new stock company. Policyholders can select either option.
When the payment is in shares, these sums represent a liquid asset owned by the recipient as these shares are securities commonly dealt in upon markets. On the other hand, one time lump sum cash payments, deemed to be taxable dividend income, are considered as interest income and under the Income Support Programmes, this type of income is excluded for the purposes of the financial assistance calculation. However, these monies also represent owned liquid assets that must be accounted for.
AMOUNT EXCLUDED FROM INCOME, EARNINGS OR BENEFITS FOR THE PURPOSE OF CALCULATING THE BENEFIT
The liquid assets possessed by an independent adult or a family include all sums that are excluded from income, earnings and benefits for the purpose of calculating the benefit.
For example, if a recipient receives interest income in the amount of $100, this amount will be excluded from liquid assets as it is considered income. However, this amount will be considered a liquid asset on the last day of the month.
For the sums excluded as income to be considered liquid assets, the liquid assets must belong to the independent adult or family. This exception cannot be applied to a person operating a shelter, a foster home or a group home when the sums constituting the liquid asset are shown to be provided by social services or the MSSS to take charge of people and can therefore not be readily disposed of.
ADULT ELIGIBLE TO THE 66/72 ALLOWANCE
Composition of liquid assets
Liquid assets include everything an independent person, a family or a person with a spouse who is eligible for the 66/72 benefit has in cash or cash equivalents (cheques, money orders, etc.). It also includes the value of the assets that he or she can convert to cash in the short term. If a liquid asset can only be converted to cash in the long term, it will be considered in the overall value of assets.
Liquid assets also include excluded amounts, whether excluded in whole or in part, from income, earnings and pecuniary benefits.
Co-ownership of a liquid asset with an adult who is eligible for the 66/72 benefit
When an adult client of the Income Security Program co-owns a liquid asset with a spouse who is eligible for the 66/72 benefit, only the value of his or her part will be taken into account in calculating the benefit.
This is assumed to be 50% unless otherwise specified.
Note: The liquid assets of a spouse who is eligible for the 66/72 benefit and of any of the spouse’s dependent children, as applicable, will not be considered in determining the benefit of the client of the Income Security Program who is not eligible for the 66/72 benefit. Each spouse’s liquid assets will be considered individually as part of his or her own file.
Concept of possession
Although the possession of a liquid asset may be inferred from certain documents, the Band Council needs to determine the real owners of said asset. This means that the Band Council must recognize the use of a prête-nom and, accordingly, be able to prove that a person acted as a prête-nom. A person may also provide proof that he or she has acted as a prête-nom for another person.
Liquid assets owned by dependent children and liquid assets of the spouse who is a client of the 66/72 benefit or the person eligible for the 66/72 benefit are not taken into account in establishing the amount paid to the person eligible for the 66/72 benefit.
Co-ownership
When an adult co-owns a liquid asset (e.g. a joint account), only the value of his or her part is taken into account in calculating the 66/72 benefit. This is assumed to be 50% unless otherwise specified.
Life insurance products
Life insurance benefits paid to a person eligible for the 66/72 benefit may be considered in the aggregate value of property to which the $500,000 exclusion applies. This exclusion applies only if these benefits are paid in a lump sum (see section “Liquid assets treated as property”).
Liquid assets – Basic exclusion – Person eligible for the 66/72 benefit
Liquid assets, in cash or cash equivalent, held on the last day of the month are considered in establishing the benefit of the person eligible for the 66/72 benefit the following month. Such liquid assets are excluded up to:
- $20,000 for the person eligible for the 66/72 benefit;
- $50,000 for this person’s spouse who is not a client of the Income Security Program.
The following basic equation is used in assessing liquid assets:
Liquid assets – basic exclusion = included resource
Note: Liquid assets of dependent children and a spouse who is the client of a last-resort financial assistance program or basic income program are excluded in their entirety. When the spouse becomes ineligible for the Income Security Program, his or her liquid assets as of the last day of the month must be considered in the file of the person eligible for the 66/72 benefit, and the basic exclusions apply.
Specific situation of an adult with a spouse who is a client of the Income Security Program: When a person who is eligible for the 66/72 benefit becomes ineligible for the Income Security Program due to excess liquid assets, he or she and any dependent children are not considered to form a family with the spouse who is a client of the Income Security Program for three months following the date of ineligibility.
Liquid assets treated as property (section to be defined)
For a person eligible for the 66/72 benefit, certain liquid assets of the adult are considered in assessing the aggregate value of assets to which the $500,000 exclusion applies. This is the case when the amounts cannot be converted into cash in the short term.
Some amounts to which this exclusion applies have no specific investment requirement, while others must be placed in a separate account.
Amounts with no specific investment requirements
The following amounts have no specific investment requirements:
Amounts or pension credits accumulated in a retirement plan other than the Québec Pension Plan and Canada Pension Plan that can be returned to the recipient before the age of retirement:
- Amounts accumulated with interest in another retirement savings instrument that, under the retirement savings plan or instrument in question or by law, may be returned to the recipient before the age of retirement;
- Amounts accumulated in a registered retirement savings plan;
- Retirement plans obtained in a division of property upon a separation, divorce or dissolution of a civil union;
- Amounts accumulated in a registered retirement savings plan.
Note: When the spouse owns these liquid assets, they are treated as property and are not included in calculating the amount paid to the person eligible for the 66/72 benefit.
Amounts placed in a separate account
To be considered as property, certain amounts must be deposited in a separate account:
- Lump sums granted to the adult to compensate for an injury or loss of physical or psychological integrity (see section “One-time amount or periodic payments”);
- Amounts accumulated by the adult under a savings plan of an individual development account up to a total amount of $5,000;
- The principal amount of a pension credit accumulated in a retirement plan, a voluntary retirement savings plan or other retirement savings instrument that may be returned to the recipient before the age of retirement, when used within 30 days of receipt to contribute to another retirement plan or retirement savings plan instrument;
- Capital from a grant or loan for the repair of a residence when used within six months of receipt for the purpose for which it was obtained;
- Capital for the purpose of establishing or creating one’s own employment when used within six months of receipt for the purpose for which it was obtained.
If the time limit expires or the conditions are not met, the liquid asset amounts used contrary to the rules are considered liquid assets for which the basic exclusion applies.
Note: When a spouse who is not a client of the Income Security Program owns these liquid assets, they are considered property when they meet all the required conditions. If the conditions are not met, the amounts are considered liquid assets for which the basic exclusion of $50,000 applies.
Death benefits, bequests and life insurance
Lump sums paid to the person eligible for the 66/72 benefit may be considered in the aggregate value of property:
- Lump sum death benefits when they have been promptly deposited in a separate account with a financial institution, whether received as a lump sum or instalments;
- Liquid assets resulting from a succession insofar as they exceed the debts and charges for which the person is responsible.
Note: Inherited property is considered in the aggregate value of the property for which the basic exclusion applies. When it is converted to liquid assets, the amount is still considered in the aggregate value of the property since it was originally inherited property.
The lump sum benefits of a life insurance policy received after a person’s death.
To be considered as property, these amounts (or the first instalment thereof) must be received in a month in which the adult is eligible for the 66/72 benefit.
The exclusion will continue until the full amount of financial assistance is claimed for the month in which the amounts (or first instalment thereof) were received. In this case, the exclusion no longer applies:
- For periods after the period in which the claim was established;
- For periods following the receipt of the amounts (or the first instalment thereof), when the claim is the result of a false declaration.