How does a trust for a person on AISH work in Alberta?

This answer covers the law of Alberta.

For a person on AISH, what matters is how a trust of which they are a beneficiary is treated, and that depends on how the trust is set up. Under the AISH rules, an asset held in a trust of which the client is a beneficiary is exempt from asset valuation. That matters because non-exempt assets cannot be worth more than $100,000 combined, and a cash inheritance counts toward that limit unless it is invested within 365 days in such a trust or a listed exempt asset.

Trust income is treated differently from trust assets. A director can deem trust income payable to a beneficiary, so income can reduce benefits even though the trust itself is exempt. A partial deduction applies: 100% of the income up to $300, or up to $600 with a cohabiting partner or dependent child, plus 25% of the remainder. Those deductions are lost if income is not reported in a timely manner or is willfully misreported.

The trustee must act in good faith, follow the trust's terms and use the care of a person of ordinary prudence. The client must also tell a director about changes in their or a cohabiting partner's assets. How the trust should be worded depends on the facts, so have a lawyer review it.