Henson Trusts OVERVIEW
For parents and relatives of people with disabilities, an important consideration in your estate plan will be determining how best to provide for him or her. There are several factors to consider. As well as thinking about the beneficiary’s personal circumstances, it is important to know whether the beneficiary is receiving government assistance related to their disability, or whether this is likely to occur in the future.
In Ontario, the Ontario Disability Support Program (“ODSP”) provides support to persons with mental or physical disabilities. Support provided includes a small living allowance and disability-related benefits, such as a drug plan. Depending upon the disability, this coverage can be critical, as some medications can be prohibitively expensive if not covered by other plans. When considering your estate plan, including your Will, if it is important to maintain the disabled person’s eligibility for ODSP after your death, then it is important to consider a Henson Trust. (Click here for the Berry Gage ODSP Page)
A fully discretionary trust (known as a Henson Trust) is an estate planning tool designed to protect a disabled beneficiary who is eligible to receive ODSP. It allows you to provide financial assistance to a disabled person without affecting their ODSP eligibility. It must be drafted properly to work.
A Henson Trust itself has no asset limit. Aside from the payments of income and capital that the Trustee actually makes to the beneficiary from the trust, neither the income nor the capital are considered income or assets of the beneficiary. A Henson Trust must: a) provide the trustee with absolute discretion with respect to payments of income and capital; b) provide that the assets of the trust will not vest in the beneficiary (in other words, the beneficiary can never compel payment of assets from the trust); and c) include a “gift over” to another beneficiary in the event that the disabled beneficiary passes away before receiving all of the assets in the trust.
At Berry Gage LLP, we will help you A Henson Trust is not always the right solution for everyone. It is something to discuss with your estate planning lawyer in consideration of all of the circumstances. If your Will does include a Henson Trust for a disabled beneficiary, you should consider speaking with others who may leave a gift to the disabled person, as their good intentions, if not properly drafted, can also result in the beneficiary losing their ODSP eligibility.
A Henson Trust is not right for every disabled beneficiary. At Berry Gage LLP, we can help you decide: whether a Henson Trust should be included to protect a disabled beneficiary; what to consider when choosing the trustee; what other tools may help you to achieve your goals under all of the circumstances.