PLANNING FOR A DISABLED CHILD OR OTHER INDIVIDUAL
[Important Update for Henson Trust Recipients: click here
As any parent of a disabled child knows, one of the most important aspects of your estate plan
will be to provide for an adult child who is unable to provide for him or herself after your death. While a disabled adult in Ontario may qualify for government benefits from the Ontario Disability Support Program (“ODSP”)
, any inheritance from you (or any other person) may jeopardize this entitlement.
Under Ontario legislation, no person is eligible for ODSP income assistance if his or her assets or income exceed the allowable limits. Prior to September 2017, and subject to certain exemptions, a single person could only receive income of $6,000.00 in any consecutive 12-month period. Effective September 2017, this has been increased from $6,000 to $10,000 per year. Effective January 2018, the Ontario Government has also announced that the cash and other liquid asset limits for ODSP recipients will be increased from $5,000 to $40,000 for single individuals, and from $7,500 to $50,000 for couples.
A Henson Trust is an estate-planning tool that allows you to provide additional financial assistance to your child without disqualifying him or her from ODSP benefits. Unlike a trust that is derived from an outright inheritance or life insurance proceeds, which will generally disqualify the beneficiary from receiving ODSP benefits if trust assets exceed $100,000.00, a Henson Trust has no asset limit.
The terms of a Henson Trust provide the trustee with absolute and sole discretion regarding payments from the trust to the beneficiary. The trustee is not obliged, and cannot be compelled, to pay out any of the funds in the trust to the beneficiary for his or her support. Therefore, capital of the trust is not considered an asset of the beneficiary, and the interest, if reinvested in the trust, it is not considered income.
The Henson Trust provides an alternative for family estate planning that will allow you to ensure that your disabled child receives adequate and sustainable support throughout his or her lifetime.