Wills with Henson Trusts in Ontario

A carefully prepared Will may provide long-term financial support while addressing the beneficiary’s circumstances, ability to manage property, and possible eligibility for government assistance.

Nobari Law Professional Corporation prepares Wills containing Henson Trusts and other provisions for beneficiaries with disabilities.

A Henson Trust is a fully discretionary trust created for a beneficiary, often through a Will.

The trustee has complete discretion over:

• whether money or property will be provided to the beneficiary;
• when a payment will be made;
• how much will be paid; and
• how trust funds will be used for the beneficiary.

The beneficiary cannot require the trustee to make payments or give the beneficiary control of the trust property.

Under current ODSP policy, a true absolute discretionary trust is not treated as an asset and is not subject to the $100,000 capital limit that applies to certain other inheritance trusts. However, the entire Will and trust must be reviewed to determine whether the trust is genuinely discretionary.

An inheritance received directly by a beneficiary may affect eligibility for means-tested income support or other benefits, depending on the amount received, how it is held, and how it is used.

A properly structured Henson Trust may allow property to be managed by a trustee for the beneficiary without giving the beneficiary an enforceable right to the trust assets.

The trust may provide additional financial support while helping to:

• preserve access to available government assistance;
• protect the inheritance from mismanagement or financial exploitation; and
• provide for the beneficiary’s long-term needs.

A Henson Trust does not guarantee continued eligibility for ODSP or any other program. Benefit rules, trust terms, payments, and the beneficiary’s circumstances must all be considered.

This planning may be considered where a beneficiary:

• receives or may later apply for ODSP or other income-tested assistance;
• has difficulty managing money or property independently;
• may be vulnerable to financial pressure or exploitation;
• has continuing disability-related expenses; or
• would benefit from having an inheritance managed by a trustee.

A medical diagnosis alone does not determine which estate-planning structure is appropriate. The beneficiary’s financial circumstances, decision-making ability, available supports, government benefits, age, and long-term needs should also be reviewed.

The trustee may use trust funds for the beneficiary in accordance with the Will and the trustee’s discretion.

Depending on the trust terms and current benefit rules, funds may potentially be used for:

• education, training, and personal support;
• therapies, caregiving, assistive devices, and other disability-related services;
• transportation, recreation, travel, and personal items;
• improvements to the beneficiary’s living arrangements; and
• other expenses supporting the beneficiary’s comfort and quality of life.

Payments must be considered carefully because their treatment may depend on the amount, purpose, and method of payment. Current ODSP policy provides exemptions for certain voluntary payments and approved disability-related items and services, but the applicable rules should be reviewed before payments are made.

Choosing the trustee is one of the most important decisions involved in creating a Henson Trust.

Because the beneficiary cannot require payments, the trustee should be:

• trustworthy and financially responsible;
• familiar with the beneficiary’s needs;
• able to make careful and impartial decisions;
• willing to understand applicable benefit rules; and
• capable of maintaining proper trust records.

The Will may appoint:

• one individual trustee;
• two or more trustees acting together;
• a trust company; or
• an individual together with a professional trustee.

Alternate trustees should also be named in case the first trustee dies, becomes incapable, resigns, or is otherwise unable to continue.

The trustee is responsible for administering the trust according to the Will and applicable law.

The trustee’s responsibilities may include:

• safeguarding and investing trust property;
• deciding whether and when payments should be made;
• considering the beneficiary’s circumstances and applicable benefit rules;
• maintaining financial records and filing required tax returns;
• working with accountants, investment advisers, and other professionals; and
• distributing the remaining trust property when the trust ends.

The trustee does not own the trust property personally and must use it only in accordance with the terms of the trust.

A Henson Trust should state what happens to any property remaining after the beneficiary dies.

The Will-maker may direct the remaining property to family members, the beneficiary’s descendants, charities, another beneficiary with a disability, or a combination of beneficiaries.

These recipients are commonly called the remainder beneficiaries of the trust.

A Henson Trust may not be the only planning consideration for a beneficiary with a disability. 

Depending on the beneficiary’s circumstances, additional legal, tax, benefits, financial, or insurance advice may be required.

Nobari Law may recommend consultation with an accountant, financial adviser, benefits professional, insurance adviser, or another lawyer with relevant experience before the Will is finalized.

Relevant considerations may include:

• the beneficiary’s age, living arrangements, and ability to manage property;
• current or possible future eligibility for ODSP or other assistance;
• Disability Tax Credit eligibility and whether an RDSP exists;
• current and anticipated disability-related expenses;
• the proposed trustee and their relationship with the beneficiary;
• the expected size and type of inheritance;
• other available family or financial support; and
• who should receive the remaining trust property after the beneficiary’s death.

The estate plan should be reviewed periodically because the beneficiary’s needs, government programs, tax rules, trustees, and family circumstances may change.

Nobari Law Professional Corporation provides personalized assistance and clear, upfront pricing for preparing Wills containing Henson Trusts and other provisions for beneficiaries with disabilities.

Our services may include:

• discussing the beneficiary’s circumstances and the Will-maker’s goals;
• explaining the purpose and operation of a Henson Trust;
• reviewing whether a discretionary trust may be appropriate;
• discussing trustees, alternate trustees, and remainder beneficiaries;
• preparing and coordinating the trust provisions with the rest of the Will;
• discussing other possible inheritance arrangements;
• identifying circumstances requiring advice from an accountant, financial adviser, benefits specialist, or insurance professional; and
• providing signing and witnessing instructions.

Every plan is different. The appropriate structure depends on the beneficiary’s needs, the proposed inheritance, the trustees, applicable benefit programs, and the Will-maker’s objectives.

To begin, complete the Estate Planning Intake Form. The form allows Nobari Law to review your circumstances and identify any additional information that may be required.

Do not send original documents, identification, complete account numbers, passwords, medical records, or other sensitive information unless requested by Nobari Law Professional Corporation. If requested, please use the document-sending method confirmed by the firm.

Submitting the form does not create a lawyer-client relationship or confirm that Nobari Law Professional Corporation has agreed to act.

Complete the Estate Planning Intake Form

Planning for a beneficiary with a disability requires careful consideration of the beneficiary’s long-term needs, government benefits, the trustee’s responsibilities, and the management of the inheritance.

Contact Nobari Law Professional Corporation to discuss preparing or updating a Will containing a Henson Trust or another inheritance arrangement for a beneficiary with a disability.