What is a Henson Trust?
A Henson trust is a testamentary trust that can be used to protect the assets of a person with a disability. The trust is created in the settlor's will and becomes effective upon their death. The trustee is responsible for managing the trust assets and using them to benefit the beneficiary, who is a person with a disability.
Henson trusts are named after the case of Henson v. Public Trustee, in which the Supreme Court of Canada ruled that trustees have a fiduciary duty to act in the best interests of their beneficiaries. This means the trustee must put the beneficiary's needs first, even if it means going against the settlor's wishes.
Why Do You Need a Henson Trust?
Henson trusts can be used to protect people with disabilities from financial abuse and exploitation. This can be particularly important for people living in institutional settings, such as nursing homes or assisted living facilities.
Henson trusts can also supplement the income of people with disabilities receiving government benefits. The trustee can use the trust assets to pay for medical care, personal care, and education expenses.
Examples of How Henson Trusts Can Be Used
Here are a few examples of how Henson trusts can be used:
- A parent can create a Henson trust for their child with a disability. The trust assets can be used to pay for the child's expenses, such as medical care, personal care, and education.
- A spouse can create a Henson trust for their spouse with a disability. The trust assets can be used to supplement the spouse's income and pay for expenses such as medical and personal care.
- A grandparent can create a Henson trust for their grandchild with a disability. The trust assets can be used to pay for the grandchild's expenses, such as education and extracurricular activities.
How to Create a Henson Trust
To create a Henson trust, you must hire an estate planning lawyer. The lawyer will help you draft a will that includes the trust. The will will specify the assets that will be placed in the trust, the beneficiary of the trust, and the trustee of the trust.
Choosing a Trustee
The trustee is responsible for managing the trust assets and using them to benefit the beneficiary. Choosing a trustworthy trustee with the skills and experience to manage the trust assets is essential.
Some common choices for trustees include:
- A family member, such as a spouse, child, or sibling
- A friend
- A professional trustee, such as a lawyer or trust company
Funding the Henson Trust
Henson trusts can be funded with various assets, including cash, securities, and real estate. The assets can be transferred to the trust during the settlor's lifetime or upon their death.
Benefits of Henson Trusts
Henson trusts offers several benefits, including:
- Financial protection: Henson trusts can help protect people with disabilities from financial abuse and exploitation.
- Supplemental income: Henson trusts can supplement the income of people with disabilities who are receiving government benefits.
- Flexibility: Henson trusts can be tailored to meet the beneficiary's specific needs.
- Peace of mind: Henson trusts can give parents, spouses, and other loved ones peace of mind, knowing their loved one with a disability will be financially secure.
Let the Expert's Help
There are several important reasons why it is vital to use legal guidance when creating a Henson trust:
- To ensure that the trust is drafted correctly: A Henson trust is a complex legal document, and it is crucial to have it prepared by an experienced lawyer to ensure that it is valid and enforceable.
- To comply with all applicable laws and regulations: Henson trusts are subject to several laws and regulations, and ensuring that the trust complies with all of these requirements is essential.
- To protect the beneficiary's assets: A Henson trust is designed to protect the beneficiary's assets from creditors and other claimants. However, this protection can only be achieved if the trust is properly drafted and administered.
- To ensure that the beneficiary's needs are met: A Henson trust can provide for the beneficiary's needs in various ways. However, it is crucial to develop a trust agreement that clearly outlines the trustee's duties and powers and ensures that the beneficiary's needs are met throughout their life.
Tabuchi Law's experienced estate planning lawyers can help you create a Henson trust that meets your needs and goals. We can also guide you on administering the trust and protecting the beneficiary's assets.
Here are some specific examples of how our estate planning lawyers can help you when creating a Henson trust:
- Choosing the right trustee: The trustee of a Henson trust is responsible for managing the trust assets and distributing them to the beneficiary according to the terms of the trust agreement. Choosing a trustworthy trustee capable of managing the trust assets is crucial. An estate planning lawyer can help you to choose the right trustee for your Henson trust.
- Drafting the trust agreement: The trust agreement is the legal document that creates the Henson trust. It is vital to have the trust agreement drafted by an experienced lawyer to ensure it is valid and enforceable. The trust agreement should also clearly outline the trustee's duties and powers and the beneficiary's rights.
- Administering the trust: Once the Henson trust is created, the trustee is responsible for administering the trust according to the terms of the trust agreement. This may involve managing the trust assets, making distributions to the beneficiary, and paying taxes on behalf of the trust. An estate planning lawyer can guide you on administering the Henson trust and ensure the beneficiary's assets are protected.
If you are considering creating a Henson trust for a loved one with a disability, I encourage you to consult an experienced estate planning lawyer. They can help you create a trust that meets your individual needs and goals, and they can guide you on how to administer the trust and ensure that the beneficiary's assets are protected.