Estate Planning
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Planning for the Future: Special Considerations for Trusts for Minor Beneficiaries with Disabilities in Ontario

Written by
The Tabuchi Law Team
Published on
August 15, 2023

Introduction

If you have a minor child with a disability, it is important to start planning for their future now. One of the most important things you can do is to create a Henson Trust. A Henson Trust is a special type of trust that can be used to protect the financial security and government benefits of minor beneficiaries with disabilities.

What is a Henson Trust?

A Henson Trust is a discretionary trust that is created for the benefit of a minor beneficiary with a disability. The trustee of the trust has the discretion to distribute trust assets to the beneficiary for their care, maintenance, and education, without affecting their eligibility for government benefits.

Why do you need a Henson Trust for a minor beneficiary with a disability in Ontario?

There are several reasons why you need a Henson Trust for a minor beneficiary with a disability in Ontario:

  • To protect their eligibility for government benefits. ODSP is a financial assistance program for people with disabilities who have a low income and few assets. If a minor beneficiary with a disability has too much money in their own name, they may not be eligible for ODSP. Other government benefits, such as the Canada Child Benefit and the Disability Tax Credit, may also be affected by the beneficiary's assets.
  • To provide them with financial support for their care, maintenance, and education. The trustee of the Henson Trust can use trust assets to pay for things like the beneficiary's medical expenses, therapy, and educational programs. This can be especially important for children with complex disabilities who require specialized care and support.
  • To protect them from financial exploitation. People with disabilities are at increased risk of financial exploitation. A Henson Trust can help to protect the beneficiary's assets from being misused or stolen.

Pitfalls without a Henson Trust

If you do not create a Henson Trust for your minor child with a disability, there are a number of pitfalls that you should be aware of:

  • Your child may lose their eligibility for government benefits. This could have a significant impact on their ability to access the financial support they need.
  • Your child may not have access to the financial support they need for their care, maintenance, and education. This could limit their opportunities and quality of life.
  • Your child's assets may be at risk of being misused or stolen. This could leave them vulnerable and financially insecure.

Examples

Here are a few examples of how a Henson Trust can be used to benefit a minor beneficiary with a disability:

  • The trustee of the Henson Trust can use trust assets to pay for the beneficiary's medical expenses, such as the cost of prescription drugs, therapy, and specialized medical equipment. For example, if the beneficiary has a rare genetic disorder, the trustee could use trust assets to pay for the cost of experimental treatments or clinical trials.
  • The trustee can also use trust assets to pay for the beneficiary's educational expenses, such as the cost of tuition, fees, and books. For example, if the beneficiary wants to attend a private school or university, the trustee could use trust assets to pay for the cost of their education.
  • The trustee can also use trust assets to provide the beneficiary with a comfortable lifestyle, such as paying for their rent, food, and clothing. This is especially important for children with disabilities who require a high level of care and support.

How to create a Henson Trust

To create a Henson Trust, you will need to work with an estate planning lawyer. The lawyer will help you to draft the trust agreement and ensure that it meets all of the legal requirements.

Tips for choosing a trustee

When choosing a trustee for your Henson Trust, it is important to select someone who is trustworthy, responsible, and has the experience and knowledge necessary to manage the trust assets effectively. You may want to consider choosing a professional trustee, such as a trust company or lawyer.

Conclusion

A Henson Trust is an essential tool for parents of minor children with disabilities. It can help to protect the child's financial security and government benefits, while also providing them with the financial support they need for their care, maintenance, and education. If you have a minor child with a disability, I encourage you to speak with an estate planning lawyer about creating a Henson Trust.

Additional information

It is important to note that a Henson Trust is just one type of trust that can be used to benefit a minor beneficiary with a disability. There are other types of trusts, such as testamentary trusts and living trusts, that may also be appropriate. The best type of trust for your child will depend on their specific circumstances and needs.

Contact us to discuss your particular situation.

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