Parents of adult children with disabilities are often anxious about their kids’ future, particularly if their kids’ disabilities prevent them from working or living independently. For peace of mind, the best solution for these parents may be to set up a Henson Trust which ensures their children’s financial needs are taken care while keeping any government benefits their kids are entitled to. In a nutshell, an appointed trustee controls the money which the parents put in trust and the trustee pays out to support the kids at a rate which does not jeopardize their government benefits.
In Ontario, adults with disabilities may qualify for income support provided by the Ontario Disability Support Program (ODSP). This program is particularly helpful to individuals whose mental or physical disability restricts their ability to work, care for themselves, or take part in community life.
To qualify for ODSP, individuals must at least 18, resident in Ontario, be in financial need, meet the definition of “a person with a disability,” and own assets less than the limits set by ODSP. This last item is the sticking point. How do you leave money to your kids with disabilities without taking their net worth or income over the wealth threshold at which they lose their ODSP benefits? Often, the best answer is to place money in a Henson Trust for the kids’ benefit.
A Henson Trust has rigid requirements. To set one up, parents are advised to get legal help to do the following:
- Set aside assets to be held in trust for the benefit of their children with disabilities (this can be money, real estate, investments, or whatever)
- Appoint a trustee (the person who will manage the assets in trust)
- Grant the trustee absolute discretion to determine how the assets will be used to provide assistance to the adult child with a disability
A parent can set up a Henson Trust while they are alive (an inter vivos absolute discretionary trust) or in their will (a testamentary absolute discretionary trust).
Scharf Estate Law can assist you with an application for ODSP benefits and with setting up a Henson Trust.
For more information: Ottawa lawyer Kenneth Pope’s practice focuses on families with a member with disabilities. His site and blog are an excellent resource: All About Everything – Children with Disabilities (kpopelaw.com)