Protecting your loved ones living with a disability through estate planning

Protecting your loved ones living with a disability through estate planning

by | Aug 29, 2023 | Wills & Estates

When estate planning, you might be wondering how you can leave assets to someone who does not have the capacity to care for themselves due to living with a disability. We understand that there is a constant worry about trying to protect them even after you are gone.

What is a Henson Trust?

A Henson trust is an estate planning tool often used to support people living with a disability to provide them with ongoing financial support. Because the trust is under the absolute discretion of the trustee and not the beneficiary, it is not considered an asset of the beneficiary and will not impact support from Ontario Disability Support Program (ODSP).

ODSP benefits are calculated based on income, therefore if the beneficiary was to receive an inheritance it could disqualify them from receiving ODSP altogether.

What can you use a Henson Trust for?

From, payments from an absolute discretionary trust to the beneficiary may be exempt as income, for example, if used for:

  • Approved disability-related items, services, education, or training expenses that are not reimbursable.
  • The purchase of a principal residence or an exempt vehicle.
  • First and last month’s rent necessary to secure accommodation.
  • Any purpose up to $10,000 maximum in a 12-month period.

If an income exemption does not apply, then payments from the trust are considered income in the month received.

How does a Henson Trust work?

There are guidelines which must be met when a Henson Trust is carried out. A Henson trust must be set up in advance as it cannot be settled by the beneficiary, there is no limit of assets that can be placed into a Henson Trust and the Henson Trust is seen as a taxable entity which must provide an annual report.

Who can set up a Henson Trust?

A Henson Trust can be a valuable tool for beneficiaries who benefit from income support and benefits in limited circumstances. This type of trust might not be appropriate for you and your situation. We recommend connecting with an estate lawyer who can help you decide if setting up a Henson Trust is the right estate planning tool for you.

If you have questions about a Henson Trust, McMurter & Associates can help.

This article is intended as an informative piece about the subject. It should not be taken as legal advice. We recommend you connect with an estate lawyer about your specific legal issue.

McMurter & Associates in Whitby has been providing estate planning services throughout the Durham Region for more than 30 years. We have the experience needed to provide you with expert advice for any of your real estate and estate planning needs.

To meet with a member of our firm, send us an email or call us 905-666-9200.