Do you have a family member with special needs who is receiving benefits through the Ontario Disability Support Program (ODSP)?

If so, it’s important to know that if you are planning to leave that loved one an inheritance, it will be considered an asset and disqualify them from the Ontario Disability Support Program (ODSP) benefits unless a special arrangement is made. The good news is that this arrangement CAN be made.

It involves creating what is called a Henson Trust in your will. The Henson Trust became available in 1989, when the Supreme Court of Ontario ruled that any estate assets in this trust were not vested in the beneficiary, and therefore could not be used to terminate government benefit programs. The Henson Trust places the assets in the care and control of a trustee, to be administered for the benefit of the beneficiary. The trust can be established either during your lifetime, as an ‘inter vivos’ (living) trust, or according to the terms of your will after you are deceased, as a ‘testamentary’ trust.

Role of the trustee

The key provision of a Henson Trust is that the trustee has ‘absolute discretion’ in determining whether to use the trust assets to provide assistance to the beneficiary, and in what quantity. The trust beneficiary would use their personal exemptions and tax credits to reduce their taxable income.

Not just for ODSP recipients

Many families have beneficiaries with special needs who are not on ODSP, yet require assistance in handling their daily affairs. They often benefit from the guidance of a trustee in handling large sums of money or significant assets, temporarily or on an on-going basis. However, they may be unable or unwilling to seek that guidance, and may at some point be left without care unless special provisions are put in place.  The Henson Trust will ensure that your loved one is given the extra care they need, and that their inheritance will not be wasted. It will provide you with peace of mind, knowing that you have done everything you can to protect their future.

At Howard Nightingale Professional Corporation, we provide the specialized financial planning and legal counsel to assist you in setting up the right plan for your loved one with disabilities, and managing all the details. We are centrally located in the Dufferin and Finch area; please contact us at 416-663-4423 or toll free at 1-877- 224-8225. We look forward to working with you.

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