Parents who have a child who has a lifelong disability often want to leave their child money in their wills in order to provide an income for the child for the rest of his or her life.
The problem is that children with disabilities often receive government assistance and if they are left an inheritance this may reduce or eliminate their ability to get money from the government because there is a threshold of how much money they are allowed to have in order to remain eligible for assistance.
What parents need to do is to create what is called a Henson Trust in their wills.
A Henson trust is a trust that gives the trustee the absolute discretion to decide how much of the money held in trust will be available for the child. The child has no legal right to demand more money from the trust and on the child’s death the remaining capital will be left to another named beneficiary. This allows the trustee to determine how much money can be given to the child each month without reducing the amount of money the child receives from the government.
Henson trusts take their name from the Ontario decision, Ministry of Community and Social Services (Income Maintenance Branch) v. Henson 1987 OJ 1121, affirmed 1989 OJ 2093. In that case, the deceased, Henson, created a discretionary trust in his will for the benefit of his daughter, who qualified for provincial disability support. The trustees had the absolute discretion to pay any amounts for his daughter’s benefit, but she could not demand any payments from the trust. There was a gift-over to charity after the daughter’s death.
Deborah A. Todd