Income from this special type of testamentary trust – originally devised for the protection of bequests made to children with special needs – is exempt from the strict $40,000 asset limit for recipients of benefits Ontario Disability Support Program.
That means beneficiaries can receive a small amount of supplementary income from the trust without risking their ODSP benefits, which are worth up to $1,169 per month. Remaining eligible for the program also gives claimants access to help with housing and medical bills.
Henson Trusts get around the ODSP asset limit because of a non-vesting provision which means that the beneficiary does not actually own the funds in the trust. In addition, a trustee retains absolute discretion over whether, how and when to use the money.
They were first recognized by Ontario courts in the late 1980s, but just last year, the Supreme Court of Canada solidified their status nationwide in a case involving a disabled B.C. woman receiving rental subsidies as part of a social assistance program.
The rental assistance provider in the case halted its payments to the woman, claiming that she needed to disclose the value of her Henson Trust as an asset. A lower court judge sided with the provider, but the Supreme Court reversed that ruling, finding that the trust matched the requirements of a Henson Trust and could not be considered an asset under the assistance program’s rules.
But it’s important to note that Henson Trusts are not the only option to provide for an incapacitated beneficiary, and may not always be the best one for individuals with very large estates.
Although a Henson Trust can offer a significant boost to the income of a person collecting ODSP, it may still feel like a lifestyle shift for those whose parents spent lavishly on programs and services to make them comfortable during their lifetimes.
Whatever your unique circumstances, an experienced professional can help you decide which choices work best for your family.
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