General Information for Recipients of ODSP
Providing for a Family Member Who is Disabled
Capacity to Make a Will of Powers of Attorney
Henson Trust - Acting as a Trustee

If you are the parent of a disabled child, you are concerned about how they will be taken care of after your death. Making adequate provision in your will for a child who is disabled involves special considerations.

Disability Support Program
Under the Ontario Disability Support Program (ODSP) disabled adults can receive income support if they meet certain financial criteria. These criteria are based on the idea that individuals should receive benefits to the extent that they have no other means of support. Benefits may be cut off, for example, if an individual receives a sum of money or gift in a will.

Parents who want to make provisions in their will for the future care of a disabled child must consider strategies which will ensure that their adult child continues to qualify for ODSP benefits.

The ODSP provides for the use of a ‘disability trust'. A disability trust allows disabled adults to receive funds from an inheritance without risking their ODSP entitlement. The use of this trust essentially allows a parent to supplement the amount of money their adult child will be receiving as income support under the ODSP. A disability trust which meets the following requirements will not adversely affect the child's eligibility for benefits:

• It must be for the maintenance of the adult child (in other words, the trust cannot provide for any beneficiaries other than a disabled person);
• The value of the trust cannot exceed $100,000;
• Payments can be made by the trustee only for disability-related expenses or education expenses (what qualifies as a valid expense under this rule is limited).

Alternatives: the Henson Trust
A special kind of trust called a Henson Trust can also provide for the future care of a disabled child without risking their ODSP entitlement. The main advantage is that, unlike a disability trust, there is no limit on the amount of capital that can be sheltered through this type of trust. The features of a Henson Trust are:

• There is no limit on the amount of income and assets held inside the trust;
• There is no limit on the amount of money which can be paid out by the trust for disability related or education expenses;
• The trust must arise from an inheritance or the proceeds of a life insurance policy;
• The trustee must have sole and absolute discretion to make payments to the child. In other words, it is the trustee who will decide if a payment is made, when it is made, and for how much. It is this feature of the trust which protects ODSP entitlement;
• The tradeoff made in a Henson Trust is that, while a greater amount of wealth can be sheltered for the child's future care, the trustee cannot be required to make payments to the child. It is essential that a trustee be chosen who thoroughly understands the wishes of the parents vis a vis the future care of the child and is willing to abide by these wishes;
• Payments made to a child from a Henson Trust do not have to be for disability related expenses or education expenses but can be for any purpose such as rent, home repairs, groceries, or entertainment;
• ODSP benefits will be reduced to the extent that payments made from a Henson Trust for expenses which do not qualify as disability related or educational exceed the allowable amounts. Currently, the limit is $4,000 in a 12-month period;
• A Henson Trust can provide for other beneficiaries in addition to a disabled child.

Please feel free to contact us by phone at (613) 836-9915, ext. 0 to book an appointment or for more information.

Copyright © 1999-2003, Donna S.M. Neff
Reproduction of this Web page is only permitted with written authorization by the author. The information in this brochure is not intended to be legal advice. Please consult a lawyer if you have questions.