A straightforward inheritance can be the worst possible gift to a person receiving disability support, because the money that was meant to help can remove the benefits they depend on.
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Income and asset-tested benefit programs — the Ontario Disability Support Program being the obvious one — take account of what a recipient owns. A direct inheritance can push someone over an asset limit and interrupt the benefits and, often more importantly, the associated supports.
The result is perverse: a parent leaves money to the child who needs it most, and the practical effect is to make that child worse off.
A Henson trust is an absolute discretionary trust. The defining feature is that the beneficiary has no right to demand anything from it. The trustee decides, in their absolute discretion, whether and when to make a payment.
Because the beneficiary cannot compel payment, the trust capital is not treated as an asset they own. The trustee can then use it for things that improve quality of life without displacing the benefits.
That structure is what makes the choice of trustee critical. You are handing someone genuine discretion over a vulnerable person's support, potentially for decades, and naming successors matters as much as naming the first trustee.
A Henson trust is one option among several. Qualified disability trusts, registered disability savings plans and outright gifts to a third party each have a role, and the right answer depends on the family's circumstances, the size of the estate and the beneficiary's situation.
Benefit program rules — limits, exemptions and treatment of trusts — are set by policy and legislation that change over time. This is an area where advice needs to be current, and where a plan written years ago is worth re-checking rather than assumed to still work.
It can. Asset-tested programs take account of what a recipient owns, which is the problem a properly structured discretionary trust is designed to avoid.
The beneficiary has no right to demand payment. That absolute discretion in the trustee is the feature that keeps the trust capital from being treated as the beneficiary's own asset.
Someone reliable, organised and likely to be available for the long term — and there should be named successors. The discretion is real and it may be exercised for decades.
No. Qualified disability trusts, RDSPs and other arrangements each have a role. The right structure depends on the family and the estate.
Yes. Benefit limits and the treatment of trusts are set by rules that change over time, so an older plan is worth re-checking rather than assumed to still work.
Government sources for this topic. Rules change — confirm the current position before you rely on it.
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