As discussed in a previous post, “Considerations for Planning Your Estate When Adult Dependent Children Are Part of Your Family” , Saskatchewan jurisprudence supports the idea that parents have a moral and legal duty to provide for dependent children, as defined by section 2(1)(b) and (c) of The Dependents’ Relief Act, SS 1996, c D-25.01, both during their lifetime and following their death. This post is concerned with those adult children who continue to meet that definition after the age of majority due to a “mental or physical disability” which renders them “unable to earn a livelihood” (a “Disabled Beneficiary”) and specifically how a Henson trust can assist in your estate planning.

Providing for a Disabled Beneficiary can be a difficult task and, dependent on the degree of disability, parents may be concerned their child may not be capable of effectively managing their inheritance, property, or personal care once they are gone. Often, this child is reliant on governmental support and it can be unclear how to adequately include the disabled beneficiary within an estate plan without jeopardizing these benefits. Under the current income support programs in Saskatchewan, if an applicant or recipient has assets, or receives income over a prescribed amount, their eligibility within the program is compromised.  A Henson trust is one available option to provide for a disabled beneficiary while maintaining eligibility.

Henson trusts derive its name from the 1987 Ontario case, Ontario (Director of Income Maintenance, Minister of Community & Social Services) v Henson, in which the Court held that a discretionary trust created for a Disabled Beneficiary will not result in the disqualification of government support to that individual. While the trust existed to benefit the disabled beneficiary, the assets were not seen to be owned or vested in that beneficiary. As a result, the Court found the trust could not be considered when assessing the eligibility for government support. Various key elements led to this result including: 1) absolute discretion given to the trustee to determine how and when to use the assets, which ensured that 2) no part of the trust vested in the beneficiary, thereby leaving the beneficiary no enforceable right to any or all of the funds.

It is important when considering a Henson trust to consult a legal professional. An improperly established trust can result in unintended consequences that could have lasting implications for your estate and for your beneficiaries. A Henson trust is only one of a number of estate planning tools available in this scenario and obtaining professional advice will assist you as you decide whether or not a Henson trust is the most suitable solution for your needs.

About the Author:

Annie is an associate practicing in the Regina office.

About McKercher LLP:

McKercher LLP is one of Saskatchewan’s largest and most established law firms, with offices in Saskatoon and Regina. Our deep roots and client-first philosophy have led to our firm ranking in the top 5 in Saskatchewan by Canadian Lawyer magazine (2017). Integrity, experience and capacity provide innovative solutions for our clients’ diverse legal issues and complex business transactions.

This post is for information purposes only and should not be taken as legal opinions on any specific facts or circumstances.  Counsel should be consulted concerning your own situation and any specific legal questions you may have.