Experience is the key attribute families should look for when seeking help to set up a Henson Trust, Ottawa disabilities and estate planning lawyer Kenneth Pope tells AdvocateDaily.com.
The trusts, which were originally designed to protect the inheritance of children with special needs while at the same time preserving their rights to provincial disability benefits, date back to a 1989 case, but Pope, principal of Kenneth C. Pope Law, says very few lawyers actually have any experience preparing them.
“The simplest and most important thing you can do is to ask your lawyer if they have any experience setting up and administering Henson Trusts," he says.
Before Henson Trusts, a family member with special needs who received an inheritance would see that money characterized as an asset for the purposes of the Ontario Disability Support Program, which could disqualify them from any entitlement to benefits.
During the last three decades, Pope has prepared more than 4,000 Henson Trusts, but even that total is a drop in the bucket of the more than 300,000 people receiving Ontario Disability Support Program (ODSP) benefits.
“These are all people whose families need wills with Henson Trust provisions, but very few of them have a will in place. And if they do, even fewer have a Henson Trust,” Pope says. “I look at other lawyers’ wills all the time to see if they’re up to snuff, and the older they are, the less likely they are to be correct.”
In addition, Pope says that preparing a Henson Trust is only one part of the job for lawyers practising in the area. The other, sometimes forgotten part involves administering the trust after the death of the testator for the benefit of a person with special needs.
“The other thing to ask a lawyer is how you can get a Henson Trust to pay out more than the $10,000 that ODSP allows over a 12-month period. There may be cases where that is adequate, but if a parent wants to pay out more, which most do, they need to know how to distribute the funds without affecting, or at least minimally affecting the ODSP entitlement,” Pope says.
“It’s one thing to draft up a simple trust, but if a lawyer doesn’t know how to disburse any abundant amount of money from the trust, they may never have actually advised about the administration of a trust once someone has died,” he adds.
Pope says some lawyers may be simply unable or unwilling to develop the necessary experience to practise in such a niche area of the law.
“Largely they don’t see it as part of their practice. They don’t have the precedents or the time to do the research,” he says. “In a way, they’re wise to not hold themselves out as able to do something that they can not do.”
Pope says he uses the intake process at his firm to determine what other needs that clients may have, besides a will with a Henson Trust.
For example, he says many parents of children with disabilities may be unaware of their full entitlement to benefits and tax credits. Recent changes to the eligibility requirements for the disability tax credits and caregiver credits expanded the number of people who can make claims, according to Pope.
“Frequently, people are not using those credits when they are clearly applicable, so we help them to get them in place, and backfile for previous tax years,” he says.