While Henson Trusts are approaching their 30th birthday in Canada, their roots can be traced back centuries, Ottawa disabilities and estate planning lawyer Kenneth Pope tells AdvocateDaily.com.
Pope, principal of Kenneth C. Pope Law, says families of children with special needs owe a debt of gratitude to retired Guelph, Ont. lawyer George Goetz, who drafted the will and the trust provisions that resulted in the 1989 case that validated the trusts as a mechanism for protecting their inheritances.
Before the case, 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 (ODSP), which could disqualify them from any entitlement to benefits.
But Pope says the two key features of a Henson Trust can also be found in the ancient “vow of poverty” trusts that have been set up for hundreds of years by the families of children who entered holy orders.
“The first quality is that the trustee has absolute and unfettered discretion as to whether to give anything to the beneficiary or not,” he explains.
“And the second is the non-vesting provision — unlike a normal trust, where the money held in it belongs to the child, the Henson Trust beneficiary does not own the assets.
“The reason is that in order to receive ODSP, the individual must basically be in poverty. The trustee can’t be obliged to support you, and must have absolute discretion to do nothing with the money if they want,” Pope adds.
He says it was once relatively common in Europe for large families to have at least one child in the priesthood or some other religious order that required them to give up their personal belongings.
As a result, Pope says the vow-of-poverty trusts were developed as a way for families to leave an inheritance without interfering with the child’s promise to God.
“Otherwise, if money was set aside for the child, it would have to go to the order, which was probably not the intention of the deceased,” he says. “This way, they could set money aside to help the person in a way that it was above and beyond the vow of poverty.”
According to Pope, when Goetz prepared the will for Henson and his daughter Audrey, who had Down Syndrome, he used an unusual precedent that he received from a lawyer who had worked for the Catholic church, which has holy orders with vows of poverty.
He says more recent events have taken the Henson Trust a little further from its vow-of-poverty roots after the maximum asset level for ODSP recipients was raised. As of Jan. 1, the old limit of $5,000 has been increased to $40.000.