Parents of children with disabilities have a greater incentive than most to prepare a will before they die, Ottawa disabilities and estate planning lawyer Kenneth Pope tells AdvocateDaily.com.
Pope, principal of Kenneth C. Pope Law, says half the population is estimated to have no will, putting them at risk of dying intestate.
For Ontarians who die without a will, their assets are distributed according to strict rules set out in the Succession Law Reform Act (SLRA) in a process that Pope says can become “untidy” or “messy,” resulting in potentially high probate and legal fees.
That might not be such a big deal for younger people with few assets to share, or for married people whose spouses are already named as beneficiaries on their RRSPs and life insurance policies, Pope says.
However, for parents of children with disabilities, he says that messiness can have serious consequences for their offspring’s future care.
“If you have a child with disabilities, then you should have a Henson Trust as part of your will, so that the share to be received by that child is protected,” Pope says. “As well, they will need a trustee to manage the funds for them.”
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, he explains.
Before their recognition, 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.
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 ODSP benefits, he adds.
According to the SLRA, the deceased’s surviving spouse gets the first $200,000 from the estate, with the remainder divided between the spouse and any surviving children. When there is just one child, the assets are split equally with the spouse.
Any amount over $200,000 is shared equally among the spouse and the children.
However, the SLRA does not take into account the individual circumstances of the deceased or their family, Pope says.
“If it happens that there was a second marriage, then the second spouse will have a claim, even if it was intended that the parties remained separate as to property,” he says. “If there was no will, it defaults to the matrimonial claim and preferential interest.
“At the same time, the share for a child with a disability could disqualify them from provincial disability benefits under the asset test,” which limits ODSP recipients to just $40,000 in total assets, Pope adds.