Estate planning for disabled beneficiaries

One of the estate-planning goals often stated by the parents of disabled children is to provide for the children without causing them to be cut off from provincial government benefits. Achieving that goal may involve pulling together several pieces of a puzzle, including the will, trusts, RDSPs, and possibly more.

I recently found the attached article at www.fromyouradvisor.ca, which goes into quite a bit of detail about planning around the Ontario Disability Support Program (ODSP). It's a pretty thorough discussion, and even talks about what happens when another family member leaves money to a disabled child, disrupting your carefully laid plans. Click here to read it.

Although this article specifically talks about ODSP, it is also useful for parents who live in other provinces. There are important variables, of course, because the dollar limit allowed varies very widely from province to province. However, the discussion regarding RDSP and Henson trusts will still be very valuable.

Alberta residents, please note that Henson trusts are not available in your province, though they are everywhere else in Canada.

I would like to clarify one sentence in the article. It describes a Henson trust as follows: "It’s an absolute discretionary trust that doesn’t allow the beneficiary to access any extra amount beyond what’s predetermined." I think that sentence might be a bit confusing. The author is correct in saying that a Henson trust is absolutely discretionary. This means that in any given tax year, the beneficiary might receive income from the trust or he might not, and if he does, the amount is up to the trustee of the trust. Therefore I find it somewhat contradictory for the author to refer to an amount that is predetermined. An absolutely discretionary trust won't predetermine how much is to be paid.