Caring For Our Child- Henson Trust

Question: As we approach retirement, we are becoming increasingly concerned about the care of our sole child. She was born with Down Syndrome and is incapable of providing for herself. We've heard about an account called the "Henson Trust". Can you provide us with more info?

Answer: There are a couple of questions I would like to ask before answering your request.

First of all, is your child receiving financial assistance from the Ontario Government? There is a program called the Ontario Disability Support Program (ODSP), which provides income to assist in day-to-day living expenses. If your child is receiving ODSP, an increase in certain types of assets or income will have an impact on the amount of ODSP income they are eligible for. In certain cases, if the child's assets or income reach a certain threshold, the ODSP income could be terminated.

Secondly, does your will contain some form of legal guardianship for your child? I find that in many cases, wills and power of attorneys do not include instructions for the care of a dependent child or adult. Any financial planner should insist that these two legal concerns are completed and reviewed on a regular basis.

As you approach retirement and consider estate planning, most likely your longest term financial need will be the support of your child. Provided you have the financial resources, an option you may be able to consider is the use of a Henson Trust.

The Henson Trust is a "discretionary trust" which puts assets in the control of a trustee, who could be the child's legal guardian. Under the Henson Trust, your child could continue to receive full benefits from her ODSP. This is a very important tool for your child.

The trust begins operating after the death of the parents. If you don't presently have the financial resources to fund the trust, you might want to consider some form of a permanent life insurance program. Although the trust sounds complicated, it's relatively inexpensive to set up. In your case, life insurance will be needed to protect the financial security of your disabled child. Insurance premiums will be a small price to pay for security of the protection.

The information contained in this article is intended to provide general guidelines only. The material herein is provided solely for informational and educational purposes and is not to be considered as an offer or solicitation for the sale or purchase of any investments or insurance. The application and impact of the law can vary from case to case based on the specific or unique facts involved. Accordingly, the information in this article is not intended to serve as legal, accounting or tax advice. Users are encouraged to consult with their professional advisors for advice concerning specific matters before making a decision.

Remember to get your questions answered, feel free to call me at 475-5109, toll-free 1-866-475-5109, fax 475-1581, e-mail info@lighthousewealth.ca. Be sure to visit our website at www.lighthousewealth.ca