Practice Considerations: Working With Clients Who Have Disabled Beneficiaries

Working with clients who have beneficiaries or loved ones with a disability requires a different approach from standard estate planning processes.

While most estate practitioners will assume that putting a standard Henson Trust in the Will is sufficient, there needs to be more thought into the circumstances surrounding the drafting of the trust in the first place. Assuming your client’s loved one is receiving ODSP, some general rules to keep in mind for estate planning purposes^[1]:

• As of January 2018, those receiving ODSP benefits are now able to own up to $40,000 in liquid assets per single person and $50,000 per couple.

• ODSP recipients can receive $10,000 a year from a cash gift or voluntary payment from a trust distribution or insurance policy without it impacting their benefit.

• Certain gifts are now exempt from income – in the past many types of gifts received by ODSP participants were treated as income during the month in which they were received and clawed back. As of September 1, 2017, a gift in any amount does not reduce the benefit amount as long as it is used for first or last month’s rent, or to purchase a vehicle or principal residence.

During the intake process consider asking your client’s the following questions:

• What are your client’s concerns with respect to the disabled beneficiary?
• What is the nature and extent of the disability?
• Does the disabled beneficiary have sufficient resources available to them throughout their lifetime to meet their financial needs?
• What is the beneficiary’s capacity to manage their assets and their own care?
• Who is your client thinking of appointing as the trustees to manage the Henson trust? Is it the disabled beneficiary’s sibling? If so, what is their relationship like?
• Is this potential trustee reliable and capable of making appropriate decisions?

The drafting lawyer should also consider the beneficiary’s age and make inquiries as to whether the disabled beneficiary wants to continue to receive ODSP benefits. It is important to consider how a gift or inheritance may impact your client’s disabled beneficiary’s eligibility for provincial disability benefits and how the estate can be structured to protect these benefits. While these questions may seem very personal, they are appropriate to ask your client as part of their estate planning process.