Qualifying for support under various government disability programs in the form of cash payments or benefits often means that a recipient must have income and assets below a certain level. Without careful planning an intended inheritance may unintentionally serve to cut off a beneficiary’s government support.
A Henson Trust allows for the assets of the deceased to pass to a special trust, and not be counted in the disabled assets thus allowing continued government support benefits while providing a disabled beneficiary an increased quality of life from the assets left to the trust. What’s important is that the trustee (person or entity who administers the trust) be someone you can count on because that person will have absolute discretionary power over the trust. In other words, the disabled will technically not have any say in the governing of the trust. It is for this reason that the courts have allowed the assets in a Henson trust to not count towards the asset and income test for disability support eligibility.
A Henson Trust is an alternative worth considering when there is a disabled beneficiary. More to follow on alternative plans in a future blog.