All About Estates

Had A Henson Trust Been Created? Tribunal Was Not Convinced

Individuals can apply for support through government disability programs such as the Ontario Disability Support Program (“ODSP”) subject to maximums for levels of assets and income. For a single adult with no dependents applying under the ODSP the asset limit is currently $40,000. The OSDP regulations prescribe how assets are determined and creates several exemptions. Monies that are held not available to a recipient because they are held in a trust can be deemed to be exempt assets when determining assets under the Regulations.

In earlier blog posts, the authors have discussed the parameters for such a trust (often referred to a Henson Trust) and recent court rulings that confirm those parameters. The central feature of a Henson trust as one where “the trustee is given ultimate discretion with respect to payments out of the trust to the person with disabilities for whom the trust was settled, the effect being that the latter (a) cannot compel the former to make payments to him or her, and (b) is prevented from unilaterally collapsing the trust”. This is consistent with the OSDP Regulation (and applied in prior Tribunal Decisions) which essentially exempt assets which are not available because they were out of reach of the recipient under the terms of the trust.

In 2019 ONSBT (the Social Benefits Tribunal of Ontario) 2071 (file 1804-2565), the appellant had initially been an ODSP recipient, her benefits were cancelled, and then she had re-applied to the program. The re-application was denied because it was determined the appellant assets exceeded the allowable limit because a large GIC which appeared to available to her.

The Appellant was of the position that her assets did not exceed allowable limits as the monies in question were being held in a Henson trust and therefore were exempt.

The Tribunal noted that the burden is on the Appellant to satisfy the Tribunal, on a balance of probabilities, that the decision to reject the re-application is incorrect.

Considering the documents and the Appellant’s testimony, the Tribunal found that the balance of evidence indicated that the monies in question were being held in some form of trust but did not do not suggest that the monies in question were held in the sole discretion of the trustee. The Appellant asserted that she believed that the trust was a Henson trust ( or a “Henson fund” for that matter) but that in itself did not adequately establish that the trust was a Henson trust where she could not compel the trustee to make payments to her or that she was unilaterally prevented from collapsing the trust. Likewise, The Tribunal noted that the Appellant had recently put monies towards the purchase of a home after the time of the re-application being denied. This testimony also seemed to suggest that she could exercise some discretion over the trust monies in question, and that these funds were accessible and not “out of reach” from the Appellant.

The Tribunal upheld the denial for re-application.

Happy Reading and stay safe

Tagged in:
About Steven Frye
Baker Tilly WM LLP is a leading, independent audit, tax, and business advisory firm based in Vancouver and Toronto, serving clients across Canada. Drawing on well-trained teams across a variety of disciplines, we ensure the alignment of our professional’s skills and experience with client requirements, resulting in exceptional service and business outcomes.

0 Comments

Leave a Reply

Your email address will not be published.

This site uses Akismet to reduce spam. Learn how your comment data is processed.