Whether you have a child with a disability or not, the simple answer in almost all situations is yes.
Retaining a lawyer to draft a proper will does cost. Many of my clients have paid in the neighbourhood of $1,500 to $2,500 for powers of attorney and a will that includes a Henson Trust. The cost isn’t insignificant, but dying without a will can cost far more and there are other fairly unpleasant consequences.
In the absence of a will, the assets of an estate are disbursed in accordance with your province’s laws of intestacy, which have strict guidelines. Even a surviving spouse does not have the legal right to determine how the assets should be disbursed and they certainly can’t assume they are entitled to 100% of the estate.
In Ontario, if you die intestate (without a will), leaving a spouse and a child or multiple children behind, your spouse is entitled to the first $200,000 of your estate. The remainder of your assets are split between your spouse and your children, regardless of how old they may be. If you have one child, the amount above and beyond the initial $200,000 is split equally between your spouse and your child. If you have more than one child, the spouse receives the initial $200,000 and then one-third of the remaining assets. The other two-thirds is split equally between the children.
If one of the children has a disability, the situation becomes more complex, raising additional issues. Unfortunately, many of the resulting issues are not easily remedied. Most issues come with a cost, take time and energy to implement and the solutions are often less than satisfactory.
An example might be helpful. A man dies, leaving a wife and three sons behind and a 1.1 million dollar estate (after fees, taxes and other disbursements). The children are ages 12, 15 and 22. The oldest child has a significant developmental disability and is heavily dependent on his mother. The first $200,000 of the deceased’s estate goes to his wife. The wife would also receive an additional $300,000 (one-third of the remaining $900,000) and the remaining $600,000 would be divided equally between the three children.
Aside from the fact the money is not divided as the mother would like or in the best interests of the family, there are other complications. The money for the 12-year-old and 15-year-old may not be easily accessible. The mother is not given control of the assets simply because she is the mother. If she wants control of the assets, she has to apply to the courts. Think of the cost and the time, not to mention the emotional stress.
Even if the mother’s application to the courts is successful, she must spend the money allocated for her two younger sons in their best interest. The mother use the money from either of the younger sons’ inheritance to cover costs that are not in their benefit. Once they turn 18 they are adults and receive the remaining amounts in their names. Once the money is in their hands, it is their money. Not only would they be able to spend the money at their discretion, they may also demand a full accounting of all transactions while the money was managed by the mother. If they do request an accounting of how the money is spent and are not satisfied the money was spent in their best interests, they could pursue legal action against their mother.
The 22-year-old child receives his share of the estate in his name. Because the inheritance is given to him in his name, his Ontario Disability Support Program benefits maybe jeopardized, if not revoked entirely. Because he is single and has no dependents, he is not allowed more than $5,000 in assets in order to maintain his eligibility for ODSP. His ODSP can be reinstated by putting the money he has received into ODSP exempt assets, such as the RDSP, but there are other complicating issues that can get in the way.
Due to the severity of his developmental disability, the eldest son does not have the contractual capacity to manage his own money or even the ability to give his mother power of attorney over his assets. As a result, the mother would have to make another application to the courts to secure guardianship for her son. Until his mother secures guardianship, they money for the son will likely be managed by the Public Guardian and Trustee. More costs, delays and stress.
Even if the mother finally secures guardianship for her son, his portion of the estate may not be enough to respond to his needs because the children’s portion is divided equally and not in accordance with their needs. If the father died with a will, all of his assets could have been left to his wife for her determine how the money should be used. Without a will in place, the mother’s ability to decide how the money should be used, for whom it should be used and when it she be used is severely restricted.
At 1.1 million dollars, the father has left behind a significant estate that should be able to ease the financial challenges of his surviving spouse and his three children, but the size of the estate is not the only determining factor. Without proper planning, assets do not end up in the right hands, raising many issues where a satisfactory resolution may not exist. Any issues that can be addressed, at least to a certain extent, will come with a price tag, ultimately eroding the value of the estate, not to mention the inevitable delays and the ensuing emotional stress.
Effective estate planning helps to ensure assets go where they are intended, government benefits (i.e. ODSP) are safeguarded, delays and costs are minimized, taxes are reduced and stress is managed. The cost of a properly drafted will may not be insignificant, but the cost of not having a will is often far greater, profoundly affecting a family’s quality of life.
My wife and I have a son with a developmental disability who is on ODSP. We need to do our wills. Do you have a lawyer you could recommend?
I do have a number of lawyers I refer people to, but it depends on where you live. Please contact me directly at email@example.com and tell me where you live. I typically provide three names for people to consider.
What is important is that you find an estate lawyer who also has a strong understanding of ODSP. They should also have experience working with parents of children with disabilities. Simply because a lawyer says they can draft wills, trusts and powers of attorney does not make them a good
We are currently working with a lawyer to get our wills done which will include a Henson Trust for our son. We are having a difficult time figuring out who should be the trustee, though. We have another son who could do it but he lives in Winnipeg (we are in Ontario). Will that be an issue?
I think it will be very difficult for your other son to manage a trust from a different province if for no other reason than logistics. For a trustee of a Henson to be successful. A trustee needs to be able to respond to the beneficiary’s needs. In this case, your son in Winnipeg will need to understand his brother’s needs, understand ODSP and make sure ODSP income and asset rules are not transgressed. I think that will be difficult for your other son to do from another province.
Many families find it difficult to identify trustees. I often suggest to clients that they look outside the traditional options (family) and consider family friends and those involved in their child’s life.
Depending on the size of the trust, you may want to consider a corporate trustee.
From our own personal experience.
Before you engage a lawyer to work on your “correctly worded” Henson Trust will, why not decide who will be the Corporate trustee along with your own choice of trustee.
The original Henson trust will was drawn up for Mr Leonard Henson of Guelph Ontario by National Trust(now Scotia Trust).
Assuming they are selected as the corporate trustee they offer free services of their top lawyers on how to correctly word a Henson trust will, they will share this information with the lawyer of your choice.
Assuming again that your selected trustee will need help in administering the Henson Trust? who better then the trust company who set it up in the first place.
For families of higher net worth, retaining a corporate trustee has some real advantages, including tax and estate planning advice that can be supplied to the family’s estate lawyer. As well, many investment firms provide tax and estate planning advice at no extra charge for families who have invested above a certain threshold.
However I really don’t see this a replacement strategy for retaining a lawyer who has specific expertise aligned with estate planning for parents of children with disabilities, especially if those children are on ODSP. Tax and estate planning services offered through a corporate trustee or investment house can provide a great deal of added value, providing additional ideas and strategies, but I would caution readers who hope to deliver language from such sources to their lawyer who is drafting their will.
Drafting a will, especially when you have a complex situation such as the inclusion of a Henson Trust, requires a comprehensive approach. If you do have access to value added services such as tax and estate planning advice, its great to take advantage of it for ideas and second opinions on the drafting of an estate plan when they are not retained counsel. I simply have concerns if people hope to use them as the drivers, instructing other retained professionals on how to do their work.
Since the Henson Trust was first used as a mechanism to safeguard ODSP, there are a good number of trust and estate lawyers who have built much or all of their practice around servicing families who have children with disabilities. If you have to retain a lawyer for estate planning and you have a child with a disability, my suggestion is that you find a lawyer who specializes in the area and use other resources for additional advice and second opinions.
My husband and I have 2 adult daughters (33 and 28) living at home. They both have MID – mild intellectual disabilities, however invisible.
Both are on ODSP and have an RDSP each.
My question is around inheritance of property.
We own a house – almost mortgage free.
I always believed that beneficiaries are permitted to sell the home in order to purchase a more affordable home of their own.
A person on ODSP is allowed to own their principal residence (i.e. they have to be living in it) without jeopardizing their ODSP eligibility. If they sell that home and buy a less expensive principal residence, the new home is an ODSP exempt asset. However, if they have money left over from the sale of the initial home and subsequent purchase of the new home, the excess money could threaten their ODSP benefits. Example: A person sells her principal residence and after buying a less expensive one, she has $150,000 left over. Unless she uses that money to purchase other exempt assets and/or uses it to cover expenses ODSP deems acceptable, her ODSP benefits would be seriously jeopardized.
I’ve come across a couple mentions of legal fees for wills being covered by ODSP, but can’t find it on the government website or in any detail, and my case worker had never heard of it. Is this something that used to be covered but no longer is? I’m on ODSP and would like to make a will, but if it’s not covered I’d have to try to do it myself.
I haven’t seen anything in the ODSP policy directives indicating the program would cover legal fees for estate planning.