Kenneth Pope LLB, TEP will be sharing with us a series of articles that support special need and disability estate planning
Supreme Court settles Henson Trust issue, Pope says
A Supreme Court of Canada (SCC) decision in the Henson Trust issue is “a big win” for people with disabilities, Ottawa disabilities and estate planning lawyer Kenneth Pope tells AdvocateDaily.com.
In its Jan. 25 ruling, the court determined that Henson Trust assets do not disqualify a benefit recipient from being eligible for income-assisted housing.
“This is a very positive development to clearly settle the fact that a Henson Trust is exempt from all other social benefits,” says Pope, principal of Kenneth C. Pope Law. “This is the culmination of what started upon Mr. Henson’s death in 1985.”
In the landmark decision, the court ruled a Vancouver woman can have her non-profit housing society rental subsidy continued even though she is the beneficiary of a trust fund.
The woman, who lives on disability payments of $934.42 a month, had been renting a Metro Vancouver Housing Corporation (MVHC) apartment for more than 25 years, according to court documents.
The non-profit housing corporation gave her a subsidy of $629 a month, reducing her monthly rent from $894 to $265.
In March 2012, the woman became the beneficiary of a trust set up for her in her late father’s will. Then, in 2015 the corporation asked her to disclose the amount of the trust and when she refused the rental assistance stopped. MVHC cited a policy that precluded anyone with assets worth more than $25,000 for applying for a rent subsidy.
But the SCC found that the Henson Trust set up for the woman was not an asset because it was an absolute discretionary trust and she could not compel the trustee to give her money for rent.
“The trust had a non-vesting clause so it was simply not her asset,” Pope says.
The original Henson Trust was drafted by Guelph lawyer George Goetz, that resulted in a 1989 case that validated the trusts as a mechanism for protecting their inheritances.
Before the case, a family member with special needs who received an inheritance could see that money characterized as an asset, which could disqualify them from any entitlement to benefits.
Pope explains a Henson Trust can be used for expenses such as rent but the beneficiary cannot simply access the funds, “they must humbly request money from the trustee.”
He says in “the best of all worlds,” the person who bequeathed the trust would also leave a letter of wishes with the trustee, giving guidance “as to the needs and hopes of the beneficiary.”
In an interview with CJAM-FM radio, Pope says the SCC decision finally resolves the issue.
“The SCC is the final determinant Canada-wide,” he says. “There is no room for dispute or waffling or some form of variation. This matter is settled.”
Published with the permission of AdvocateDaily.com By Tony Poland, Associate Editor
Learn more about the history of the Henson Trust below: