Eric Honey, Barrister, has given a presentation to the PLEO group on the benefits of using the Hansen Trust to financially protect surviving children who have a mental disability. He explained how important it is to set up a Trust Fund and to appoint a Trustee that WILL administer the fund wisely and fairly.  Here are some points that he shared with us:

• The Henson Trust protects a beneficiary, who is already receiving social benefits at the time of the parent's death, from having those benefits discontinued until all of their entitlement from the parent's estate has been spent.
• The Henson Trust allows the Trustee to become a financial parent to the disabled child and the other surviving children. For example: if the disabled child has demonstrated that he/she has no need for a huge amount of money, the Trustee can opt to increase the entitlement to siblings. The Trustee has a lot of discretionary power.

Mr. Honey also discussed other types of trusts and made the following points:

• The Trust Fund can state a specific age for the child to become the beneficiary of the total estate.  At which time the Trustee releases the funds to the child and has no further responsibilities. This works best for children who are expected to become mentally stable in the future.
• Trusts have tax advantages.
• A key factor in setting up a Trust Fund is choosing the Trustee.  There should be provisions in the WILL to replace the Trustee in the event of the Trustee's death. This has to be carefully worked out, otherwise, the Executor of your Trustee's  WILL is automatically given the authority to administer your child's Trust Fund.  Your lawyer can advise you on how to prevent this from happening.
• Any insurance policies, investments, RRSP's that name your child as a beneficiary (instead of your estate) WILL not be considered as part of the Trust Fund, therefore your appointed Trustee WILL have no power to administer those funds.  These legal documents must be changed to read that the beneficiary is "your estate".
• By law the Executor is entitled to claim 5% of the gross value of your estate and are entitled to out-of-pocket expenses. The 5% entitlement WILL be taxed.  If you want to have your Executor receive money you should put a clause in the WILL ie: "the executor WILL not be entitled to any compensation", you still have the option to leave a "legacy" to the executor of a fixed amount that won't be taxed.
• When your WILL names the estate as the beneficiary instead of individuals, the WILL must go to PROBATE.  Probate means that the court must approve the WILL.  The cost of probate is approximately 3% of the total value of the assets passing through the WILL.

There was a final note from Mr. Honey.  The Henson Trust is not complicated, therefore, you should not be incurring additional expenses to have these clauses included in your will. For more information please contact Mr. Honey at (613) 722-2493.