Trustee of a Trust – Henson Trusts

The responsibilities of the Trustee of a Henson Trust are different from those of an Estate Trustee in a number of ways and when appointing a Trustee of a Henson Trust a settlor should consider the following key factors:

 

  • Trust
  • Knowledge and Expertise
  • Commitment
  • Stability

Trust

A Settlor should have absolute trust in the trustee, or consider putting in place safeguards, such as multiple trustees required to act jointly, or a professional trustee.  Trust is a paramount concern because:

  • despite high standards for Trustee conduct, there is little oversight to ensure that standard is achieved;
  • The Beneficiary of the Trust often requires support to understand the implications of the trust and his/her rights and entitlements thereunder;
  • As an absolute discretionary trust there is potential for abuse, particularly if the trustee is a beneficiary of the remainder of the trust.

Knowledge and Expertise

A Henson Trust is a specialized trust designed as one piece of a larger plan for the financial security of a person with a disability.  The Trustee needs to understand the complexity of the situation, including:

  • The purposes of the trust;
  • The rules around ODSP eligibility;
  • The record keeping requirements;
  • The applicable investment options (ex. the segregated funds and RDSPs); and
  • The availability of other sources of funding and supports within the community for the Beneficiary.

Commitment

There is a lot of work involved in managing a Henson Trust including:

  • Managing and investing assets;
  • Accounting records tracking all transactions;
  • Managing audit and review by CRA, PGT (the public guardian and trustee) and the Courts (i.e. a passing of accounts);
  • Filing tax returns annually;
  • Filing disbursement reports with ODSP; and
  • Distributing funds for the benefit of the Beneficiary.

Vigilance, organization, timeliness, and commitment to these responsibilities is imperative to ensuring ODSP benefits are not interrupted, the testamentary trust status of the trust is preserved, funds are not depleted and most importantly the safety, security and happiness of the Beneficiary is not jeopardized.   

Another factor that can affect commitment is the proximity of the Trustee to the Beneficiary.  Ideally a Trustee would reside within an easy distance of the Beneficiary.  At the very least the Trustee should reside in Canada, as there are tax considerations which make out of country trustee appointments undesirable.

Stability

A Henson Trust is generally established for the life of the Beneficiary.  In other words, the Trust will last as long as the Beneficiary is alive and there are funds remaining in the trust.  The age and life expectancy of the Beneficiary and prospective Trustees are therefore key considerations.