While parents provide the principal protection, governments do play an important role. Each province has its own support legislation and program. In Ontario, the help is delivered through the Ontario Disability Support Program (ODSP).

ODSP delivers a variety of valuable services to the disabled and their families. The primary benefit is through income support to assist in housing.

ODSP has its drawbacks though. A disabled person is strictly limited as to the amount of liquid assets he or she can have. The maximum amount is $40,000 (as of 2020, this limit and other ODSP amounts are updated over time) and this includes not only bank accounts and investments, but also furnishings and even moneys held in simple forms of trust. If this limit is exceeded, the ODSP benefits cease.

Another significant restriction is that the disabled person cannot receive more than $40,000 in income from other sources for living expenses, without in loss or reduction of ODSP benefits. This other income could be from part time employment, or from investment or trust income, or financial gifts from family members.

A disabled person trying to get by on only ODSP income will not have a very comfortable standard of living by any measure. The predicament is that if parents or family provide financial assistance beyond the $40,000 limit to allow the disabled family member to live in a nicer home, or eat better food, or dress in warmer clothing, then they risk the reduction or loss of ODSP benefits for the child.

While the parents are alive, they can usually find ways to contribute without running foul of the ODSP, by supplying groceries from time to time, or taking the child out to dinner, or buying a new winter coat. The anxiety for parents is, what happens when we are no longer alive? Who will then have the money or the inclination to help the disabled child?

Don’t expect the government to do all that is needed. The governments role in providing for the care of disabled adults is much reduced. As the Toronto Star noted in a recent investigative report, “No matter the age of parent or child, there is a lack of funding, a lack of places to live, a lack of support, a lack of options for Ontario’s most vulnerable citizens.”

While government may increase its commitment to the disabled community in the future, there is no question that the primary responsibility for care giving and planning remains with the parents today. Delay only increases the difficulties for a disabled child’s prospects. Partly this is because of the length of time required to make safe alternative arrangements, particularly for accommodation. The same Star article reported that a there is a list of over 17,000 people waiting for support funding, group home placements or daytime activity programs. Those on the list may well wait for decades. In the final analysis, parents must take the lead in providing for their disabled child, even after the parent’s death.

44The preferred solution for the disabled dilemma is a very special form of trust technique, called an Absolute Discretionary Trust. The proper use of this type of trust permits parents to provide financially for the support of the disabled child, without adversely affecting the ODSP benefits. This trust is also known as a Henson trust, named for Audrey Henson, a disabled woman from Guelph. Her father’s Will was the first using this technique to be upheld in court.

With an Absolute Discretionary Trust in the parents’ Wills, an inheritance is left for the disabled child that can be relied upon to assist the child for the rest of his or her lifetime, without affecting the ODSP benefits. This estate planning technique has many advantages:

• The child will not be dis-entitled to ODSP benefits, even if the amount left in the Trust is far more than the modest $40,000 limit for non-exempt assets before disqualification. Tens, even hundreds of thousands can be set aside from the estate for the disabled child’s exclusive benefit, without triggering ODSP problems.
• The disabled child’s income from the Trust for non-disability related expenses such as food, clothing, housing and entertainment can be substantially supplemented, to a maximum of $40,000 per year, without suspending or affecting the ODSP benefits.
• The child may also receive sums in addition to the $40,000 for disability related expenditures, such as assistive devices, education and medical matters. For example, the Trust could buy a $11,000 electric wheelchair for a physically disabled child without risk.
• The Trust money remains available for the child as a safety net if the ODSP benefits ceases in the future, because the program ends, or redefines his or her eligibility.
• When the child turns 65, the ODSP ceases and federal support can become available. Then the limitations on income and capital from the Trust no longer apply, and the trust money is available for the benefit of the ageing child without those arbitrary restrictions.
• If the child’s needs during his or her lifetime do not require the expenditure of all of the trust assets, then after the child’s death the remaining money can be directed to surviving family members or charitable organizations.
• Please note that the ODSP limits for total allowable asset amounts and income amounts change from time to time.  The amounts in this article are accurate as of 2020, but you should confirm current amount limits in subsequent years.

The many benefits of this type of trust are not limited to the parents’ Wills, funded by the estate after their death. An Absolute Discretionary Trust can deliver important advantages while the parents are alive.

An Absolute Discretionary Trust of this type is particularly valuable if the parents have a significant taxable income and already contribute financially to the child. If so, the help provided by the parent is with after tax dollars. This can be very inefficient. For example, a top marginal rate father may earn $4000 from employment, pension or investments and want to spend this on his disabled daughter. However, about half of his earnings are diverted away from the family to the government in income tax. This leaves barely half the amount he intended for her. This Dad will actually need to earn almost $8000 to have $4000 after tax to help his disabled girl.

If the parent uses an Absolute Discretionary Trust as the vehicle to provide financial assistance to the disabled child, under the right circumstances no tax is paid and all $4000 can be used for the child. As a bonus, the parents’ income tax is also reduced.

In some families, parents establish an Absolute Discretionary Trust now, which results in more money available for the child and less money scooped by the government for tax. After the parents have passed away and no longer need their assets for their own support, the Wills direct more money into the Trust to help the child for the rest of his or her life. Depending upon the size of the estate, it may even be possible to provide for a nest egg sufficient to release the child from ODSP rules. Then the disabled child will enjoy a higher quality of life, without the arbitrary limitations and restrictions.

Don’t be mislead. An Absolute Discretionary Trust is not a magic wand that makes all of the problems of a disabled child disappear. It is a sophisticated legal tool ensuring that financial means are available to provide for the housing, clothing, food and other needs for the child’s lifetime, while retaining all available government support.

It is not uncommon for an adult person to become mentally incapable of making important decisions on his or her own behalf regarding property (real estate, finances etc.) or personal care as a result of dementia, illness or brain injury.  If the adult person, while capable, had made a Power of Attorney designating a spouse or trusted family member to make those important decisions on his or her behalf, those important decisions can continue to be made for the rest of the incapable person’s lifetime by the designated Attorney(s) in a seamless and straightforward manner. 

If, however, the adult person had not made a Power of Attorney for property or personal care prior to becoming mentally incapable, or if the person was never capable of making one due to lack of capacity, it will be necessary for a parent, spouse and/or trusted family member(s) to apply to the Court to be appointed as the incapable person’s legal Guardian(s) in order to obtain the legal authority to make all important property and/or personal care decisions on his or her behalf.  An Application for Guardianship is complex and can take several months. Although most applications are uncontested, occasionally they are opposed by the incapable person or his or her family members in which case contested guardianship litigation ensues.  Such cases can become highly emotionally charged, time consuming, and expensive. 

Guardianship Applications are also sometimes required for young adults.  In situations where parents have a mentally incapable child as a result of genetics, illness or injury, those parents are often very surprised to discover that once their mentally incapable child reaches age eighteen, they do not have legal authority to make important decisions regarding their mentally incapable child’s property and finances. Although parents may be treated leniently by medical practitioners and/or financial institutions and permitted to continue to make important decisions on behalf of their incapable child for some time after the child becomes an adult, siblings and/or other family members may not be afforded the same leniency when the incapable child’s parent(s) die.  In such event, the siblings and/or other adult family members of the mentally incapable person will have to apply to the Court to be appointed as his or her legal Guardian(s) in order to obtain the legal authority to make all important property and/or personal care decisions on behalf of the mentally incapable person,  for the rest of his or her life.  

Guardianship Applications are governed by the Substitute Decisions Act (“SDA”). Because the SDA presumes that all persons aged sixteen or over are capable of making personal care decisions and all persons aged eighteen or older are capable of managing their property, there must be a finding of incapacity before a guardianship application may proceed. A qualified capacity assessor will be required for this purpose.  

The Guardianship Application process is quite strict. In addition to the capacity assessment, the application requires a sworn affidavit filed with the court outlining the circumstances of the incapable person and the applicant(s), why there is need for a guardian, suggestions for who the guardian(s) should be, and what the guardian’s plan for personal care or property will be. The application must also be served on the incapable person and all members of the incapable person’s immediate family, as well as the Public Guardian and Trustee or the Office of the Children’s Lawyer (depending upon whether the individual is an adult or a minor). 

At LBGH, we take a sensitive and practical approach to Guardianship Applications. With our experience, attention to detail and an understanding of what is important to our clients, we help clients throughout the application process to make it as straightforward and cost-effective as possible.